City braces for recession by cutting its spending
Uncertain picture leads to delay in hires, purchases
Grand Junction City Manager Laurie Kadrich has instructed department heads to delay spending their budgets for the first quarter of the year, as the city braces itself for the possibility its revenue could slip in the midst of the recession.
The spending freeze on nonessential operational items means the city will postpone hiring 14 of the 22 full-time employees scheduled to be added this year, purchasing several vehicles and other equipment and bidding out smaller capital projects for three months. City officials say the delay will save more than $450,000.
The city will proceed with expenditures for hires they have deemed critical, including four new 911 dispatchers, and capital projects already under way or near completion, including the 29 Road-Interstate 70 Business Loop interchange and the Independent Ranchmen’s Ditch flood-control project.
“I think it just came from the city manager’s desire to be proactive,” Deputy City Manager Rich Englehart said. “We don’t want to get ourselves in a position where we purchase or hire and then, if everything tanks, we have to lay off.”
Englehart said administrators will review the city’s financial situation at the end of March. He acknowledged restrictions could extend another three months or through the end of the year if
it appears revenue will come up short of the city’s projected $149.7 million budget.
Kadrich informed the City Council about the move Monday night, and she informed city employees during State of the City presentations Tuesday.
“It’s more of a precautionary measure in response to what I’m hearing from community members more than what we’re actually seeing with our revenue,” Kadrich told council members, adding some community leaders have told her “the worst is yet to come” in terms of the economy.
Sales-tax receipts in December, usually a strong retail month, won’t be known until later this month, but those receipts grew 5 percent in November compared to the same time last year.
Finance officers have projected an 8.5 percent increase in sales- and use-tax revenue in 2009 over 2008.
The city has estimated its overall revenue will increase 3.1 percent this year, which would be less than years past.
While city officials generally remain optimistic about the local economy and sales-tax revenue, they’re less hopeful about money that comes in annually from the federal government and the state. And that could have implications on local projects.
As an example, the city has applied for a $2 million federal grant to pay for the bulk of a proposed $2.5 million firefighter and emergency medical services training facility on D Road.
Without that grant, the project is dead, Englehart said.
He said the city could see a decline in the amount of federal mineral leasing revenue it receives. That money depends on energy production, which could drop this year.