This article will simply look at the overview presented this week and wonder whether the numbers presented here are simply too optimistic. Part of these figures are based on projected outcomes from negotiations with the bargaining units. That process is ongoing and does not figure to be resolved prior to the budget’s passage on June 23, 2009.
The All Funds Proposed Budget for FY2009/1 0 totals $1 2 1,567,568 representing a decrease of $ 11.9 million (8.9%) from the FY2008/09 Adopted Budget. This reflects a reduction of roughly $10 million in capital improvement project funding support as well as $3.9 million in budget-balancing measures across all funds.
The Proposed General Fund budget for FY2008/ 10 is $36,95 1,064 reflecting a decrease of $3.2 million (8.0%) over the FY2008/09 Adopted General Fund Budget, reflecting $3 .7 million in General Fund budget-balancing measures as well as the inclusion in the current-year allocation of $442,000 in one-time funding in support of capital improvement and other priority projects. The proposed budget includes expenditure reductions across most all program areas, with resulting service-level reductions, and detrimental impacts on the City’S ability to advance many of the City Council’ goals and objectives for the coming year.
The key question is where do the reductions come from?
The basic answer is to that question is that it comes from a number of different places including some cost-savings measures, personnel cost reductions, program and service reductions, and a small amount in some increased revenue items.
We will briefly run through each of these.
The city is hoping to gain $30,000 by taking an audit of unlicensed businesses to enforce compliance with the city’s Business License Tax Ordinance.
“Based on the experience of similar audits in comparable cities, staff estimates that as much as $60,000 in uncollected Business License Tax could be realized. Staff recommends including approximately 50% of the potential incremental revenue in the revenue estimates for the FY2009/10 budget.”
The city hopes to get $255,000 for two police officers through a community-oriented police hiring grant.
“The City has applied for Federal Stimulus grant funding through the Department of Justice’s Community-Oriented Police (COPS) Hiring Grant to fund two Police Officer positions otherwise proposed for deletion as part of the FY2009/ 10 budget-balancing plan. Funding through this grant will be awarded to law enforcement jurisdictions based on a competitive process, with grant awards expected in late September. The City of Davis would only be eligible for a grant award under the criteria of retaining sworn officer positions otherwise subject to budget reductions. If successful, the City would receive 100% funding (no local match) for three years for up to two Police Officer positions.”
It’s also hoping for another law enforcement grant that would net around $25,000.
One of the major criticisms leveled toward the city is the use of overtime, particularly by the fire department. The city is hoping to realize around $150,000 in savings on overtime.
They project that they can save around $100,000 in overtime for fire and $50,000 for police.
“This level of overtime reduction reflects successful efforts to reduce overtime in the current fiscal year. Additional savings may be realized through implementation of recommendations from a recent audit of FLSA overtime and management of vacation scheduling.”
This brings up a lot of issues as to why this has not been looked into earlier as a means of reducing ongoing costs. In particular, we have questioned the use of overtime as it revolves around community-based activities for the fire department. During a records request last fall, it was made clear that the city attempts to not pay out overtime for such activities, however, what happens is that those activities may bump employees into overtime down the line.
The city also seeks to save about $626K through a number of consolidations and reductions of city departments. Most of this appears to be done through holding open or deleting vacant positions in the various departments.
From our perspective one of the more interesting projections is roughly $850,000 in savings based on new labor contracts with employee bargaining groups.
The City is in negotiations with several employee bargaining groups on successor labor contracts to agreements that expire June 30, 2009. The City Council hopes to achieve savings-relative to the assumptions currently in the budget forecast – as a result of these negotiations. While it is premature to predict both the extent of any potential savings, as well as the timeframe within which agreements on labor MOU’s will be reached, staff would propose including a place-holder estimate of potential personnel cost savings in the FY2009/10 proposed budget.
However, in so doing, it is also recommended that a specific contingency plan, representing equivalent cost savings, be identified for implementation if agreements are not reached, or savings not realized, within a specified timeframe.
One of the contingencies is that the city is looking for an agreement from employee bargaining groups to implement a time-limited mandatory furlough.
The City is seeking agreement from its employee bargaining groups to implement a time-limited mandatory furlough for possible implementation, effective July 1,2009, with the goal of yielding personnel cost savings from July 1st through implementation of new labor contracts. The level of savings proposed in this category could be realized via a mandatory city-wide furlough of 10 days per year.
The upside of the furlough as one can see is that it implements a decent amount of cost-savings to the city. The downside is that it does nothing to restructure contracts longer term and thus only deals with the immediate cashflow/ budget deficit.
The city also proposes about $1.5 million in program and service reductions.
While this looks to close the immediate budget deficit, one of the key questions rests on the out year budget assumptions.
First, Paul Navazio calls this his “conservative” revenue assumption, but notice that it estimates only a single year of declining revenues for the city. Is that realistic let alone conservative?
Even with those relatively non-conservative revenue assumptions, he is forecasting a deficit due to rising expenditures.
So he presents an even more conservative revenue projection and reflects personnel costs through existing labor contracts only.
The problem as he admits is that those numbers are based on personnel costs through existing labor contracts only. So basically these assumptions suggest what happens only if we hold salaries and compensation stable for four additional years. As Navazio himself admits, this is a problematic assumption that will likely be corrected or adjusted in a future forecast model.
The assumption that revenues are going to grow in the out years seems equally optimistic at this point. We still do not know what is going to happen with the economy, particularly with the state being in the condition that it is.
The bottom line here is that we can quibble over some of the details as to how to balance the budget short-term, there remains a good deal of concern that longer term issues are not being addressed and that a pretty bleak budget forecast over five years is actually pretty optimistic.
—David M. Greenwald reporting