February 2005
The 2005 budget
The last substantial information that most people had about the city budget was a December article in The News Tribune suggesting that Lakewood was looking at some very real service reductions in the 2005 budget. Those of you who read this newsletter also had the same impression that budget cuts were coming. So, in fact, did this member of the council.
It’s stuff like this that makes me wish we had a local paper, because you deserve to read about this matter from a variety of perspectives, and certainly not just mine.
In fact, the 2005 budget process turned out quite differently than what was expected when we passed a budget immediately after the failure of the police station bond proposal. I want to give you a summary of what happened. Not only do you want to be informed, but the budget will probably be a lead item when we enter the 2005 City Council campaigns. We ought to be talking about this before the discussion gets heated.
There were three schools of thought about what to do with the budget: a plan from four council members who form the majority, a couple of possible plans from John Arbeeny and Pad Finnigan … and one plan from yours truly. I will give the variations to you in that order:
THE MAJORITY: Mayor Doug Richardson and council members Bill Harrison, Helen McGovern and Claudia Thomas have indicated they do not want to make cuts, if any, until a mid-year financial review. They are assuming, with some evidence, that the city revenues will be greater than anticipated in the city manager’s budget – the budget that seemed to call for cuts and which has formed the basis for previous discussions and for the limited news coverage.
The last I heard, projections were that the city will burn through about $2 million in reserves before we enter 2007, and then we will have to make more than $1 million in cuts to avoid burning further into reserves.
Doug, Bill, Helen and Claudia want to wait until summer when a new city manager has been on board for a few months. The city manager can then adjust the projections as appropriate, and also provide his recommendations. For the record, I totally agree with them that it’s a good idea to avoid the most painful cuts until our new city manager can participate in weighing the alternatives. He is, after all, the CEO of the company, so to speak.
Strengths of this approach:
- Waiting to do anything drastic until we have the perspective of a new city manager.
- Having a better picture of revenues before making any cuts.
Weaknesses of this approach:
- The city will have already eaten into reserves before this budget review and any cuts take place.
- Citizens have learned that when we say we need approval of a police bond, we really don’t mean it because we seem to be getting along just fine without a bond. This has long term, and bad, implications for the city’s credibility. And yet it seems unclear to me if it’s true.
ARBEENY AND FINNIGAN: John and Pad have been critical of the city’s approval of new spending programs, including taking over the senior center operations from the previous operator, which is shutting them down.
Their position, simply put, is that the city should only spend what it gets in revenues, and should not eat into reserves: a balanced budget. Their suggestions include budget cuts by 6 percent across the board; or to take the current year’s and add only 1.5 percent for inflation. Also, as an alternative, John and Pad also threw out options for targeted cuts, which I think for reasons I will explain in a minute is a better approach
They propose, among other things, increasing city staff
salaries only by 1.5 percent instead of
4 percent (saving $154,000); reducing the level of city contribution toward
health care benefits for staff by 10 percent (saving $480,000); cutting city
overhead by 5 percent ($240,000) and
delays in hiring police officers (moot, since they’ve since been hired) delays or alterations in the
building of a parks maintenance complex in Fort Steilacoom Park ($475,000 in savings,
though with some expenses for storage of equipment elsewhere); and delaying senior center operations
($66,000) and new recreation programs (it’s a little harder to assign a savings
to this since rec programs bring in some revenue as well); and reducing funding
for human services in proportion to the reduction in the overall discretionary
budget ($40,000)
Strengths of this approach:
- The city would immediately stop spending its reserve and be spending what it receives while maintaining a large reserve.
- The council would be making specific cuts and thus providing specific direction, and giving the citizens something specific to react to.
Weaknesses of this approach:
- These cuts may not be needed because the city can afford to spend some of its reserve temporarily while still maintaining a healthy reserve.
- Across-the-board cuts damage all departments and will send employees careening to start unions; targeted cuts at least tie budget reductions to reductions in service, which is more realistic.
- The city would be taking drastic action before a new city manager, the person who presumably will manage the city government for several years, can make recommendations.
The city should wait to do anything drastic until a new city manager – the person who should be organizing the budget process for the next several years – is on board.
NEARY: I totally agree that we need a balanced budget. So, never one to dodge a change to anger individuals, I came up with a list of cuts to consider based on a list from the city manager and the poll you folks helped me with at http://www.surveymonkey.com/s.asp?u=13015744011 I came up with this list back when I thought the city was going to hold a hearing on budget cuts, and when people both for and against these cuts would come talk to us. I’m not sure I would come up with the same list now, since there will not be a hearing. If we had held a hearing, there would have been a full airing of the budget issues and we would have heard, for example, from people who would want to preserve the position of economic development director. The people who came to ask us to save that position would have heard from the people who want us to build a parks maintenance facility, and so forth. It would have been a good education for everyone.
I don't think across-the-board cuts or salaray reductions are the answer at this point for three reasons. One, cuts across the board damage all departments equally, and damage departments that are operating leanly and efficiently without providing clear guidance about what to cut. Two, below-market salary ranges will send employees packing to a union. And three, if we cut salaries, we risk not being able to hire the best people for the job because they will look for positions elsewhere. I want to save you and me money as taxpayers, but I also want us to hire the best people for the peoplle we do hire. Sure, we could save bucks by hiring the people who would work for the least, but you have to ask what sort of service those people would provide.
Anyway, my list of cuts to put on the table for the hearing included, in no particular order: one less issue of the city newsletter, saving $11,000; volunteer recognition program, $3,500; a city hall informations position, $27,920; the Sister City program, $6,800; $475,000 for a parks maintenance facility in Fort Steilacoom Park; $72,000 for a code enforcement officer; $136,000 for a neighborhood police officer and supporting costs; economic development coordinator, $109,000; wood treatment for the exposed beams in City Hall, $250,000; memberships for individual council members in Rotary and the Lakewood chamber, $1,000 (I think that ought to come out of our salaries); a property abatement fund ($25,000, basically an unspent reserve fund); and an overall 5 percent reduction in overhead as described in John and Pad’s plan.
I should also tell you that I cut a little bit more than needed because I favored adding $40,000 for streetlights in the Ponders area. I feel strongly that the city either needs to help get streetlights out there as a matter of our fundamental service, public safety. Either that, and now I am partly joking, or we should set some sort of threshold that will determine when we do put in lights (we will put in street lights once there is a total of five arsons, for example, and one fatality, or …)
The painful list of cuts all added up to more than $1.3 million, which I had thought was our target, but which the majority of council members decided we did not have to worry about right now. So I sort of feel silly and exposed to have given you this list, but you deserve to know what I proposed back when I thought we were going to cut something from the budget. I sure as heck would not normally want to be linked to cutting a position in the police department; and quite frankly, if revenues are not as high as expected, we will have to revisit budget cuts eventually.
Here’s what I thought was going to happen in the real world: I thought that the council would announce these and other potential cuts were up for discussion, hold a public hearing, get a lot of public feedback, and agree to cut only some costs until we had a city manager on board who can give us projections for the next several years. I never thought we would actually cut all of that $1.3 million because there were not enough votes on the council to do so - but at least people would have had the chance to speak out about our budget during the hearing. In some ways, I think that hearing would have had more value than the actual budget cuts, because people would have had a chance to dive deeply into what the city receives and what the city spends.
Strengths of this approach:
- The council specifies where reductions should take place, and takes the heat directly from the public.
- The public would see how reductions in the budget reflect reductions in city services. The public would have had an opportunity to speak up on particular cuts.
- This approach also cuts the budget but avoids cuts to city staff salary and benefits. There’s a lot of anger and resentment about public employees, sometimes because I think there is just a lot of anger and resentment out there, and it’s hard to imagine anything more popular politically than slashing somebody’s job or salary. But it seems to me, based on experience in both public and private industry, that you get what you pay for. That doesn't mean you have to pay top dollar, especially when spending taxpayer dollars, but it is an insult to the taxpayers to pay the least and accept the least.
Weaknesses of this approach:
- Same as with John and Pad’s cuts: maybe it is wise that the city now spend some of its excess reserves as it sees how revenues come in this year.
- Perhaps it would be best if the City Council should set spending limits, and let city staff look strategically at where to make reductions - even in a modifed version of across-the-board cuts.
- The city should wait to do anything drastic until a new city manager – the person who should be organizing the budget process for the next several years – is on board.
So here’s the bottom line:
Lakewood may still have to trim its budget in order to spend responsibly.
But not yet.