Baltimore finished the 2014 budget year with a $12 million surplus but will have to address an expected $15 million shortfall in 2015, city officials said Monday.
The projected $15 million deficit in the year that ends June 30 is largely due to high police overtime costs and low revenue from the Baltimore Horseshoe Casino, officials said.
But budget officers said they believe Baltimore will be able to close the gap by implementing a new police work schedule in January — predicted to save millions of dollars — and through a round of belt-tightening by city agencies.
"We're taking steps with all of our agencies to tighten spending," said Andrew Kleine, the city's budget director. "There's no need to panic at this point."
In fiscal year 2014, Baltimore officials faced a $30 million shortfall but addressed it and finished the year with a $12 million surplus. This happened largely due to about $50 million more in property and transfer taxes collected from improved home sales and business growth.
"We've seen more market activity," Kleine said. "The median home prices have gone up. Everything is moving in the right direction for us. These are signs of a better economy."
Even so, fiscal challenges remain.
At a hearing Monday before the City Council, Kleine said revenue from the Horseshoe Casino is running $6 million behind projections. Three months after the Baltimore casino opened to big crowds, its revenue is substantially lower than state consultants projected. Kleine said city budget officials were counting on those state projections to be accurate. City government gets a cut of revenue spent at the casino.
"We're very hopeful they're getting their legs under them and things will improve," Kleine said of the casino.
The city also is seeing higher costs from police overtime spending, which Kleine now projects to increase to $38 million, far more than the $22 million budgeted. And the city is missing out on about $13 million in anticipated revenue from speed and red light cameras, which have been offline since April 2013 amid concerns about erroneous ticketing.
The city also could face millions in increased costs from the purchase of body cameras for police and ongoing litigation with the police union over pension cuts, Kleine said.
"We have the body camera program being studied right now," Kleine said. "We don't know the cost of that."
Mayor Stephanie Rawlings-Blake has faced a budget deficit every year since taking office, including a $120 million deficit in 2010. In an interview, Rawlings-Blake said she's been able to close each of those gaps plus chip away about $300 million from the city's $750 million 10-year structural deficit.
"We have come through worse," she said of the current shortfall. "I believe we'll be able to move forward without any significant service cuts."
Rawlings-Blake said she hopes that when she leaves office she will have left a "lasting legacy" of "turning around the fiscal health of the city."
"I've really focused on the not-too-sexy work of reforming our budget," Rawlings-Blake said.
The mayor added that she planned to apply for federal funds to cover the cost of the body cameras, which advocates believe will help cut down on police brutality. President Barack Obama has proposed spending $75 million to help purchase 50,000 body-worn cameras for police across the country. But the mayor added she didn't want to slow down the purchase of body cameras by waiting for grant applications to get approved.
"I'm not going to wait for that money to move forward with the program," she said.
City Councilman Eric Costello asked whether the state's fiscal problems, including a $600 million shortfall, would affect the city, which receives a sizable amount of state aid. Kleine said he believed there would be "some impact," but did not offer specifics.
City Councilwoman Helen Holton, who chairs the budget committee, said she wanted more details about why police overtime spending is so high.
"This is one of the biggest areas of overspending concern," Holton said.
Kleine said he expected the overtime projections to decrease later this year, perhaps to as low as $24 million. "I think it will be much lower than what you see here," Kleine said.
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