Horizon, Host: Ted Simons

November 26, 2008

Host: Ted Simons

Phoenix Budget

  • Phoenix Mayor Phil Gordon talks about the city's budget woes, a buy local plan and other city issues.
  • Phil Gordon - Mayor of Phoenix

View Transcript
Ted Simons
>>> Hello. Welcome to "Horizon." I’m Ted Simons. The city of Phoenix like all other governments is facing tough economic times. The city is talking about laying off 1,000 workers to help ease a $250 million budget shortfall. Phoenix Mayor Phil Gordon has asked the federal government to help out with local projects to get the city's economy going. The mayor announces a buy local campaign. Here to talk about all of that is Phoenix Mayor Phil Gordon. Good to see you again. Thank you for joining us.

Phil Gordon
>> Thank you very much, Ted.

Ted Simons
>> This $250 million shortfall is that the worst you've seen?

Phil Gordon
>> It's not only the worst I’ve seen it but according to city managers since we've been a chartered city, it's the worst economic crisis.

Ted Simons
>> 1,000 job cuts. Are we talking attrition here? What kinds of jobs are we talking about?

Phil Gordon
>> The number estimating based last year's reduction. Last year, we ended up as a city cutting $125 million out of our budget and eliminated 700 positions. And this year, we're at estimated -- according to the city manager -- $250 million shortfall. And trying to be creative and hopeful, you know, I’m estimating that means we'll have to eliminate another 1,000 positions. We've had a hiring freeze as a city for over two years now which is a lot except for critical positions like in fire and police and a few others. We've been able to absorb because of the size of our city, you know, 700,000 people a year going into other positions since they retired. If we can manage this $250 million shortfall and better economic news for the next eight months of the fiscal year and with some help on our expenses we hopefully will be able to avoid layoffs.

Ted Simons
>> As far as the jobs that might be targeted, police and fire protected?

Phil Gordon
>> Police and fire are protected, though ultimately the mayor and council will vote on that in probably January to make the cuts earlier but the policy has been and remains and certainly is mine that we won't be cutting police and fire. Non-critical police and fire services, services may be curtailed. The first time ever. The city manager is proposing a small reduction in their budget. Any small reduction certainly affects public safety.

Ted Simons
>> As far as raises are concerned, I know that there's an idea that you have regarding either skipping raises and also taking days off without pay. How's that work into all of this?

Phil Gordon
>> If I can, first of all very quickly, I proposed basically a three-point plan, most of which has already been in effect. Number one, on the revenue enhancement side or new revenue, look at how we can extend existing contracts, say, with the bus advertising shelter company where we can get more money for the next year or two or allow the bus advertising company to advertise in the heart of downtown which isn't done at this point in time and receive more revenue. Ideas like that that are major dollars, not small dollars unfortunately, secondly, new investments that won't require our capital by facilitate new job hirings which is the public works projects which will extend the runway aprons or reclamation projects. Both of which are partners with the feds, will be built and we can pay back and it would employ thousands. The third one, though, we have to look as a city how to further reduce our expenses. Last year, we reduced them by $125 million. We're talking about looking at consolidating. This has been coming to us to in the next couple of weeks that we already asked a month ago to do this. Consolidating departments and functions and also can we go to our labor units? That's what I’m asking. It'll have scheduled contractual raises and cost of living next year which makes up a big part of our expenses and unit by unit and together since we have been a family together and we do what is best for the city and for our employees, can we figure out creative solutions that each unit will then take back to their members saying if we do this, then we won't have layoffs. Those ideas encompass maybe furloughs next year. If they want to where they would go -- not work that day and not be paid for that day. Could be potentially giving back some vacation days. Or any other creative ideas it wouldn't be unilaterally imposed for two reasons, one that's not my belief nor the city's -- management's belief and, two, there's a contract. And if we honor that -- we will honor that contract. But if we do, that new amount that goes into effect next year has to be balanced. We can't -- the federal government print money -- unfortunately, sometimes like the state government, respectfully, where they come down to lower governmental levels and just kind of take some money that the cities have been counting on. So we're going to have to balance that budget.

Ted Simons
>> What kind of response are you getting to the things we've talked about so far? Again, some of this stuff will be voluntary. Some of this stuff will not be voluntary. I’m sure a lot of people are concerned is there a sense of cooperation? What kind of reaction are you getting?

Phil Gordon
>> I think overall, there's a good sense of cooperation. There's certainly -- this is such an uneasy and untrying time. We read every day as a city, as a community, as a state, layoffs within our Valley, within government, not just reductions but layoffs, companies. That stopped people from buying a new car, new house or flying on airlines to visit loved ones that contributes to it. It's uneasy. Until you sit down, rumors spread around. I think through coming to you and asking that we talk about this, I think it calms the water. I talked to most of the labor leaders today of the unions of the city and they're very understanding. They're grateful we're not asking them -- it was misunderstood yesterday by a few people is that I’m asking people to not only give up a day of work and pay but then to come back and work for free. That's, A, not what we're asking. We're asking, are there creative ways that won't reduce the current paycheck but at the same time help on the expenses for next year?

Ted Simons
>> I want to get back to the idea of your own kind of WPA which I think you're actually using those letters --

Phil Gordon
>> Right.

Ted Simons
>> -- what kind of projects are you talking about? And how is the funding going to work with all of this? We're talking state. We're talking federal. Any moneys at all?

>> Well, and, again, there's some people that have looked for an opportunity to try stop what I believe this country wants and this public wants which is to get the economy turned around and people back to work or people to keep their jobs. And the worst economic crisis that this nation ever faced that everyone concurs on is the great depression. The federal government -- in fact, I’m using the name, work projects acceleration -- the federal government trying to stop the hemorrhaging didn't try to go to the top to bail out specific companies and industries but went to families and workers and put people to work immediately by building public infrastructure, roads, highways, parks and in our case, we still have those projects up in South Mountain sometimes retaining walls and trails. The dams up north that brings us our water, that paid people a fair wage that allowed them immediately to pay their rent in those days and buy groceries. Today, if we do that same concept, we can put people to work or maintain people working and they can buy homes or not have their homes being foreclosed. They can buy airline tickets or invest in the stock market. Go to a big box store and buy a computer. All the things that the government is trying to turn around but we can do it directly. It'll have an economic benefit of five to seven times. It'll be loans in most cases. It's not even a handout. And we end up with great assets, specifically, there's that -- at the airport, we have $250 million of already approved, already designed projects that the federal government is a partner on and is putting money into. But for the slow down of the economy would we be building today because we don't have the sales tax or passenger revenue, we can start the projects today.

Ted Simons
>> The odds of getting the federal government and/or state government to help along this project, what are you seeing out there? What are the winds telling you?

Phil Gordon
>> I think this will happen for sure. If you read -- and I do and everyone is listening or reading and seeing on TV -- President-elect Obama, majority of the congress, no matter which party you're on and the majority of the senate and the house are all saying we need invest in cities and states in these types of projects. The question is can it be now where we can immediately save jobs and create jobs or do we have to wait 100 or more days when more people are out of work? For everyone 100 dollars of these projects that we can pay back, we'll create 500 new jobs. Atlanta, as you're aware of, the mayor of Atlanta and Philadelphia and I sent a letter to the federal government, Atlanta stopped over $300 million of air projects, federal projects, that are needed for the feds and for the state, in midstream. So they could start those right away. We can start new projects in 30 days. That means jobs.
Ted Simons
>> Real quickly. We have about 30 seconds left. I know I want to emphasize buying local here in a weakened December. Will that make that much of an impact?

Phil Gordon
>> Today, every penny -- the vast majority of our city's revenue is dependent on sales tax. 60% of our city's revenue comes from the less than 2% that you pay of the 8% plus or minus wherever you buy a car or a computer. The 2% is critical because for every $50,000, we can hire another police officer or keep a librarian employed. So what we're saying is today is an important month after thanksgiving holiday. And it'll be a lot of shopping. We hope from the city of Phoenix residents -- because you're the one receiving most of our services -- that you'll consider if you have a choice to buy in Phoenix so we can keep our employ the city employees that provide the service. We're emphasizing by the way, if you have a choice, also look at local businesses within Phoenix, the return to the community that -- the amount that stays in the community, is even larger than a national chain. Phoenix will take that sales tax no matter what.

Ted Simons
>> I bet they will. Mayor, good to see you. Happy thanksgiving. Thank you for joining us.

Phil Gordon
>> Happy Thanksgiving.

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