I know, I know, I promised to move all of these Shoreacres posts to a different site. Well, forgive me but I decided it was just too much trouble to keep up with another site. Sue me. Or just skip this one. But maybe you shouldn’t because I doubt Shoreacres is alone as a city with major budget problems.
Recall that at the budget meeting on September 10, Mayor Matt Webber proposed a budget with an overall increase in spending of 3.9{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986}. The members of the council that were present balked, holding the line at the old tax rate and promising to cut spending to match it. Even with that commitment the budget would increase by about 2{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986}.
At tomorrow night’s council meeting, Mayor Webber is scheduled to present his budget to the public. I’m assuming that the proposed budget that he will present is the same one as he presented on September 10th because there is no updated proposed budget in the council packet or on the website.
This is one of those times that I have to blame myself for not understanding just how severe the budget problems are for the city. I should have been going to these meetings in years past. The problems the city faces are severe, to say the least. We have been running budget deficits for years but especially since Hurricane Ike hit in 2008. Some of that was offset by grants received from various state and federal agencies but incredibly, we continued to increase our spending even as the city’s population and property tax base dwindled. As I’ve found over the past few days, it is a difficult tale to tell but I’ll attempt it.
First, here is a table showing that how much our reserve fund has dropped since 2008 – I could not go back further because the information isn’t available on the city’s website:
The 2013 balance is as of August 30th, the rest are at September 30th of their respective years. As you can see, the fund has dropped by 30.4{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} in the past six years. This is because the fund was used to supplement the ongoing operations of the city.
Here is a chart of General Fund revenues vs expenses for the past 11 years plus Mayor Webber’s proposed budget for next year:
Click to enlarge. The red bars are budgeted expenditures, the green budgeted revenues less budgeted reserve fund transfers. Here is a table of numbers if that is better for you:
The Utility Fund is probably worse because it is supposed to generate enough revenue from sales of water and sewer services to pay for itself:
And a table of values:
What this all means is that we have been using our reserve funds to run the city. The reason that we aren’t at zero reserves already is because of the grants mentioned above. But recall that during the September 10 budget meeting, City Administrator David Stall warned council that we would be at zero within two years if they do not cut spending or raise taxes and fees.
Another interesting feature of the budget is that the Utility Fund has been used to subsidize the General Fund. Look at the amount of funds transferred from the UF to the GF:
According to the budget detail, these transfers are supposed to reimburse the General Fund for the costs associated with running the water, sewer, and refuse collection departments. The average cost for this charge was $35,152 from 2002-2010. The charge increased substantially after that to an average, with Mayor Webber’s proposed increases included, of $135,213. Obviously the cost to the city didn’t increase this much. Either the definition changed or council decided to subsidize the General Fund. I think it is the latter because I recall some discussion of that after the hurricane.
Okay, that is a lot of stuff to ponder. The main thing that you need to ask yourself as a citizen is why would the Mayor propose an increase in budgeted spending if the finances are this bad?
What we should be doing is cutting spending and cutting it drastically if we have any chance of surviving as a city. Raising taxes isn’t an option because of the high rate that we already pay. Raising water and sewer fees is an option for that fund but as I review line items, there are opportunities for major cuts that should be done first. Don’t forget that we are gong to have to replace our water tower, which is estimated to be over a million dollars. At the budget meeting, Stall stated that we would have to issue bonds for that replacement. Folks, if we continue down this path, no one is going to buy bonds we issue – they will be classified as junk bonds.
Please attend the meeting Monday night, September 23rd. Perhaps the Mayor can explain why he wants to raise spending by dipping further into our shrinking savings account. Perhaps council will see the light and demand immediate, deep cuts to the budget.
I’m not trying to scare you – I’m simply presenting to you what Mayor Webber is proposing. And I’m trying not to be too critical of Mayor Webber – after all, I stood in front of council and urged them to vote for him as Mayor Pro-Tem after the previous mayor resigned. I simply think that it is a huge mistake to increase spending and use our reserve funds for non-emergency items and think that it will hurt the future of the city. If there is a future at all.
B Sale says
I don’t live in your city but I was certainly interested in your Shoreacres, We Have a (Budget) Problem article. It describes the situation in many families as well as many cities. Houston, one of those cities?