With the federal government staring down a possible $2 trillion deficit, and the state of Arizona $1.2 billion in the hole, some local governments have started to prepare for their own coming fiscal troubles.
In Oro Valley, the town council on Nov. 19 will consider instituting a hiring freeze.
“I’m looking at ways we can eliminate wasteful spending so we don’t have to cut the budget,” Councilman K.C. Carter said.
Carter and Councilman Bill Garner requested that the town look into the proposed cost-cutting measure.
The immediate impact of a hiring freeze would be limited, however, because the town is advertising for just one job — a part-time bus driver for Coyote Run, the town’s transit system.
Town finance officials say the freeze could save as much as $150,000 this year because it would stipulate that departments also not fill positions if employees quit or retire.
Town Manager David Andrews, however, would have authority to fill any open position if the vacancy would make it difficult for the affected department to function.
“We’ve already started to do that on a management level to cut our costs,” Andrews said.
One cost-saving act already implemented was the decision to not fill the open position for an economic development coordinator.
The town saved $360,000 earlier this year, when the council voted to not extend a one-time construction sales tax break to the pharmaceutical firm Sanofi-Aventis.
A recent change to town employees’ insurance policies could save as much as $100,000, according to Oro Valley financial officials.
The town has also cut travel and training expenses.
An anticipated cut in state funding next year spurred town officials to rethink their budget.
Local governments are bracing for a potential 10-percent drop in state shared revenue and highway user funds next fiscal year, which begins July 1, 2009.
“We know that next year will be an extremely difficult budget year,” Andrews said.
Oro Valley received nearly $11 million in state shared revenue this year.
The state gives local governments a cut of money generated from sales, income and vehicle license taxes.
Highway user funds accounted for more than $3 million of the town’s budget.
Pima County officials have discussed the possibility of even deeper cuts than Oro Valley’s proposed hiring freeze.
County Administrator Chuck Huckelberry last Wednesday requested that all departments submit revised mid-year budget plans to include 2.5 percent spending cuts.
Pima County Sheriff Clarence Dupnik agreed to slash $2.7 million from his department’s budget.
“We definitely have to shift into crisis mode,” County Supervisor Ann Day said.
Day and fellow supervisor Ray Carroll voted against the county’s $1.4 billion budget last June. The supervisor said she and Carroll wanted to see spending reductions then to avoid the need for cuts now.
“This is exactly what Ray Carroll and I were trying to avert,” Day said.
She said even more budget reductions could become necessary if the legislature cuts the state budget.
The county plans to place a hold on all hiring.
Marana officials also have initiated discussions about ways to save money.
Town Manager Gilbert Davidson recently told department bosses to prepare cost-cutting scenarios to include 5-, 10- and 15-percent budget reductions.
Town leaders have not made any decisions about a hiring freeze, according to spokesman Rodney Campbell.