The Time Has Come For Tough Financial Decisions


Council spent two days this week discussing the City’s budget & our financial condition. Our City Manager summed it up pretty well…

‘Without boring you with a ton of details, we continue to be in a position where we still can’t take care of what we have. By that I mean, we have a lot of infrastructure (streets, utility lines, buildings, vehicles, etc) that is wearing out with not enough dollars to replace them when they reach end-of-life’

Prior to getting on the Council and during the last five months I have been continually trying to get the support by Council to cut back on the expansion of new projects, such as NACET Phase II, more urban trails and increased funding to our Housing Department to name a few. Putting up these objections has not always been easy or popular with some of my colleagues and some of the public. But when we are nearly $50,000,000 short in funding our streets and sidewalks and tens of millions of dollars behind in other vital needs, something needs to change. We can no longer kick the can forward and continue business as usual.

Mr. Burke our City Manager summed up some of Councils upcoming budget discussions. Remember, these may be the direction of only two Council Members so there still may be a lot of work to convince a majority.

· Council wants to examine ways we can put more financial resources towards facilities, fleet, streets, and parks as well as graffiti remediation.
· They want to have a line-by-line conversation about contributions to various partner agencies in the community.
· All new capital projects in the BBB Beautification and Recreation funds will need to show long term maintenance impacts before they are constructed.
· We will examine the two-tier medical response system from the Fire Department and Guardian Ambulance.
· We will have a conversation about “General Administration” to answer the question about being “top-heavy” in the organization.
· We will examine how recreation fees are set across all programs not just J. Lively.
· We will resolve the philosophical question of should we be in the business of Sustainability, the Land Trust and Economic Development.
· We will further explore the ideas of “Self Certification” as it relates to Planning & Development operations.
· We will review staffing levels as it relates to building inspection.
· We will examine the Stormwater program to understand what are the expenditure priorities.
· We will review how we got to the structure we currently have with regards to Code Compliance.
· We will review how we fund Library services.
· We will budget assuming a constant revenue generated by primary property taxes with the option to revisit increased revenue or decreased revenues depending upon the things Council wants to fund in the budget.
· And we will talk about compensation increases necessary to address compaction, market movement, and those job families whose compensation average is more than 25% below the average.

As you can see, this list is extensive and a vast shift in the priorities of the past. I anticipate a very intense conversation on many of these items. Some may even be upset that we are even discussing these issues but given the current state of our finances, the tough conversations and potentially tough decisions have got to be made soon.

I appreciate the support many in the community have given me in tackling many tough issues. The next few months will bring even tougher decisions. I look forward to the communities continued support while the Council attempts to right our financial ship of state.

Sincerely,
Councilman Jeff Oravits

———————————————
The City Managers full letter to staff;

Dear Colleagues,
Council, the Leadership Team, and the Budget Team spent the last two days in a budget retreat. The purpose of the November Budget Retreat is to look at policy objectives of the Council and set the framework for the upcoming fiscal year budget. As you know, our Fiscal Year runs from July 1 – June 30th. So we are working on a budget for FY14 that starts July 1, 2013 and runs through June 30, 2014.

Now, I know budget conversations always create a lot of anxiety in the organization in these tight budget times. While our revenues continue to look better and better (trigger 1 for a 0.6% compensation increase across the board on April 1 is looking likely), they are nowhere near what we need for some crucial improvements. Without boring you with a ton of details, we continue to be in a position where we still can’t take care of what we have. By that I mean, we have a lot of infrastructure (streets, utility lines, buildings, vehicles, etc) that is wearing out with not enough dollars to replace them when they reach end-of-life. Likewise, we see the employment/compensation market moving again and typically only have enough money to cover increases in pension and health insurance contributions. Employees and infrastructure are the center of our whole business purpose, yet we are stretching them farther and farther each year. So it is only sensible that we are going to have hard conversations each year in the budget as we try to address the problems. Those hard conversations include re-allocation discussions (meaning taking from one portion of the budget to fund another portion of the budget).

But before I get into some of those re-allocation conversations, let’s keep in mind two critical points. First, it only takes one or two Councilmembers to start a conversation, but four to take action. Even when someone starts a conversation, it doesn’t mean that is where it is going to end. It means they want to explore an idea. Council has a responsibility to ask these questions and staff a responsibility to facilitate those conversations. That exploration reveals more information that is needed about a program or service. It will certainly provide opinions from other Councilmembers, staff and the public that shape the conversation, and it often refines the issue from something broad to something narrow. Second, local government is an incredibly responsive form of government. It’s why 77% of Flagstaff citizens rate the City as doing an excellent or good job in delivering municipal services and Congress gets an 8% rating. But it is that responsiveness that means we need to be responsive to change. So there may be some changes that we don’t want to make but need to. However, when I look back at the last five years and see that we reduced personnel by 13% and the General Fund budget by over 25% at one point, we maneuvered through that change pretty well. We found positions for those who wanted to stay with the organization. We kept programs and services alive that this community values but has difficulty affording in tough financial times by re-inventing how we delivered it. We are a creative and nimble bunch that responds to challenges that change brings and we do it well.

So I suppose this last paragraph could be read to be pretty unsettling, but I really have the opposite outlook. The Budget Retreat gave us focus and it crystallized things into specific questions that we can address head on and should get straight up or down answers rather than nebulous and rumor filled speculation. Also, those of you who have worked with me for a while know that I’d rather give you the straight bad news up front so we can tackle this, than sugar coat something and have you be surprised later. So let’s look at the conversations to be had:

· Council wants to examine ways we can put more financial resources towards facilities, fleet, streets, and parks as well as graffiti remediation.
· They want to have a line-by-line conversation about contributions to various partner agencies in the community.
· All new capital projects in the BBB Beautification and Recreation funds will need to show long term maintenance impacts before they are constructed.
· We will examine the two-tier medical response system from the Fire Department and Guardian Ambulance.
· We will have a conversation about “General Administration” to answer the question about being “top-heavy” in the organization.
· We will examine how recreation fees are set across all programs not just J. Lively.
· We will resolve the philosophical question of should we be in the business of Sustainability, the Land Trust and Economic Development.
· We will further explore the ideas of “Self Certification” as it relates to Planning & Development operations.
· We will review staffing levels as it relates to building inspection.
· We will examine the Stormwater program to understand what are the expenditure priorities.
· We will review how we got to the structure we currently have with regards to Code Compliance.
· We will review how we fund Library services.
· We will budget assuming a constant revenue generated by primary property taxes with the option to revisit increased revenue or decreased revenues depending upon the things Council wants to fund in the budget.
· And we will talk about compensation increases necessary to address compaction, market movement, and those job families whose compensation average is more than 25% below the average.

Again, some of these are pretty intimidating, but remember, we spend more time with these programs and services than anyone else in the community. So much of this can be an education process that clarifies and satisfies the question. But some of it may lead to change. We don’t know until we get there. And getting there means me providing information to Council and involving those who are responsible for the programs presenting to Council in various work sessions before the February Budget Retreat.

There will be an article in the Daily Sun this weekend. I understand that it will focus on the need for funding infrastructure through re-allocations from contributions to partner agencies. I understand that there is a connection there, but as you can see from the above narrative, it is more complicated than that. Either way, I am sure the article will be built to illicit a public reaction. And that is OK (so long as the information is factually accurate) because we are responsive to our community and we want to hear what their opinions are to these ideas.

Lastly, there is a lot of strength in this organization when we work together and support each other. If you see a co-worker who is struggling with the uncertainty, please reach out and try to help or vice versa. You have all done an amazing job though some very difficult times. Thanks for your work. kb

Kevin Burke
City Manager
City of Flagstaff
928.213.2078


5 thoughts on “The Time Has Come For Tough Financial Decisions

  1. Thanks Jeff. The only salient point made by Burke in his equivocation at the opening of his letter was “First, it only takes one or two Councilmembers to start a conversation, but four to take action.” Looks like you’ve got a tough row to hoe. With a $50 million dollar shortfall now identified do we really have the time or resources for diverting city staff for a week to put on a snowboarding event?

    1. And please end the giveaway to The United Way. Unless solid proof can be provided of a real need in the community, that there is a significant shortfall in funding for programs that help those truly in need, we should no longer accept that the so called public/private partnership is more efficient at distributing needed funds in the community–I can’t determine how fancy awards ceremonies at the conference center achieves that objective.

  2. Thank you Jeff and Kevin for all the hard work and wisdom needed to bring our fiscal house in order! Hold the councils proverbial feet to the fire, we need a long term plan/balance!

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