Woodfin’s Budget Features Pay Cuts, Furloughs And Funding Reductions

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Miranda Fulmore, WBHM

As promised, Mayor Randall Woodfin’s proposed FY 2021 budget is austere, thanks to financial pressures brought on by the COVID-19 pandemic.

The budget, which had been delayed by three months so that the city could calculate the extent of the economic damage caused by the coronavirus, includes salary reductions for the mayor and his appointees, furloughs for hundreds of city employees and reductions in funding to several entities.

But it continues funding for many of Woodfin’s signature issues, including neighborhood revitalization and the city’s long-underfunded pension.

“I believe we, the city of Birmingham, cannot let this economic crisis interfere with our commitment to basic services to our residents and the 99 neighborhoods,” Woodfin told the City Council Tuesday.

Woodfin’s proposed budget projects a sharp decrease in revenue — $412.9 million for this year, compared to $462 million last year. That nearly $50 million drop comes mostly from diminished business taxes, which plummeted due to shutdowns caused by the pandemic.

Property tax revenue, meanwhile, increased by $3.4 million, which Woodfin called “some good news” amid the financial crisis. Permits and fees also increased by $3.3 million “However, everything else took a hit,” Woodfin said.

“Our economic outlook is directly connected to a crisis that currently has no defined end,” Woodfin said. “We will not truly understand the city’s financial position until after the business license collections in the first quarter of 2021… We don’t know what’s going to happen in January and February… We can only hope for the best.”

The most significant budgetary changes have to do with city personnel.

Woodfin himself will take a 10% salary reduction, while mayoral appointees will have their salaries reduced by between 3% and 10%. The city will indefinitely furlough 114 part-time employees and 259 full-time employees who cannot perform work functions due to the city’s closed cultural and recreational facilities. Furloughed employees will continue receiving health insurance benefits for three months. The budget also defunds 447 vacant positions, which Woodfin said will save $15.8 million.

The city will not pay for nonessential travel expenses, Woodfin said, while merit raises, longevity pay and cost-of-living adjustments for employees have been frozen. The city will also suspend nine paid holidays over the fiscal year.

“These are hard decisions,” Woodfin said Tuesday. “They don’t come lightly, and it’s emotionally heavy. But combined, these actions will reduce spending by $35 million in FY 2021. Combined, these actions ensure no reduction takes place in public safety or general government services.”

The proposed budget also slashed funding for city-owned facilities such as Railroad Park (from $900,000 to $450,000), The Birmingham Zoo (from $2.08 million to $500,000), and the Alabama Jazz Hall of Fame (from $175,000 to $87,500).

Funding for the Birmingham Civil Rights Institute appears unchanged; its $750,000 appropriation, combined with $250,000 in emergency funding approved last month, keeps the institution on par with the $1 million it received from the city last year. Last month, councilors told the embattled BCRI — which revealed earlier this year that it was facing a $600,000 budgetary shortfall — that it should begin looking for other ways to generate revenue because city funding “may or may not be there” in the future.

Totally cut from the proposed budget was funding for Red Mountain Theatre, the Alabama Symphony, the Alabama Ballet, Red Mountain Park, the World Games (which were pushed back a year due to the pandemic), the Birmingham Bowl, UAB Football, the Magic City Classic, Jones Valley Urban Farm, Vulcan Trail and the Jefferson County Memorial Project.

Many economic development organizations, such as REV Birmingham and Urban Impact, were removed from last year’s budget and told to apply through the city’s Office of Innovation and Economic Opportunity (IEO); the IEO’s economic incentives budget remained relatively level compared to last year’s funding.

Despite these cuts, Woodfin maintained that his administration has “not deviated from our priorities” of neighborhood revitalization, pandemic or not. The city will continue to allocate $10 million for street paving, $1.5 million for demolition, $1.25 million for weed abatement and $300,000 for the Land Bank Authority, Woodfin said. Even so, that’s a significant cut to the Land Bank Authority, which received $1 million from the city last year.

Woodfin’s Birmingham Promise Educational Initiative will continue to receive $2 million from the city, but Birmingham City Schools’ appropriation from the city’s general fund — the system received $3.25 million in FY 2019 and $1 million in FY 2020 — has been eliminated. Woodfin said that this cut would be “offset by other sources of funding,” including over $2 million from capital expenditures in the city.

The Birmingham-Jefferson Transit Authority will only receive $5 million — half of its usual contribution from the city. That amount had already been approved by the council last month. The BJCTA, Woodfin noted, had also received $21 million in federal CARES funding, which would offset that cost reduction.

The city also increased funding to its pension, which had been long underfunded by previous mayoral administrations, from $3.4 million last year to $4 million this year. This increase, Finance Director Lester Smith said, would help prevent the city from having its credit rating downgraded.

Woodfin has said he hopes the budget will be approved by the council by Oct. 1, though some city councilors have expressed indifference toward that deadline. “We will do our due diligence, and we will pass it when we pass it,” Council President William Parker said last month.

On Tuesday, Parker responded that there was a “lot to digest” with Woodfin’s proposal. “We’ll have more conversations. This is just the beginning of the process. Everybody take a deep breath.”

The full proposed budget can be found here. Woodfin planned to address questions about the budget in a digital town hall at 6 p.m. Tuesday.

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