City Budget Shortfalls: Thoughts From a Former, Republican Lucas County Commissioner

Maggie Thurber is a former Lucas County Commissioner who has a multi-media presence in NW Ohio (blogging at Thurber's Thoughts and hosting radio programs in particular). She also is one of the very few female political bloggers in Ohio and even fewer female conservative political bloggers, which is how I came to learn about her. She has not been immune to controversy, but that controversy has absolutely zero to do with blogging, just to be clear.

Because her credentials are solidly in the conservative column (Americans for Prosperity named her 2008 Blogger of the Year), I offer up her post, "It's started - doom and gloom if Toledo doesn't get more tax dollars from its citizens," of hers for Pepper Pike residents to read.  As I wrote Maggie in a comment on that blog post, I agree with her theory that tax cuts can help growth.  But I view that as a long-term step to be included as an option in a long-term, strategic plan for a city.  It does not, as far as I know, do a thing to solve current and predicted shortfalls in payroll obligations and nonpayroll operations.


And so I've left a comment for Maggie with the hope that we will open up a dialogue there regarding how she would deal, right now, with current, right now deficits.  Again, to re-emphasize what I've been emphasizing: Toledo and Pepper Pike, as different as they are, are absolutely not alone.  Please read this National League of Cities research brief about the struggles faced by cities of all sizes across the country.  Very interestingly, the one thing the NLC piece does not mention? The role of taxes in assisting the situation.

6 comments:

Jill said...

Maggie commented at her blog about my question to her and gave me permission to post it here:

Jill - I posted an answer to you, but don't know what happened to it...so I sent you an email, too.

* don't present the option of 'how do we pay for gas for snow plows'...but rather 'shouldn't we pay for gas for snow plows first before we pay for ____?' and fill in the blank.

* many things are mandated, but some of the mandated items in your budget are mandated by yourselves. In Toledo, council passed a law creating the Board of Community Relations. It's nice, but not a necessity, especially because it has no power whatsoever to do anything other than be a sounding board for issues. Without power, all it does is cost the city money - in 2009, around $185,000. While the BCR might be important to some in the community, it's not as important to all as having their streets plowed of snow.

Take a look at your mandates and see which ones can be repealed.

* Do a comparison of how much the city pays its employees vs. what the private sector in the city pays for similar type of work. Don't forget to include benefits, health insurance, pensions, sick days, vacation, holidays, overtime, etc.. I'm certain you'll find that government compensation is higher than what the taxpayers are getting, yet they are paying for those higher benefits for the government workers.

Once you have the comparisons, you can go to the unions with them and start working on what have become unsustainable compensation packages. Public sector unions often believe the public won't go without staff to do things, but if you've already gotten the public on your side with your comparison of wages, they'll help bring the pressure to bear on the unions.

* as I said in my email, involve the public in setting the priorities. Every group that gets some sort of funding from the city will tell you not to cut their program. If you ask them what they'd be willing to go without in order to have their particular program, they'll tell you that making those kinds of decisions is your job. Of course, that gets them out of the position of having to make tough decisions.

If you can get the type of survey I detailed in the email, you will find which of the city programs are of least interest to the majority of residents. That should help with decision on what to cut.

Special interests always advocate for their own program, but asking them what's more important (their program or police, for example) means you'll help them to recognize that the majority of residents need the essentials.

Hope this helps!

Paul said...

Jill:

It's not just city governments which are having to deal with budgets that are out of whack - school districts nationwide are in the same situation.

The story is the same: when the economy was booming, and both personal income and personal wealth was hitting all time record levels, those leading our governments allowed spending to grow at a more or less commensurate pace.

Now both income and wealth is down, but governments don't usually know how to reduce spending in harmony. The answer always seems to be to raise taxes, because that seems easier than cutting back government spending.

Perhaps an interesting exercise would be to take a look at your city's budget in a year when tax receipts were what you project for next year, and then see what it would take to reset spending to that level.

Most of the time, the spending category which has changed the most is compensation and benefits for the public employees. But setting those costs back isn't an easy task: most public employees are unionized, and it seems that most union leaders would rather adjust costs by laying off their newest members and causing service degredation than sharing the pain across the membership.

A temporary tax hike as a short-term financing measure while restructing can make a lot of sense. The trouble is, no one really trusts their governments to make tax hikes temporary or to really restructure.

Look how many governments have redirected the federal stimulus money from the programs for which it was intended to merely preserving their ability to make payroll. That's exactly what happened in our school district.

PL

Jill said...

Thanks, Paul. What you said. I'd put a smiley face afterwards to indicate a thank you but I'm not feeling particularly smiley just now, as I'm sure you can imagine.

Are you familiar with situations in which a tax increase was in fact kept to being temporary?

Paul said...

Actually, the example which comes to mind is exactly the opposite:

The "Bush Tax Cuts" had an expiration date, meaning we had a situation where a tax cut was temporary, and afterward tax rates automatically reverted to the prior higher levels.

I wonder how the dynamics of government would change if all tax hikes had an expiration.

School district have a choice - levies which have a fixed term, or permanent/continuing levies which hang around forever. Most school districts, including ours, use permanent levies, but I know of a few who are brave enough to have to return to their community regularly to renew their levies.

Too bad all taxes don't work that way - it sure would make governments do a better job of communicating with their constituents, and I think make constituents get more involved (otherwise their favorite program might get axed).

the1911fan said...

It would help if the city government would stick to spending only 18-22% over employee wages/benefits. It's the 80% (wages/benefits) 20% (discretionary spending) formula most conservative spending cities rely on. Employee salaries and benefits are not the reason PP got into such dire financial circumstances.

Jill said...

Dear 1911fan:

I would say that 80/20 is indeed conservative, knowing that the general range for the split can be as low as 60 and as high as 80 or 85.

And, as much I believe that there are numerous choices which contributed to the current situation, there's no doubt in my mind that now, compensation and benefits - because they are steady and steadily increasing costs (unless you do in fact decrease the number of personnel and control the wage increases and benefits packages), is a very large part of the equation, as is the predicted decline in property and income tax revenues (added to the volatility of inheritance tax proceeds).

The essential question, in my mind, at this point in time (because I reserve the right to alter this as more information and sentiments become known) is: what balance of services and contribution for paying for the services do residents desire? City government must examine this question for the best interests of the city (or region as the case may be - I'm still unsteady about how that all fits in) and individual residents will need to consider it for themselves as well.

I confess - it is so tempting to go over the multiple points at which decisions might have been different over all the years. But none of that review - which should inform what we do from here on out - will alter where we are at this very moment in time.

And so we must stay focused on resolving the current situation, so we can get beyond it and into different circumstances - with effort and dedication, better circumstances.