Monday night’s Finance and Budget Commission budget discussion got high marks from a number of people who have typically been critical of the city’s handling of budget matters. However, one remark jumps out and it came from City Manager Dirk Brazil, who seemed to preclude further concessions or “take-backs” from employees during this round of negotiations.
The question is whether the city manager jumped the gun here and prematurely foreclosed on the possibility of more employee concessions.
Our analysis of the budget shows three problems with the ten-year projections the city finally released. First, the sales tax measures were sold to the public as “temporary” and “emergency,” however it is clear that the city goes immediately back into the red as soon as the taxes expire after the 2020-21 fiscal year. The city undoubtedly will have to attempt to get the voters to renew them – but the city cannot operate under the assumption that the voters will do so.
Second, as Commission Chair Jeff Miller pointed out, the budget assumptions assume economic growth – modest growth, granted, but positive growth throughout the period. That assumes ten additional years of economic growth after this year – which does not seem reasonable or likely. It seems probable that we will see another recession some time in the next decade.
Third, right now we are at a historic low in terms of number of full-time equivalent (FTE) employees. At 352, we are down a full 100 from the peak. Those cuts were largely done by attrition and without much regard as to services provided and workload. The question is whether we can assume that, over the next decade, we can continue to operate at 352 FTE. Again, it seems likely that we will need to grow the number of employees to a more workable level.
Fourth, the city staff showed us the projection of what happens even at one percent annual COLA. The small margin that the city had in the black completely evaporates and, as soon as the taxes fall off the books, the city’s fund balance drops precariously.
Fifth, these numbers do not factor in the need for infrastructure repair. Right now, the city is pumping in more than $4 million for roads, and the city manager has acknowledged that that figure in insufficient to improve the city’s roadway conditions. That doesn’t include the needed money for parks, greenbelts, and city buildings. The city has a discussion for a parcel or other tax revenue scheduled for July, but any revenue will have to get past city voters – and a two-thirds margin was elusive in previous polling.
On the other hand, it seems unlikely that the city has the will to attempt another round of cuts – not the city manager, nor, likely, the majority on council.
What is interesting is that, for most employee groups, while they believe they have had severe cutbacks, most actually received a small COLA in the last round of negotiations. This was in exchange for cuts in other areas. For example, many took a huge hit on the cafeteria cash out, which was reduced in many cases from $1500 to 1800 per month, down to $500 per month.
They have picked up a greater contribution to employee pensions; in the case of non-safety employees, they went from paying none of their pensions to paying eight percent. And there were also changes to medical plans.
On the other hand, the firefighters went to impasse, and so some of these changes could not be imposed upon them. They make more than any other bargaining group and are likely the only group in town near the top of the region in compensation.
There has been some talk, therefore, about trying to equalize the discrepancy between fire and police in compensation, but it’s not completely clear that there is the political will to do so.
We need to ask tough questions still – are we staffed sufficiently to deliver the services that we want to deliver? Are there gaps in that service delivery due to attrition? And the larger question still is whether we can continue to provide all of the services that we currently provide.
The biggest question of all is how do we go forward from here? We have clear needs in terms of infrastructure and we have no margin for error on the budget for the foreseeable future.
We are going to need to look at a renewal of the sales tax and probably a parcel or utility tax to pay for the infrastructure, but we are going to lose a lot of support if we include “nice to haves” like pools or sports complexes in that request.
We need to assess staffing needs and the cost of services we provide and determine whether or not we want to continue to provide all of the services we have.
Within that context should be a discussion both of employee compensation and staffing levels.
Finally, we need to continue to look at ways to increase revenue. Our fear is that the public has sensed incorrectly from statements from the mayor and city manager that the economic crisis may be over. The budget numbers argued against that. We need to look at economic development as a long-term solution to help with our margins.
But if we end up closing off the possibilities of concessions from employee groups, we limit ourselves, and right now the budget doesn’t look strong enough to do that.
—David M. Greenwald reporting