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Guest opinion

Kozachik: City budget reaping fallout from 'one-time' fixes

This budget cycle is slipping by with little in-depth discussion. Avoiding a tough headline doesn't mean we're avoiding the reality of our tough budget challenges. It feels like the comfort of the eye of a storm and yet, there are some fundamental issues we have to confront before finalizing the FY 2016 budget. To that end, over the weekend I sent staff a list of well over 30 budget-related questions that I have asked be answered and made a part of our posted study session material prior to our next City Council meeting.

Last fiscal year the city manager began the budget cycle with a presentation entitled "Adapting to the New Normal." The chart shown at right was a part of that. What it shows is our rainy day fund going deeper and deeper into the red. Our proposed FY'16 budget keeps it headed in that wrong direction.

Our current budget discussions have been curiously quiet. We seem to be headed towards voting on a budget that will have avoided any of the headlines of previous years, but will only continue our structurally imbalanced condition. I'm going to insist that we at least get a few facts on the record, if for no other reason than to alert our incoming city manager that, in my opinion at least, things can't continue as they are.

This isn't new stuff. Back in November 2012, the Executive Leadership Team put together a list of principles that were to guide our budgeting and prioritizing. Those included "adequately fund basic services and eliminate or reduce low priority services," "take better care of what we have; improve city facilities by investing or divesting," and accept that we must live within our fiscal means by acknowledging the "new normal." And this single frame:

Short-Term Fixes Will No Longer Work!

This year we're again relying on $9 million in land sales and another reduction in our Stabilization Fund (also called our "Rainy Day fund") to balance expenses with revenues. Those are "short-term fixes," again.

Also last year staff indicated we had these options: "increase revenues, and reduce expenditures via service level cuts and/or reduce employee compensation." We did neither. In fact, we gave wage increases.

By our own policy we should have a Rainy Day fund that's 10 percent of our revenues. Right now, it's about 5 percent. Ask our finance and budget people the last time we actually added money to that fund and they'll shrug their shoulders. It has been that long. Our present budget proposal suggests that we'll replenish what we're taking from that Fund this year by agreeing to repay $1.1 million annually for the next three years. We have shown no such inclination.

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Here are some of the "Key Philosophies" we were shown last year in relation to "Priority Driven Budgeting." Things such as "prioritizing services," "do important things well," "question past patterns of spending," and "spend within the organization's means." We were to shift thinking away from what is needed to "what is available." It was a budget focus based on the reality we faced and still face.

So what did we do? We gave raises, refused any fare increases on buses, continued our Sick Leave Sell Back program, and didn't implement any meaningful bus route efficiencies. That's $12 million in missed opportunities right there.

If we're not going to increase revenues (fares, fees) then we are faced with reducing services. A part of what staff presented last year was a prioritizing of what each department in the city does. We have to take a serious look at that list again and simply stop doing that which is beyond our core responsibility. Let the private sector take on some of the excess in what we're doing. Let's focus on "doing important things well" and get ourselves moving in the right direction.

None of that's popular. We haven't heard any of it during this round of budget talks. It's out there now, and it needs to be a part of the community narrative – and ours at the mayor and Council budget table.

Right now, even with us pulling over $3 million out of our Stabilization Fund, we're relying on about $2 million in bus route savings to balance the FY'16 budget. We will see in the next few weeks if mayor and Council leave those route changes in place, or whether they will be pulled again and we are faced with more Rainy Day reductions.

Last week, I asked which of our transit options from last year are still open for consideration. Last year, the city did a Title VI analysis and concluded we could implement some form of both fare increases and route changes. At the time, mayor and Council didn't want to move forward with what was being presented. But in reply to my questions, staff has "determined that the Title VI Service and Fare Equity Analysis is valid until Nov. 30, 2016." The "Minor Service Changes" are calculated as a part of our current budget for FY'16. If we added a 10 percent fare increase to the base fare, we'd add another $730,000 in revenues that'd go to help protect our General Fund and our reserve funds. We're told that we could go up as far as a $1.6 million annual savings through fare increases without doing another Title VI analysis. We'll see what the mayor and Council have a taste for.

We're reaping the fallout of decisions made during the last five years of "one-time fix" budget solutions. I'm not at all comfortable simply watching this budget cycle move to a final vote without having at least raised these issues. Things will only get worse next year when we pick up the General Fund obligation for another 25 police officers because their grant funding is running out and we face another $18 million public safety pension spike due to a likely court ruling. Next time, there won't be land to sell to bail us out.

We should be setting aside $6 million annually for building maintenance. Our contingency fund is only $250,000. We should be setting aside $9 million annually for keeping our motor vehicle fleet up to speed. This year we're not buying any new police cars.

Finally, last week while I was on Golden Microphone Award winner John C. Scott's radio show, a caller named Sean joined the conversation. He made the very accurate point that we can continue attracting service sector jobs forever, without making a dent in our local economic challenges. I pointed out to him the work we've done with annexations around Raytheon to protect that asset and avoid having them outsource more jobs to Huntsville, Alabama. I also pointed to the work we've done adding incentives out around the Port of Tucson logistics hub. Those are good moves – and they're not enough.

The list of questions I've sent into city staff largely reflect the points I've made here. They'll be on the record for our May 19 study session. The point about jobs is simply this: We do not attract those high level jobs Sean was referring to by sitting at the phone and hoping that it rings. We have to assign to our economic initiatives staff the task of hitting the road and recruiting. Go knock on doors and make clear our desire to bring new logistics and manufacturing jobs to this area. If that's already happening, the results do not bear out the success of the efforts. And to be clear, it's not just the City of Tucson that's lagging in attracting those sorts of employers. We need a region-wide consortium of players to band together and get in front of CEOs to let them know Tucson and Pima County have an open door. I'll keep hammering that point.

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I'll also continue to advocate for joint City Council/Board of Supervisor public meetings – perhaps once per quarter – so we are talking together about issues of common concern.

I just want all of this on the record since it appears this budget is slated to slide through without controversy.

Steve Kozachik represents Ward 6 on the Tucson City Council. Contact him at at .(JavaScript must be enabled to view this email address) or (520) 791-4601.

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1 comment on this story

May 11, 2015, 4:10 pm
-0 +0

Meh.  Tucson is a service sector-driven community. Residents need to accept that.  Cut back services to small-town level. You can’t “raise prices” and expect that to work,  Service-users will “adapt.”  You’ll lose more than you gain in the long run.  When Tucson has five or six “Raytheon”-type manufacturing plants, then we’ll approach economic stability.  So far, in over half-a-century, no big manufacturers have come to Tucson. Do we REALLY need TREO?

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