RE: Budget issuesTammi,
Don't panic (yet). While we are in this economic climate our revenues
have declined. Interest income is down and the growth numbers are not
as were assumed when some of the capital projects were authorized
however, we are not doing as poorly as perhaps your review indicates.
The budget in Kalispell is very much an accountants budget rather than
one that provides comprehensive information to the public (or Council).
Debt assurances are kept for all our debts but are not currently shown
in the budget book because they are not appropriations. Likewise, we do
pay principal but it is not booked the same way as the interest
expenditures. I've asked Amy to put together information on this so you
can see this before next week's budget wrap up.
We did increase public safety by 1 M when we brought on the 6 additional
firefighters for station 62.
I also believe in the need to downsize some of our functions but after
looking closely into the budget feel this can be accomplished (for the
most part) by attrition, retirements and consolidation. As you know, I'
m looking at 3 to 4 higher level personnel reductions in public works
over the next year and want to do this in a staggered fashion so we can
get these job responsibilities covered by existing employees rather than
have some items fall though the cracks.
There are several departments I want to consolidate with each other but
wanted to do this after the budget was done so it wouldn't bring to much
change all at one time. Examples include community development and
planning as well as IT and the Clerk's office.
Most of the departments have contingency plans but we have not presented
them as in almost every case these plans entail personnel cuts which, in
turn would mean program or service reductions. Again, this is the main
reason I wanted to go through the budget work sessions we spent the past
8+ months on. I don't believe staff should dictate service or
programmatic cuts: that should be the role of the council. What I've
tried to do with the current budget is to give you a budget that will
provide current levels of service within the current revenue conditions.
Council then has the ability to determine if they want to cut further so
they can pay debt more quickly or add other services etc.
What I want to do next week with the wrap up is to once again give
council my recommended budget and then provide all the items that have
been brought up (by council) as potential issues. We will have a tally
sheet so as council deliberates on each of these items, we can show how
they will impact the bottom line. For example, I feel we can adequately
address the records issues in the police department with the 2 proposed
analyst positions. If council wants to keep the facility open 24/7 and
add two more positions, it will add cost to the bottom line but council
will know this and will be able to make that decision.
More later, Jeff is here.
Jane
From: Tammi Fisher
Sent: Monday, June 14, 2010 10:06 AM
To: Jane Howington
Subject: Budget issues
HI Jane-
I had the 2007, 2008, and 2009 budgets reviewed by an accountant on my
task force and put into a format that is short and decipherable for my
non-numbers mind. I will provide you with the spreadsheets today. A
few things that were noted are:
1) only 10% of total debt is reserved for debt service and this amount
barely covers the interest payments so the principal isn't being brought
down;
2) from 2007-2009 the city doubled its debt load but there was not
cocomitent increase in the budget for debt service;
3) the city increased its assets by $20million in two years that it now
has to maintain (I assume that was for the sewage treatment plant)
4) we saw a public safety increase of over $1 million in 3 years;
5) 12% of our total revenues goes to pay for employees
6) interest revenue in 2009 is 50% of what it was in 2007;
7) over the three year period we added over 21 miles of water main paid
by developers that we have maintenance responsibility for, and 9.3 miles
of sewer line;
8) in the sewer budget, we spent $80k in contracted services to earn
$40k in revenue;
9) the City has consistently lost approximately $100k per year by
operation of the Airport;
10) the City's expenditures have largely been the same, but income has
decreased;
11) the only propriety fund department that has been able to maintain a
balanced budget without a loss is Garbage.
I wish I had this information prior to going into our work sessions, and
I regret I was not able to get it to you sooner. Obviously, with our
debt service for multiple obligations looming large (including OSS), I
am quite concerned about moving forward and our ability to eliminate
debt- not simply service the interest payments. I am not panicked, but
I am deeply concerned, and I know that you are too (a fact which has
been reflected in your budget proposals). I would like to see some
benchmarks for the budget come to fruition, until we can get the debt
service under better control. I would like your review and opinion on
the following benchmarks:
i.
Public Safety not to exceed 30% of total budget
ii. Debt
Service (including lease payments) < 6% of revenue
iii. No
increase in personnel expenses
I believe your budget proposal has implemented (iii). My concern is
that a further reduction in personnel is
necesary, and if there is a department that can be minimized, the time
to do it is now. I would also like each
department to look at a 10% reduction in expenses - not that it would be
implemented, but to have each
department head provide a break down of how they would, if forced, cut
their budgets by 10%. Again, this is not to
say that I would promote an across the board 10% cut, as I recognize
there are departments that are doing well,
are already very lean on money, and they all cannot be lumped together.
I will get the spreadsheets to you in short order. If we could have the
proposed 2010 numbers plugged into this format, that would help me
review the same and make a better informed decision.
Thanks!
Tammi