The city of Tempe may have to cut as many as 100 jobs to survive the current economic slump that could leave the municipality with a $7 million deficit, the City Council learned Thursday night.
City Manager Charlie Meyer said layoffs would only come as a last resort; attrition was preferred. The city already is in a hiring freeze.
Currently, Tempe has about 1,700 employees, city spokeswoman Nikki Ripley said.
Job cuts as a budget-balancing strategy has been successfully implemented in Tempe before, Meyer said. During a downturn that ran from 2002 to 2004, the city eliminated 102 positions. When the economy recovered, added were 112 jobs more than three-quarters of them in the fire and police departments.
Something must be done to cut expenses, Meyer explained, because the city's sales tax collections in July and August were down by nearly 9 percent from the same period a year before. Extrapolated across the whole fiscal year, lower tax receipts could result in a shortfall of $3 million to $7 million.
Meyer noted 80 percent of the city's general fund goes toward personnel services, such as payroll and benefits. That means cutting 75 positions could result in a savings of $5 million, he said.
Those previous cuts came under examination by Meyer and his subordinate department heads when they brainstormed solutions at a Tuesday meeting. The goal is to present the council with recommendations at its meeting of Nov. 9.
Once Meyer finished with his presentation, it was the council's turn to offer suggestions.
Councilwoman Onnie Shekerjian said the council itself may have to do without benefits such as travel and attending events. "If there's going to be a hit, we should all take it," she said.
On Thursday, the Tribune reported the city's budget carries more than $50,000 for councilmembers and staffers to attend luncheons and banquets.
Mayor Hugh Hallman said the city should consider auditing the outside agencies to which Tempe contributes financially.
At last week's meeting of the council, Hallman grilled the head of the Tempe Community Council, the city-funded nonprofit which distributes money to various human service organizations, over its salary hikes and hiring to fill vacancies - neither of which the city is doing.
"While other agencies are free to spend as they like, we ought to be free not to fund that profligate spending," Hallman said.
In the meantime, the TCC has asked the council for an emergency fund request of $115,000. The council has yet to vote on that request.