I’m not going to write any more posts on the City budget that say “budget season has started”. Budget season now officially never ends – we had our first presentation from the staff last night about their analysis of the city’s fiscal position.
There wasn’t really anything earth-shattering in the analysis but the big difference between this year and previous years is that, for the first time ever, the finance committee is looking at projections and analysis that include spending forecasts. This was done as a part of my motion to approve a grant that allowed us to hire some fire fighters.
I made this request as I was growing increasingly concerned about expenditures in out-years to which the Council has committed the City. There is a big police grant that will be due in a couple of years and another large grant that allowed us to hire some fire fighters/medics that will come online in 3 years. Both of these grants have the Feds pay for 3 years of salary and the City pay for the positions thereafter. If you’re not looking at expense forcasts and doing your budgeting year by year (which is what we were doing), you run the risk of being forced into a corner because you haven’t been looking down the road. In our case, we found that if keep driving the same road, we’ll have to raise taxes in a couple of years for these things. Now that we know what that looks like we can plan and address that situation before it arrives. In all things, time = options. More time, more options. Less time, fewer options.
Expense forecasts are not universally embraced by small-town leaders. Many local politicians are afraid of them – although it’s just information. I think that the reason for this is that many localities are run like very small business – almost on a cash accounting basis. This might be fine when you’re getting started but as anyone knows who has run a business with more than one employee, you have to switch to accrual accounting sooner than later. Management needs to understsand its liabilities. You cannot stick your head in the sand and hope to prevail. An informed leader is a more effective leader. You’ll also need a business plan that extends for more than a single year. The City is in the same situation (our business plan is actually about 7 years old) and we need to be looking down the road.
The other aspect of expense forecasting that makes local electeds nervous is that it “sets expectations”. I agree that expense forcasting may create expectations but I do not find that sufficient reason to avoid it. I believe that the expectation of our constituents is that the Council should plan for the future and to me that is more compelling. If a particular analysis shows that giving raises every year causes a problem in 3 years then the Council needs to have the backbone to make a change.
September 22, 2011 at 8:41 am
My compliments on how you lead into this posting! Your right that budgets never stop. In my Army Comptroller days, it was always looking one year back, current year…and tweaks in the current year that would have to be noted for the next budget cycle, and always was that 5-year plan (especially the quarterly review of Real Property for Life Cycle Management). And given the “Sword of Damocles” hanging over every level of government, agencies and programs – even the nonprofits who support those various levels through their services and programs – “Be Prepared” is not such an bad motto for leaders to remember (even if never in Scouting).
September 22, 2011 at 9:56 am
Sounds like wise goverance to me. Plus, being forewarned is being forearmed.
September 22, 2011 at 11:45 am
Good job. Balance. Big picture. Newton’s laws of motion.
September 22, 2011 at 11:52 am
Good work keeping surprises to a minimum and the constituents informed and ready.
September 22, 2011 at 8:27 pm
Let’s be honest in the discussion though, at some point, the concept of low tax rate and try to meet the future is going to collide like atoms in a superconductor. Take for example the Urban Land Institute from October 2010 which was done at bequest of Council & the LUC to look at the Mathis Avenue Sector Plan from early 2000s.
Aside from overhauling city-owned infrastructure, one point for selling developers to come in is raise Weems Elementary to a “primo” school (my quick summing up of their description). I found that intersting since Weems was also identified by the Governor as one of two of our schools for the Pay-for-Performance Initative. So, that is going to take focused-funding by MCPS Board to make it happen. And given that by the JLARC report on spending by Districts on SOQ, and JLARC saying Manassas should contribute 46% local dollars and there is already 10%+ more given from GF, somewhere the money is going to have to come from.
As the out years are looked at, going to hit the point to attract more, going to have to upfront spend more. That includes developing the City’s Tech Corridor out at Airport.
Then there needs to be the avoidance of being a little like Counties around us where, that in order to meet say mandates around sewer-water, the tax rate is claimed to be low, but associated fees go up. Of course, as pointed out, if there is a CLEAR business plan, and residents are aware of the reasons wherefore and why, the majority will support. Like I always say, I am willing to pay a higher tax rate if it puts more cops on the beat, and pays for an effective FRS. Just not being sold that way – sort of like my statement to the Council around MCPS and AP Courses…show how if you paid for the exam vs. the school system doing it in relation to tuition costs (especially to W&M, VT), then parents say “AH! The bang is worth the buck since tuition is higher than cost of exam giving credit for two or more courses!”
September 22, 2011 at 9:26 pm
Why is the City accepting grants if in the end it just costs the City more? Unfunded mandates get a lot of attention because elected officials like to place blame on either the State or Feds for forcing us to accept those polices when there are budget issues. It seems a grant is just another unfunded mandate, just under a different name.
September 22, 2011 at 9:36 pm
This morning there was a reception at GMU launching the Leadership Prince William Class of 2012 — and Weems Principal Angela Burnett is, I believe, the only person representing the City who is part of that class.
http://www.manassas.k12.va.us/education/school/school.php?sectionid=66
September 22, 2011 at 9:52 pm
A grant is not and never becomes an unfunded mandate. It does become an unfunded option for local authorities after the grant expires. The perfect example is the Northern Virginia Gang Task Force or the Fire and Rescue Emergency Services Coordinator. Both of these grants expired this year, but the city’s experience with the value of their service compels us to continue them. If proven valuable, this unfunded option becomes a self-imposed mandate to ensure we continue with the highest realistic service level for core governmental functions
September 23, 2011 at 4:47 am
From my understanding the city has to fund one year at 800,000.00 the fire/rescue personnel when you accepted that grant. That is an unfunded mandate.
If the city chooses after that required year to still fund those positions them you can call it an unfunded option.
September 23, 2011 at 6:33 am
Maybe it’s all a mixup in lingo but, in a traditional sense, the grants are not unfunded mandates as the Council elected to assume the costs associated with the grant. Unfunded mandates *(in the traditional sense) are things like the Chesapeake Bay cleanup law that localities have no choice but to comply with. (BTW, the spending on that act is so high that even FFX and PW are complaining about it.) Another example would be the line of duty benefit that the General Assembly passed on to localities last year.
Please understand that I’m not squawking about accepting the grants – I supported both – I’m only trying to make sure everyone understands what those obligations look like. Planning is imortant!
September 23, 2011 at 7:18 am
But in the end, it’s us, the tax payers that have to pick up the tab. And, ya, I suppose it’s nice to have some up front help to cover some costs, but, I suppose if the City needed the services and or equipment associated with the grants, we would have already had them, and not have waited to receive grants.
September 23, 2011 at 7:30 am
COM: No denying, in the end it’s always the tax payers who are on the hook. I’m one too. I pay just about every tax except M&T.
I would point out that these grants were pretty nuts and bolts stuff: cops and fire fighters.
btw – the message I got was that “Bob Phelps” had called. Our new answering machine is terrible. Guess that’s why it was on clearance…:)
September 23, 2011 at 8:46 am
I noted that during this years budget talks it was stated that Manassas had a very small increase in real estate values and therefore additional income which was promptly spent. We were in the only area of the USA to experience such an increase in property values. I hope for our sake this increase will continue but I have my doubts. I thought it was pretty “gutsy” for council to use those funds in its planning for the current budget. It would appear that the acceptance of the “grants” somewhat counts on a continuation of the increase in real estate values. The “grants” came with “strings” and those strings are real money which must be paid in a couple of years. We have been warned that there will be cutbacks from the state and I would expect those cutbacks to follow from Federal funds. Yes, it is wise to look 5 years down the road but given the current economic factors and the current political climate, I would use extream caution on the projection of revenue.
September 23, 2011 at 9:01 am
Mo: The bulk of the increase in spending went to one-time expenses. This way we have options in the coming budget year. Continuing expenses did increase slightly and almost all in the venue of public safety. We added 4 police officers which brings us back to staffing levels we had in 2008.
The real driver in spending increases on the City side has come in the Fire and Rescue fund. The portion of the tax bill collected for the General fund actually fell by $14 on average. The portion collected for Fire and Rescue rose by $52 on average. This is all laid out in the budget presentation I made last year. It’s linked somewhere on this site and on the City’s site.
Revenue projections in the fiscal analysis were largely flat.
September 23, 2011 at 9:13 am
One other thing: in the General Fund we have almost no Federal money that we depend on for continuing operations. The last Fed money we had that was used to fund operations was the gang task force money and that’s gone so our sensitivity to Federal budget cuts (in a strict sense) is almost zero.
The state puts about $5 million a year into our General Fund budget. Mainly for road maintenance and police money. I’d be surprised if both of those aren’t hit this year. The police money (which was actually part of a deal that ended annexation) has been reduced every year I believe. The road maintenance money is currently being eyeballed by those in Richmond for new road construction with maintenance costs being shifted to localities.
So, our main sensitivity to budget cuts at a higher level is to the state and that is about $5mm. This, of course, ignores the impact of those budget cuts on the wider economy but that’s a bit beyond the scope here…
September 23, 2011 at 6:38 pm
Andy,
LOL. I’m not a big fan of accepting money from the Federal Government, since as Mo pointed out it usually comes with strings, and gives them way too much power over us.
Even though, I’m not a betting man, I’d wager that if we declined federal education funds, which would allow us to kick out illegals alien students, we would have a smaller school budget and a much better school system. And, that of course would attract better families(higher incomes) to the City, which in turn would lead to higher tax revenues for the City. Just look at the PW County, they cracked down on illegals, and the County now has a higher median income than Montgomery County, MD.
September 23, 2011 at 7:58 pm
I am glad to see the F&R Fund is used an example…as it does contribute to the point of proper business planning. In hindsight, the Virginia Code allowing creation of a Fire District was first set back around 1970 in the days we were still a town. After chartering as a City, the opportunity existed even back in ’75 to create the Fire District (now three years old) and have a fund where a partial or full cent went into and allowing it to build up over the years. Of course, a scenario as to the “why” can be built for the years progressing until establishment of the District and the FRS.
The scenario would run that aside from the City being smaller, there was still a lot of participation by us City Folks in the fundraisers by the two volunteer companies. Even as times were good, infrastructure still sound (the highest cost in business operations next to employees), and adding career staff over time, the funding was still easy. But, as with any program/service in the Life Cycle Model, as it hit the top of the circle where the program was mature, actions to ensure in the good times for the lean times was not instituted, so program declines for multiple reasons among which is growth of the City and less participation in fundraisers.
If the Fire District had been created 20 or 30 years back, then funds would be available to use as appropriate since the law is very clear this tax is only for FRS. Fortunately, AndyH was strong in his advocacy to begin breathing life back into the FRS Fund.
September 23, 2011 at 8:07 pm
Mo, have to agree with you when you said the money available was promptly spent…and in looking what spent on not passed over to the schools, those items out of the GF had some paying for three years of cut, cut, cut, cut. Again, in Life Cycle Mangement, you can only cut so long before breaks occur which will cost more in the long run.
Agree with you too Mo when it comes to viewing increase of property values with a watchful eye. AndyH is on the right track raising his points which started all this – we pay for fancy Comp Plans, and yet, the next phase of taking those plans and turning them into the City Business Plan is not there….as I mentioned twice to Council with regards to portions of the Comp Plan as they relate to transportation. Personally, as a former bean counter, I would build the Five Year Forecast based on an average percentage of growth over the last two years in terms of RE value, but also build one based on the low point – that way there is a gauge to implementing a Five Year Plan. Sound business planning, and Cities (as I learned in the Army Installation & Station Planning Course years ago where Bases are “the world’s finest cities) are a major Business Enterprise. Just not viewed on the whole as such.
September 25, 2011 at 6:47 pm
If this post is a ‘we’re going to have to raise taxes over the next couple years’ heads up, I appreciate it. Much as I would welcome it, I do not expect the costs of running a city to go down from year to year. If the city is prudently managed and the citizenry kept informed of the budget facts, I would support your requesting a rate increase. If we need more officers of public safety, we need them. We certainly are paying some share in taxes for the federal grants we receive, but it’s a helpful lift in the right direction and we’ll simply have to shoulder the burden when the grants expire.
September 25, 2011 at 7:09 pm
It isn’t that at all. Just a planning document.
September 25, 2011 at 7:48 pm
I pontificated once about Sovereign Powers internal to City, and so far out of the three we have hit two of them. The three are Taxing, Public Safety, and Eminent Domain. Not sure how we touch on that last one…:-) since it occurs so seldom. Of the three though, I always see taxing needed to ensure the public safety. I suppose though the changes last year to our City Code to match State on condemnation powers could fall under Domain. Although one wag once said the 10 foot egress for utilities is Domain even though the ownder pays taxes on it and maintains it 🙂
Nice format though, Andy, for running a dream sheet to what to have in a planning document.