While city revenue is expected to grow at a rate of around 3 percent, city Budget Director Doug Dowler told the council on Jan. 31, forecasts show overall expenditures are likely to increase at a rate of around 4.4 percent over the next five years.
The biggest anticipated expenditure growth lies in personnel services and other services and charges, such as utilities, information technology and workers compensation. Within that expenditure growth, Dowler said, are items that include an increased number of city workers, picking up the tab for positions currently being covered by grants set to expire, and a new fire station.
Other projected expenses include $3 million for operation of the MAPS 3 streetcar, upped funding for the MAPS 3 convention center, MAPS 3 downtown park maintenance, water rights litigation and an underfunded city worker retirement system.
The city has several options to close the gap, Dowler said, such as additional sales tax or fuel tax (which would require a vote by residents), a sales tax on online transactions (which would require a change to federal law), or property tax to go toward operations (which would require a change in state law).
In terms of the current fiscal year, Dowler said revenue is projected to come in around 3.5 percent above target. Sales tax, the biggest revenue generator for the city, performed 3.6 percent or $11.5 million better than expected, while the use tax came in 18 percent above target. Franchise fees, charges for services and other taxes also outperformed estimates.
Looking ahead to fiscal year 2013, the citys projected budget is about even with projected expenditures.
Nevertheless, there might be some risks associated with the projected 2013 figures, Dowler said, including possible lower use-tax revenue, which mainly is collected from energy companies, because of lower natural gas prices and reduced drilling activity.
Meanwhile, Russell Evans (pictured) of the Oklahoma City University Meinders School of Business said an interesting trend could be developing in which the city appears to be pulling further away from Tulsa economically.
While OKC almost has made up for the 19,800 jobs lost between 2008 and 2010, Tulsa has made up only about 12,000 of the 27,500 jobs lost during that same period, according to Evans.
As we look forward, he said, its unclear whether this is just a timing issue in the recovery or whether this represents a significant long-term trend in which Oklahoma City is going to grow in employment at a faster rate than Tulsa going forward and that gap continues to expand.