Modesto's projected budget shortfall has swelled to $12 million, up from the $8 million to $10 million leaders anticipated earlier this year.
Officials will spend the next month hammering out how to bridge the spending gap in the $103 million general fund, which pays for police, fire, parks and other quality of life services.
The deficit grew after some departments failed to meet revenue goals, said Mayor Jim Ridenour. He declined to say which departments.
Modesto recently received one piece of better budget news: Sales tax revenue in the last quarter of 2009 met projections. That's important because sales tax is the city's biggest source of general fund revenue. Those dollars have dried up as the economic decline has kept shoppers out of stores.
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Ridenour and City Manager Greg Nyhoff have asked department heads to paint a picture of how potential cuts would affect their operations. They're asking all department leaders to prepare scenarios cutting 3 percent, 5 percent, 7 percent and 10 percent of their budgets.
Ridenour said he also asked departments to show him what 8 percent cuts to personnel budgets would look like.
"That gives me a good idea of where we would be if we just laid a bunch of people off, which we're not going to do, but we wanted to see what it would look like," Ridenour said.
In the Police Department, even the smallest level of cuts would mean losing employees, said Chief Mike Harden.
"At the end of the day, to get that target, it's personnel costs, which make up about 80 percent of my entire budget," Harden said. "We've had to offer up both sworn and civilian staff alike."
Harden said it's too early to say how many employees, if any, the Police Department could lose.
He and other officials will know more after the city completes negotiations with employee unions. All of those groups skipped pay raises last year except the police officers union.
The city will hold a series of public budget workshops in May. Ridenour is scheduled to present his proposed budget to the City Council in early June. The city's new budget year starts July 1.
Read more about the city's current budget at www.modestogov.com/cmo/docs/0910_annual-report.pdf