Friday, December 19, 2008

And the Beat Goes On

Today's Star Trib had an article on Minnesota cities making budget cuts in light of tough economic times.

Here in Eden Prairie- we look forward to funding a new Art Center.

I missed this week's City Council meeting- but had a chance to watch some of the video this morning. I knew there was a budget vote on the agenda and wanted to see how it all "went down".

The City Council approved the 2009 budget, back in Sept. 2007- but it needed to be formally approved this week. At the end of it all, they ended up approving a budget that is about $1.4 million higher overall than the previous years budget- the overall operating budget went up by over $1 Million. That's "only" a 2.7% increase-- gee, that's nothing! But, consider the fact that the general fund has increased by 23% in only 5 years since 2004 and 41% in 10 years since 1999. This follows the logic of the State Budget which has increased by about 50% since 2000.

Why is it so hard to freeze spending? Why is it so hard to make cuts? It all seems like a no-brainer to me. It's a simple task- albeit not an easy task.

Councilman Jon Duckstad proposed freezing the proposed 2009 tax levy at 2008 levels and shrinking then proposed 2009 budget- which called for a $2 Million increase. Duckstad stated the absolute obvious- that the economic realities since September 2007 have dramatically changed and that we are in a time of uncertainty.

Mayor Phil Young acknowledged that he and City Manager Scott Neal have had many discussions about their "philosophy" on staff pay- which is to be above the median pay in the state. Hmmm, why? What's wrong with median pay in an industry? It's a nicety to pay above-average in strong economic times- we're going into uncertain economic times and "philosphies" may need to be adjusted and staff positions may need to be cut alltogether or combined. City staff received 3% pay raises across the board while Best Buy announced this week that it's offering severance packages for almost of it's Minnesota corporate employees. I wonder if somoe of those Best Buy employees live and pay taxes in Eden Prairie.

Kathy Nelson rightly brought forward the fact that the state is likely to cut homestead exemptions- but then backed off of it...I liked that she asked to cut staff/council travel to out-of-state travel costs- to every other year. Neal said it was "only about $20,000" Kathy called for it to be cut anyway- good for her. It's peanuts, and it's an easy-target, but it's something. If people want to go to conferences to learn from other local governments how to best spend taxpayer money or to save the planet- they should do so on their own dime. Or chat with each other over the internet.

Brad Aho proposed a 0% levy increase, spending the 2008 surplus- which as I understand it- is not known for certain and won't be known until next year- and to making some spending cuts. This is what Tim Pawlenty did- spent the surplus and accepted a spending increase (albeit a lower one than the Democrats wanted) and now we have a $5 Billion+ budget deficit. It sounds like compromise- and I suppose it is. But is compromise what we need right now or is fiscal responsibility what we need right now?

We ended up with a 0% increase in the tax levy- so people will probably not even notice the increase. But really- is anybody else out there increasing their household budgets right now? Or are they maintaining and/or cutting spending and saving for a rainy day? And it ain't rain clouds out there, it's storm clouds.

We shall see.


Jim said...

And, speaking of pay...

Hey Congress, you're doing such a great job giving away other people's money, nationalizing industries, and mandating their executive levels, I think you deserve a raise... lucky for you it's set up so you get automatic pay increases so you don't have to vote yourself more money and look like a greedy jerk while the rest of the country suffers from your decades of excess spending and horrid policy.

Why can't we get bipartisan support of this bill:

Oh, that's right, Congress consists mainly of corrupt, self-serving, power-hungry twits.

phil said...

I can't prove it but i think that paying "above the median" is a large reason that we remain mostly a non-union shop. We are an exception among cities, most of whom have admin and police which are unionized. Organizers come every year; AFSCME recently came; and remaining non-union is an advantage to the city. There are hidden costs to an employer in the union scales and you lose considerable flexibiling in both directing your staff and terminating people who deserve to be terminated.
Jon's points were well taken. But, i think he would have had more success if he had actually explained where in the budget he wanted to make reductions. He proposed taking more cash from reserves (we did take some)than I thought practical. We have enough cash that you can use a little every year without having to deal with the issue of increased costs (because by using cash all you're really doing is masking the increased costs, not eliminating them) but if you start taking $1 Million in cash then in about four years (when our cash would run out) you would be facing a huge impact on taxes unless, in the interim, costs were also controlled. One of the things which the council is likely to discuss next year is our cash balance policies--we likely have more than is necessary.
My theory on unions will likely be put to the test next year as it will be a much more challenging budget cycle--we may end up get organized no matter what we do.

Sheila said...

Didn't Jon ask the staff to prepare a 0% budget increase last Sept?

Curious- what is the rate of attrition for EP City Staff?

phil said...

Attrition is low. There's no doubt about that. I don't know the exact number. We tend to lose employees, either voluntarily or not, within the first five years. If we lose someone, it's usually to the private sector. Once they've spent at least 5 years in the public sector they tend to start thinking about the state pension they'll receive if they stay.

The Council discussed a 0% budget in 2007. We'll likely give it another shot next year. There's no doubt about it--it's hard. Our biggest departments, both in terms of employees and cost, are police, fire, and public works--demand for their services really hasn't changed. We'll lay off additional people in planning, inspections, and engineering next year (beyond what the budget calls for). Parks is probably the most "optional" department which we have, but also the one with the fewest employees.

Jim said...

It would be nice to find a way to cut some of the glorified welfare that's hidden in the education budget. It always takes me a while to find the silly EP school budget when I look for it, so here's a handy link. In a budget that's over $125 million, it's almost three times as large as the city budget, so small cuts end up making big differences.

Yes, the schools are "for our children" and most people don't want to ever consider touching the education budget, but if you trim the fat from the city budget and it is just hidden in the education budget, not eliminated, that doesn't solve anything when the schools cry for another tax levy instead of cutting some of this funky spending. I know some is reimbursed, and some are "unfunded mandates" that are required, but something has to be done about it no matter what level of government ultimately needs to change it. If it's a higher level, put pressure on that higher level. Tell the people to put pressure on the higher level. The taxpayer ends up paying for it even if it's supposedly "federal money" or "state money."

I agree with T.Paw when he says there is plenty (Pawlenty?) of room for cuts before going to police and fire, even though that's what they always threaten to cut (not EP, but MSP).

"Pawlenty described the cuts as "modest" and said that despite what critics may say, there should be no need to cut into essential police and fire services. In not-so-veiled references to Minneapolis and St. Paul, Pawlenty said that so long as cities maintained their own human rights departments and cultural community liaisons, they had places to cut before touching basic services." (source: strib)

That said, much like I don't think education should be an untouchable sacred cow, there's probably some room for minor savings here and there in police/fire without a noticeable decline in service. Keeping some non-life-critical equipment longer, buying used/surplus instead of new, not using as much ammo on the range (or buying it in bulk with other departments), etc. Minor savings that might add up and don't impact service. Then I suppose you could impose user fees for wasting police time with repeated non-emergencies. Or maybe some/all of this is already done.

phil said...

fair points, Jim. We've made modest progress in police/fire, mostly by lengthening the time that we hold vehicles. But, you're right that more will have to be done in even this area if we truly wish to flatten our budget for 2010.