The new City Manager Scott Moore will have to forego the traditional “honeymoon” period new managers usually enjoy. He gets the unenviable job of reporting this distressing news to the council at his very first meeting:

The Finance Department is now projecting the FY2010 budget deficit to be $14.5 million. This re-forecasting is the result of continued poor performance in City revenues, especially sales tax receipts.

The Finance Department had previously predicted a deficit of $10.5 million, which was already unbearable. The new deficit projection is 38% higher. Ouch.

As an aside, I thought it was interesting that he says, “especially sales tax receipts.” I wonder what effect these “especially” lower sales tax receipts are having (or will have) on a couple of new sales taxes — the Hospitality Improvement Zone (HIZ) tax and the upcoming public facilities (museum) tax. And, conversely, what effect the addition of these new taxes will have on future sales tax receipts. Sales taxes are largely voluntary. If consumers don’t want to pay them, they simply make their purchases in one of the surrounding communities, like East Peoria. As taxes go up, I wonder how much more business Peoria will lose.

But I digress. What does this mean for city services? Read on:

A total of 46 positions have been identified for complete elimination and 14 have been identified for seasonal lay-off…. The Police Department will be faced with reducing its fore by 17 officers. The Fire Department is faced with eliminating 15 positions, including shutting down one fire company. If the Firefighters Local 50 had not conceded their 2010 wage increases, the closing of a second fire company would be facing the department. Other front-line departments like Public Works and Emergency Communications could also expect critical losses in service delivery internally and externally. Information Systems and Legal will lead to serious interruptions and delays that will impact front-line departments and citizens alike.

The report goes on to say, however, “The critical loss of services and the crippling effect of many of these changes is likely unacceptable,” and asks for more direction from the council. I’m not sure what else the council could do to reduce expenses; I think there’s going to have to be some talk about raising taxes — specifically property taxes — to mitigate some of these cuts. Property taxes are not volatile like sales taxes.

With sales taxes, the city sets the rate and then gets revenue based on public purchasing. When people don’t go shopping as much or shop somewhere else, revenue goes down. With property taxes, however, the city starts by determining the amount of money it needs to receive (called a “levy”) and then the necessary tax rate to raise that amount is figured based on the equalized assessed value (EAV) of property within the city. Thus the city is more or less guaranteed to receive the money it requests in this way.

The question is, what will public reaction be? Will they rather see draconian cuts to police and fire, or fewer cuts coupled with an increase in their tax rates to maintain an adequate level of service?