After Monday night’s council meeting, one of the residents told me that he was looking forward to my recap and could I please include pictures of circus animals. I couldn’t think of any response other than ‘how the heck do I write about this?’ But alas, I will try and as usual, go in the order of the agenda. BTW, you can now listen to the meetings online buy clicking on the little speaker icon on the meetings page.

Special Presentations

City Administrator Stall went over the proposed budget. There isn’t anything that I can add to this that I didn’t write about earlier. The only thing that I will say is that I was disappointed that Stall presented it because it is Mayor Webber’s budget. He should have been the one explaining why he wants to deficit spend. And I did say that in the meeting.

Administrative Reports

Stall described a boating accident that resulted in a death. Shoreacres PD responded to the call at the Houston Yacht Club.

Business

8.2 – this agenda item is something that Alderman Nancy Schnell has been working on for a couple of months. In a nutshell, the city currently has, by code, one building inspector. Not a company, an individual. So, if he isn’t available when your contractor is ready to move to the next step, you have to wait. Schnell’s ordinance starts the process to expand that list. Although citizen Dana Woodruff spoke in opposition to it, it passed the council unanimously.

8.3 – Alderman Schnell volunteered to be the representative to the Houston-Galveston Area Council. Alderman Mike Wheeler volunteered to be the alternate.

8.4 – Budget review

Here is where the real ‘fun’ started. I’d suggest that you listen to the meeting if you want to get a real flavor of what happened. In the end, another budget workshop was scheduled for Monday, September 30^th.

Here are a few of the things that got my attention.

Mayor Webber wanted to go line item by line item but that proved unworkable and tedious. In fact, I don’t recall that they ever got off the first line item. Alderman Schnell wanted to look at the big picture and started out by saying we needed to cut the city secretary to 29 hours a week and that we couldn’t afford the current city administrator.

Citizen and former alderman Dana Woodruff gave a spirited defense of Mr. Stall, noting the amount of funds that he had pulled in via grants after Hurricane Ike and the progress made on rebuilding streets, water infrastructure, and drainage ditches.

Citizen Ron Hoskins stated that he had pulled budget numbers from the city website and noted the large increases in spending since 2008. He then proposed returning to the budget of 2008. That isn’t a bad idea if you ask me. I’d rather have zero-based budgeting but it is probably too late in the process for that to happen on this budget.

Then someone mentioned that Stall himself had said that the city would be broke in two years. Stall objected and asked the mayor if he could clarify what he said. In addition, he objected to “someone” (yours truly) using budget numbers and not actual numbers when analyzing the city’s financial situation. Imagine that, using budgets that council approved to analyze the direction of the city. Shame on me.

Stall continued, saying that we haven’t thrown the money away, we’ve invested in assets and rebuilding infrastructure. I’ll let you listen because I’m fair that way. I am also posting the charts he used to “prove” that I was wrong.

This is the way he described it to me via email:

At the instant the budget year ends all there are fund balances that include cash, bank balances, TexPool and the Certificates of Deposit. For that instant there is no budget and no reserve, just fund balances. In the next instant the new budget goes in to effect and those funds that are not budgeted for expenditure become the reserve (unbudgeted cash reserves).

The numbers on the chart are the fund balances at the end of one budget as the next is ready to start.

Fair enough. I stated that the city’s reserves had dropped 30.4{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} over the past six years, including the current year through August 31. Stall’s combined chart also uses six years but he goes back to a year before the hurricane and doesn’t include the current year, which isn’t exactly apples to apples but I’m fair, so I’ll accept it. Using his method, the city’s combined funds have only dropped 28.1{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986}. Do you think that is rosy?

Now, about his ‘clarification’. I’ve transcribed what he said at that budget workshop but please, listen for yourself to see if I described it accurately.

 

If you look at the big picture and you put both of the funds together, you can see that the combined growth of the budgets is 3.9{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} and you can see that the contribution from the reserve fund is $846,000. As we look forward, that is not a sustainable number even if we come in under budget. We have in reserve just slightly more than $1.7 million, so if we were to spend all of the money in this budget, which we historically have not done, but if we were, and if our revenues were to come in at or below, we would only have one more year that we could have this kind of deficits and fund it from the reserves.

I absolutely agree with him that this is not a sustainable number. I completely disagree that we should budget spending more than we know we will spend just so that we can say that we are ‘under’ budget. This type of budgeting leads to terrible decisions, such as the witch-hunt against the current police chief, for which the council approved spending $15,000. One of the council members told me that he voted for it because they didn’t have to go out and find new money, they just used money that was budgeted. I’m sorry but budgeted or not, that $15,000 came straight out of the reserves. No legitimate business in the US would put up with this kind of budgeting.

Stall and I are like oil and water on most things. As Chair of the Fayette County Republican Party, he works inside the system. As a political blogger dealing mainly with Republicans, I work outside it. He uses Canon, I use Nikon. But I respect his wealth of knowledge and have stood in front of council many times and said that we are fortunate to have him as our city administrator. Whatever comes out of the budget talks, my opinion of him will not change.

Commentary

There were other highlights but too many to mention. I do like the aggressiveness that Schnell and Alderman Steve Jones are displaying in insisting that the budget be balanced. I was disappointed that Mayor and a couple of others stated that they were not interested in affecting the livelihoods of city employees. I’m sorry but this is the City of Shoreacres, not the Texas Workforce Commission. As Mr. Hoskins stated, sometimes you have to cut a few jobs to protect the majority of the jobs. No one said being on council would be a walk in the park – we need people that are willing to make decisions to protect the future of the city.

Here is my suggestion to each council member. Show up at the budget workshop Monday night with your own budget. Present it to the other members. This will be far less time consuming than going line by line. If you don’t have the time to come up with your own budget, do as Mr. Hoskins suggested and present the 2008 budget as is. Have Mr. Stall put your proposed budget on the city website Friday or Saturday so that other council members and citizens could review it before the workshop. Citizens will not have input at the meeting because it is a workshop but they could contact council members and let them know that they approve or disapprove of their proposals. Heck, I’ll be happy to highlight the proposals here. Anything to avoid another ‘circus’ like we saw Monday night.

We have serious budget problems. But we also have plenty of knowledge and creativity to overcome them. Let’s Git-R-Done!

 

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.