NEW PORT RICHEY — Real estate debt that is projected to wreak havoc on the city's finances for years has the city manager calling for department heads to make major budget cuts.
With the city facing a projected general fund deficit over the next five years of more than $12 million, City Manager John Schneiger told the City Council Tuesday night that he has asked his leaders to slash 10 percent from their budgets for the 2012-13 fiscal year.
The city is also looking to cut $400,000 from the current year's budget to deal with the impending deficits, Schneiger said. The city's financial crisis stems from purchases such as the Hacienda Hotel prior to the real estate collapse.
The purchases were designed to invigorate the downtown area but when the economy stalled, the city was unable to develop or sell the properties. Debt service on the properties has left the city's Community Redevelopment Agency depleted.
Schneiger said cutting city department's budgets by 10 percent will be "draconian," but may be necessary for the city to stay afloat. He said he hopes the situation gets better, but cuts — including jobs — must be identified now.
"That's going to be extremely painful," he said of possible 10 percent cuts.
Council member Judy DeBella Thomas acknowledged the city's dire financial straits, but noted progress in finding a developer for the city-owned former First Baptist Church property, where a residential neighborhood has been planned.
Mayor Bob Consalvo also addressed city employees who have not received a raise in four years.
"We need to thank our employees for hanging in there," he said.
After the meeting, Schneiger told the Times that police and fire departments are included in the 10 percent cuts. The utility department must suggest a 4 percent cut because it's an area that is generating revenue.
Schneiger said layoffs are on the table as department heads look to present their budget cuts, but with job openings already frozen and full-time jobs being filled part-time, services are already suffering.
"We're pretty much already down to the bone in most areas," he said.
The city did approve one hire Tuesday — an economic development manager. Schneiger said he hopes fresh ideas will ease the need for such deep cuts.
The city entered into a contract with Mike Chen, who operates Tampa's Urban Mobility and Development solutions, and has years of experience in the public and private sector in the area of redevelopment. New Port Richey will pay him $5,000-a-month for six months.
Schneiger said the city hopes to generate revenue at the New Port Richey aquatic and recreation center by hiring a marketing specialist there.
"We just have to get to where we can see the light at the end of the tunnel," he said.