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Council suspends Rio Nuevo panel, discusses financial clarity

The Tucson City Council’s Rio Nuevo subcommittee was suspended indefinitely at Tuesday’s council meeting.

Councilwoman Nina Trasoff, who heads the committee, said everything that would go before the group at this point should be discussed by the full council. Trasoff’s colleagues nodded vigorously

Several Rio Nuevo projects, including the flagship University of Arizona Science Center, have been put on hold for financial reasons. The Legislature has threatened to withdraw the money that underpins the redevelopment push because of a perceived lack of transparency.

The subcommittee had only three council members – Trasoff, Councilwoman Regina Romero and Councilman Steve Leal.

The council Tuesday also discussed a series of changes intended to make city finances more understandable to officials and the public.

Budget officials apparently figure differently than finance officials, who come up with different numbers than department accountants, City Manager Mike Hein said.

The result is an anticipated drawdown of savings to about 2.5 percent of the city’s discretionary spending, or a quarter of the council’s stated goal. The figure is also low enough to possibly affect the interest rate incurred by the city when it borrows money.

Among the proposed changes are budgeting and tracking spending by fund, instead of by terms only the city uses, such as “general purpose funds.”

Interim Finance Director Silvia Amparano’s presentation began with a glossary.

Both the council and officials admitted to confusion about whether figures took into account “general purpose funds,” an umbrella term used to denote discretionary money from parts of three funds, or the “general fund,” a fund that pays for the operation of several departments whose fees do not cover their costs. The general fund comprises part of the general purpose funds.

The terminology mixup contributed to the unnoticed accumulation of deficits worth millions of dollars, officials said.

Changes will also be made to how the city incorporates depreciation in its balance sheets. Current practices have allowed enterprise funds, which are supposed to charge enough in fees to pay their expenses, to run operating deficits that the city’s general fund then has to cover, Amparano said.

Deputy City Manager Mike Letcher said departments would no longer be able to shift money among budgeted line items without oversight. Before, “as long as they controlled the total, we didn’t look very closely,” he said.

That will change, officials said.

“You’re not alone in finding out the gravity of the numbers at this late date,” Hein told the council members, who expressed concern that officials seemed not to have anticipated how much of the city’s savings would be used.

The council was divided on two issues: whether to tie fees to an index that would regularly increase the price of services and whether to approve any proposed “revenue enhancements,” which Councilwoman Shirley Scott called a euphemism for taxes.

About $5 million in new revenues was included in Hein’s most recent proposal for the next fiscal year that begins July 1.

The council will be given balanced budget scenarios for next fiscal year on March 24.

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