Mayor Stephanie Rawlings-Blake has told all city agencies to propose spending cuts to help close a predicted $75 million budget shortfall for next fiscal year.
The expected shortfall in the city's more than $2 billion budget for the year that begins July 1 is largely driven by new or higher expenses in several areas, finance officials said. The city faces higher costs for providing prescription drugs and pension benefits for workers, and must pay for new initiatives such as police body cameras, new trash cans for residents and expanded Charm City Circulator routes.
Meanwhile, the city is bracing for slower income growth and a downturn in tourism after April's rioting. "We're overdue for the business cycle to turn down again," said city budget director Andrew Kleine.
Rawlings-Blake has asked each agency to submit a spending plan that is 5 percent smaller than the agency is spending this year. The mayor will then decide which areas to cut, officials said.
Sean Naron, a spokesman for Baltimore Health Commissioner Dr. Leana Wen, said that agency is working to comply with the mayor's request.
"We're going to go through and make sure we can continue to provide the services we've been providing," he said. "We're looking to find ways to do more with the money we have. Our focus is on keeping the services we have strong."
Despite the shortfall, Kleine said the mayor plans to include in the budget 2 percent raises for all city employees and a small cut in the property tax rate for owner-occupied homes.
The city is already feeling pressure in the current budget, which is running a $6.3 million deficit. The mayor has ordered a hiring freeze for civilian positions until the fiscal outlook improves.
"We are putting restrictions on hiring" by agencies, Kleine said. "Their hiring actions have to be reviewed by us. They have to provide additional justifications."
City Council President Bernard C. "Jack" Young said he was "a little shocked" at the state of the budget.
"I do expect the budget hole to be closed," he said. "We've always had a balanced budget."
Young said he opposed a hiring freeze. He said he'd rather see city government cut the frequent use of consultants.
"If you're going to do that, you have to make sure you're not hiring consultants," Young said. "Consultants should be the first ones gone."
Finance director Henry Raymond called the hiring freeze "prudent fiscal management."
The fiscal shortfall is the largest since Rawlings-Blake embarked on a 10-year plan to improve Baltimore's finances. Last year's shortfall, by comparison, was $30 million. The city addressed it and ended the fiscal year with a $12 million surplus, thanks largely to better-than-expected property tax revenue.
In 2013, Rawlings-Blake said the city had run up a structural deficit of nearly $750 million over the next decade and she began sweeping changes to close the gap. Her administration says it has reduced that deficit by about $350 million through cuts to health care and pension costs and new work shifts for firefighters, among other changes.
Without those charges, next year's budget shortfall would be nearly three times as large — $200 million — according to Kleine. Rawlings-Blake is pledging to make sure the budget gap is closed by the time a new mayor is elected, her spokesman said.
"It's not an emergency by any means," Kleine said of the current state of city finances. "We want to make sure we correct the course right away. If we let it go on, it gets much more difficult."
Budget officials are holding a community meeting from 9 a.m. to noon today at the Patterson Park branch of the Enoch Pratt Free Library, 158 N. Linwood Ave. Officials are encouraging residents to attend to offer suggestions about what should or should not be funded in next year's budget.
The mayor will submit her formal spending plan to the City Council in the spring.