Budget 2013: Not Re-Living the Past, Making Good Decisions
Mayor Shelley Welsch's latest blog post.
At the regular City Council meeting on June 25, 2012 the Council will be voting on a budget for FY2013 which will start on July 1, 2012. I have told members of the Council that I, in good conscience, cannot vote the budget that we’ve been discussing recently.
First, some background.
When I came into office we were presented with a budget for FY2012 that, like multiple budgets in previous years, was not in balance – we were being asked to spend more money than we were bringing in. At that time the former Acting City Manager Janet Watson told me that she was projecting a more than $2 million dollar deficit for FY2013.
City Manager Lehman Walker came on board in August of 2010. He has done an amazing job in bringing City finances under control. Some needed reorganization in the form of consolidating smaller City departments has occurred resulting in the need for fewer department heads and therefore significant cost savings. More accountability is in place throughout City government without a reduction in services to our residents. We have ended FY2012 with a SURPLUS of more than $400,000 and he is estimating surplus of more than $500,000 for FY2013 instead of the projected $2 million deficit!
Great work as been done. But we are not out of the woods yet.
We don’t know what is going to happen with the economy. Europe is still in dire straits and, depending on what happens there, the U.S. economy could still be hit hard. If the U.S. economy is hit hard, so are we.
Our reserve fund is not where it should be. We have a reserve fund balance of about 33 percent. But current accepted practice, in this economy, is to have a reserve of 40-50 percent. We were told, for instance, that the City of Maryland Heights has a 100 percent surplus – they receive money from a casino and one could argue that, because of that, they would be less conservative that we are, but they are being far more conservative.
Our newest member of Council, Councilmember Paulette Carr, had asked for additional study sessions on the budget, and was seconded by Councilmember Crow. They asked for the additional sessions (which the rest of the Council put on their schedules and attended) to take a more “global” perspective on the budget. Although I have attended both sessions, I had suggested that that “global” perspective should be discussed in our upcoming long-term strategic planning sessions.
Unfortunately, in my mind, the “global” was not on display during these discussions and, instead, the discussions centered on lists of items that members of Council supported – almost all of them good and important items. However, the end result of the discussions – if put in the budget and approved – would add $1.7 million to our budget for this year; making it a deficit budget; use up all of of this year’s surplus, all of next year’s PROJECTED surplus, and dip into our reserves to the tune of $700,000-$800,000.
I cannot support this apparent return to past practices that put us in such a bad fiscal hole in the first place. I told Council members I could support using all the surplus from this year – we already know we have that amount of money on hand. But I have problems in committing to the use of the projected surplus and the reserves.
Last year I asked our City Manager Lehman Walker to come up with numbers for what it would take to get all our streets, sidewalks and curbs in shape. The number was staggering — about $20,000,000 over 12 years, and $1,200,000 annually after that to maintain them. And we would need hundreds of thousands more, annually, to properly maintain our trees—we are now seeing the result of a generation of underfunding of our City’s infrastructure. Mr. Walker set up a Council subcommittee (Councilmembers Price, Sharpe and myself) to look at ALL the capital needs of the City and make recommendations to Council on how to prioritize them. (The total for ALL capital needs is much, much more.)
The use of the FY2013 surplus and the reserves in the budget under discussion would, for the most part, cover a request for an additional $1,200,000 for streets, sidewalks and curbs and for additional tree trimming. I support spending funds for capital improvements but I STRONGLY believe that we should figure out how to move forward after the subcommittee makes it recommendations to Council and Council discusses how to fund the needed capital improvements.
Dipping into a projected surplus and the reserves for FY2013, without a detailed discussion on how we will handle these long-term costs strategically, will hurt us in the end. This is not a decision that should be made lightly – and I am uncomfortable with setting a precedent for using the reserve for an annual cost for streets and tree maintenance that should really be paid out of the annual operating budgets. (I know additional work will need to be done to free up those much-needed funds in our operating budget.)
At the last budget study session on Monday evening, which ended after midnight, Mr. Walker rightly encouraged Council to slow down, saying the way a decision was being made on another item under discussion what not the way to do business, encouraging Council to wait until it had sufficient information before agreeing to move forward. He wasn’t talking about streets, sidewalks, curbs and trees, but I think his advice holds for all our discussions.
The Council has the ability to amend the budget throughout the year. I encouraged the Council to use this year’s surplus to cover the cost of most of the items on the “wish list”, and wait to make the “big item” decisions until all information and recommendations are in hand. We would just need to wait a couple of months. But I think those months will send a signal to our residents that we understand the gravity of our fiscal situation and will work to improve our situation in a strategic and responsible way.
The City Manager has provided us with the latest monthly financial report which I have attached below. I’ve also attached his monthly rundown of what staff’s been doing – it will provide you with a sense of where your money is going.