The city received approximately $379,000 in gross receipts tax revenue in October. The city needs at least $435,000 per month to sustain its current budget.

The city’s gross receipts revenue has mostly been down since the start of the new fiscal year in July. In September, the gross receipts revenue was down around $30,000. The month of August was above projections by $33,000, which helped ease losses.

The city council will hold a special meeting on Tuesday to discuss ways to further reduce spending by prioritizing projects and services.

At a meeting on October 8 with the mayor and city council, city employees asked the city council to develop a clearer plan for addressing revenue shortfalls.

Employees also asked for the city to look at ways of increasing revenue, as well as offering guidance to employees on what they can do to help reduce spending.

With one of the primary sources of revenue coming in the form of business gross receipts, the city continues to see the loss of businesses in a continuing economic recession, shown most starkly by the number of newly vacant properties along Main Street and its adjoining streets in recent months.

Even while businesses have closed, a number of projects continue around town, some funded by the national stimulus and other government resources.

Major construction is mostly in new and renovated apartments on Aragon Road and South Main Street. Another major renovation of a medical office is taking place on Christopher Road.

A contractor is also continuing work on the $3-million Reinken Avenue pedestrian overpass, with construction continuing through early December.

Camino del Llano is also still under construction at least through the end of the year, with a possible extension of construction by two months because of problems relocating fiber optic lines.

Those projects are bringing in some revenue for the city. Other sources of revenue include fees and fines for things like court costs and city code violations. The city has not discussed any effort to increase the amount of revenue received in those areas.

During the audit’s first meeting with city officials on Monday, City Councilor Jerah R. Cordova asked the auditors to look into three concerns he has had with how funds have been expended.

During the recent city council meeting where the purchase of $619,000 worth of land was discussed, Councilor Lorenzo Carrillo asked if the purchase properly followed procurement code. While violations of the Open Meetings Act have been discussed and, for the most part, resolved, no one has been able to say whether or not the city followed procurement code.

Cordova requested the auditors look into whether or not the city has in place the proper safeguards to guarantee the city doesn’t again make such a substantial purchase without following the law.

Cordova also requested the auditors look into the relationship the city has with Molzen-Corbin & Associates, the city’s contract engineer. The city has had a relationship with the company for around 50 years but had a particularly close relationship with it during the previous administration, which is proven in hundreds of emails sent between the company and former City Manager Sally Garley, emails Cordova has read.

Right now, the city is in debt to Molzen-Corbin & Associates by approximately half a million dollars for work performed by the company during the previous administration.

Part of the problem is that some of the approval for work was conducted under a special relationship with Molzen-Corbin & Associates, which city officials refer to as a retainer. Any work completed by the company under the retainer, which could cost up to $50,000 per project, was approved solely by the former city manager.

For months under the new administration, it remained unclear what work the former city manager had approved, since sometimes the approvals weren’t written into any contracts.

Cordova also asked the auditors to determine whether or not leases of municipal property the city has entered into with private entities or individuals are legal under the New Mexico Constitution and state law.

The most publicly discussed of those leases has been the city’s lease of the former city hall to the late Tim Lardner and his wife, Janice Lardner, for $1 a year over 20 years. Cordova wants to know if this and other leases are in compliance with the law or if they need to be renegotiated or terminated.

Councilor Wayne Gallegos, who was also present for the meeting with the auditors, agreed the city needed to get definitive, authoritative answers to these lingering questions so it can move forward with other city business.

During the meeting, the auditors were also made aware that Mayor Rudy Jaramillo has submitted bids and received city catering jobs. The auditors will also take a look at that, in addition to major purchases and processes, which standard audits assess.

The audit will continue this week at city hall. The deadline for the final report and findings is due by December but could be completed earlier.

That stands in contrast with August, when the gross receipts tax revenue was at more than $468,000, approximately $33,000 above the monthly projection.

More months with low revenue could prove bad for the budget. Some city officials have already begun looking into where cuts could take place should more cuts become necessary.

In addition to low gross receipts tax revenue, some self-sustaining funds aren’t proving to be self-sustaining.

The amount of money being taken in by the municipal court, for example, is less than is required to pay bills out of its fund, called the correction fund. That means money from the general fund has to be used to supplement the correction fund.

Right now, the correction fund has a deficit of more than $5,400, which, with a tight budget and low gross receipts, can quickly turn into a significant amount of money.

Despite an effort by Councilor Jerah R. Cordova to get a more comprehensive look at the city’s finances to assess the legality of specific transactions and to help the city figure out what went wrong in previous years that led to a more than $3.5 million deficit, there’s been little positive reception to looking into some transactions.

“I appreciate the Council’s interest in the City’s financial audit process and my office stands ready to assist you should you need additional guidance,” Balderas writes in response to Cordova’s effort to engage the state auditor in this year’s annual audit process.

Cordova has requested this year’s audit include an assessment of specific transactions, such as leases of city property, among other things.

The audit will take place next month and primarily assess the 2009-2010 fiscal year, which closed on June 30.

The city needs to receive at least $435,000 each month to afford the bills. The new budget is based an expectation of $435,000 in gross receipts tax revenue each month.

The city has also been notified that the New Mexico Department of Finance and Administration (DFA) has given final approval to the city’s current fiscal year budget.

In its approval letter, DFA cautioned the city that the budget is tight.

“Your projected cash balance of $3,142 above our 1/12th reserve requirement is extremely low. Despite your diligent efforts in coming within budget, careful monitoring and aggressive revenue collections is recommended to avoid financial problems in the future,” the letter reads.

In late July, Councilor Mary T. Aragon questioned whether or not police officers should continue to take their vehicles to their homes outside of Valencia County because the city continues to experience budget problems.

Aragon requested that the issue be placed on an agenda in August for a vote of the city council. That didn’t happen.

Instead, Jaramillo made his announcement Monday night that he believed the decision could be made at the administrative level.

Aragon and Jaramillo exchanged words, with Aragon accusing Jaramillo of potentially exceeding his authority and not living up to the spirit of democracy by making a unilateral decision.

Jaramillo defended the action, saying the council decided to fund the take-home vehicles in this year’s budget. He also said he gave the former police chief, Mike Chavez, his word that police officers would get to keep their take-home vehicles.

Had the council wished to rein in take-home vehicles it could have done so as a part of budget discussions and the multiple discussions and votes before getting the city’s final budget in place.

In fact, in May during the budget workshop, when the issue came up, no one expressed opposition to a deal between Jaramillo and Chavez that meant Chavez would resign and his salary would be put toward continuing to allow police officers to take their vehicles home, even if they lived in places like Albuquerque, Socorro or Mountain Air.

Under the Torres administration, the take-home policy was intended as an added benefit and recruitment tool for officers. Under the current budget woes, however, some in the public and in city government have advocated taking them away to save money.

The vote was 3-0. Councilor Wayne Gallegos was absent.

The budget anticipates general fund expenditures of more than $4.9 million. It anticipates general fund revenues of almost $4.3 million. The difference is made up through transfers from other revenue sources.

The general fund balance at the end of the 2010-2011 fiscal year, assuming gross receipts revenues come in as projected, is just above $3,000.

With the budget so tight, the city is continuing to operate with extreme caution.

While there has been discussion of additional cuts because of weak gross receipts, no decisions have been made.

According to the city’s finance director, Michael Steininger, the city can look at cutting capital projects, like the roof repair for the municipal court, or budgeted purchases, like needed equipment, before further affecting staff.

The issue came to the forefront of debate in late March as the city began cutting back on employees’ vehicle use to help reduce the city’s budget deficit.

In early May, former Police Chief Mike Chavez resigned in a deal that allowed his salary to be put toward continuing to allow police officers to take their vehicles home.

Despite the deal, the issue is again under discussion by the city council because of continuing budget problems.

At Monday night’s city council meeting, Interim Police Chief Dan Robb defended the take-home vehicles as a necessary incentive for keeping good officers working for the city.

Typically in discussions a distinction has been made between police vehicles taken home outside of Valencia County and taken home within Valencia County.

In general, the council has been more supportive of allowing police officers who live near Belen to take their vehicles home to enhance response time.

In addition to police vehicles, Aragon also questioned vehicles still being taken home by the city’s airport manager and engineer, despite the ban in March.

Councilor Lorenzo Carrillo also expressed skepticism about continuing to allow police officers to take their vehicles home.

Since the beginning of the month, the city has been more closely monitoring the city’s gas consumption to ensure vehicles are being properly used.