The Tucson City budget office is projecting a $15 million budget deficit for the fiscal year beginning July 1, largely because of rising costs of pensions for public employees.
City Councilman Paul Cunningham said the deficit may actually end up smaller, at $9 million to $10 million, because sales tax revenue is coming in better than projected.
Unlike in past years, when state and local funding was down because of the recession, this year the deficit is "99 percent" due to increases in the cost of pensions for public employees, Cunningham said.
"Some things happened that were probably unexpected when they drew up the pension plan, and as a result we have a gap in the pension system for public safety which uses one pension plan, and other employees that are non-public safety employees, which is another pension plan. And both of those have contributed to this total budget gap," he said.
Though federal budget cuts have many effects, Cunningham said it's not a big driver of the city's current financial state.
The cost to run the public safety pension system, which is part of the state retirement system, has gone up in the last several years.
Cunningham said part of the cost is that there are fewer firefighters and fewer police officers contributing to the system, so each officer or firefighter pays more, and the city pays more to keep the pension system fully funded.
Options to ensure the city can pay the rising pension costs include restructuring the city's debt, like refinancing a personal loan, Cunningham said, though he doesn't support that option.
He expects the city to see some savings in not filling vacant positions and cutting overtime, and Cunningham said the city may see higher sales tax revenues than initially expected, because the economy is improving.
Cunningham doesn't think the city will have to cut to services.
"I don't think there's going to be a lot of changes," for city taxpayers.