Apr. 28—The Santa Fe City Council is set to vote Wednesday on whether to adopt its proposed budget for fiscal year 2022 following a public hearing on the $347.3 million spending plan that marks a rebound from last year, when the city grappled with a massive pandemic-related shortfall.
City officials are cautiously optimistic that revenue predictions will hold strong and a new coronavirus strain won't force more business closures.
"It really is a recovery, or a get back to pre-COVID," said Roman "Tiger" Abeyta, chairman of the City Council's Finance Committee. "It's the first step toward getting back to pre-COVID levels."
The proposed budget includes an 11 percent increase — $34.8 million — from the current fiscal year. The city is expecting revenues of about $338 million and will pull about $8.9 million from reserves.
Reilly White, associate professor of finance at the University of New Mexico, told the Finance Committee at the start of its budget hearings the city shouldn't expect to fully recover to pre-pandemic levels in the upcoming fiscal year, but national and local metrics show a moderately positive outlook.
"The Santa Fe economy is in a strong position for recovery in fiscal year '22," White said.
Tourism, which largely feeds gross receipts taxes, the city's largest source of income, is expected to see a steady recovery in the rest of fiscal year 2021 and in 2022, including gradual improvements to hotel occupancy and restaurant spending, he said.
He added that a robust property market, powered by low interest rates and a growing population, will help spur steady growth in property tax revenue. The city lost about $1.1 million in property taxes heading into the next fiscal year, while gross receipt taxes are expected to increase by $18 million.
The worst-case scenario, White said, would be for another, more dangerous virus variant to spread, causing more closures that would siphon off gross receipts and lodgers tax revenues.
"It does seem like we are moving in a positive trajectory," City Councilor Jamie Cassutt-Sanchez said. "I think the phrase 'cautious optimism' is key. It does look like things are going to be improving rapidly, but I think there are fallouts of the pandemic we need to be on top of and follow."
The Finance Department will provide frequent updates on projected revenues and expenditures, which Cassutt-Sanchez said will help officials keep their finger on the pulse.
Abeyta said there was a lot of talk about a lack of goals and objectives in the budget — largely a result of the pandemic.
"We had to put together a budget over Zoom," Abeyta said. "It's really been different the last year and a half. Typically, we can have staff meetings and put the budget together to talk about goals and objectives for the given year. It's wasn't like that this year."
The budget remains largely the same as the draft recommended by Mayor Alan Webber on April 9, except for a few reallocations of funds.
A total of $100,692 for one project administrator position for the redevelopment of the midtown campus was transferred from the Public Works Department to the Economic Development Department.
The budget for the Planning and Land Use Department's administrative division was reduced by $746,671, but Abeyta said that after a revision, the department is still scheduled to receive $657,000 in funding for additional staff.
The Public Utilities Department's Environmental Services Division saw a $542,760 decrease for contract and utilities costs.
The budget includes funds to add new positions and unfreeze others. According to numbers provided by the city, 1,569 city positions will be funded in fiscal year 2022 — 36 more than in the current year.
The city also is unfreezing 58 positions that were unfunded in this year's budget.
Service agencies, including the Santa Fe Police Department and Santa Fe Fire Department, are poised to receive bumps — 7.2 percent for the police department and 20 percent for the fire department, including an extra $3.5 million for salaries and benefits.
Six new positions are supported in the budget, as well as funding for 15 temporary wildland firefighters.
The Affordable Housing Department would get the largest increase, 155.5 percent, raising its budget to $7.7 million from $3 million.
The city has put a particular focus on affordable housing in recent months, pledging to fund the Affordable Housing Trust Fund at $3 million and ironing out a resolution that would pump half of the revenue from the sale of city-owned properties into the trust fund.
The budget does not include $15 million coming from the federal American Recovery Plan. City spokesman Dave Herndon said the budget will undergo adjustments as the funding becomes available.