"Business As Usual" Will Put the City Out of Business:Thoughts on the Multi-Year Financial Plan

The New York State Comptroller requires municipalities to file multi-year financial plans that look at 3-to-5 year projections for revenue and expenditures, and the likely corresponding impact on property taxes.

In 2007, the City Council held an in-depth work session on the City’s first such planning document. In it, were projected huge deficits, an annual property tax increase of 3%, and a virtual depletion of the City’s fund balance (think of the fund balance as the City’s savings account).

At that time, NoStringsGeneva declared , “City Manager’s MultiYear Plan is a MultiYear Disaster” and urged Council to assert itself as the governing body. The business model leading us towards a financial abyss had to be corrected. But 2007 was an election year, and budget discussions took place in the midst of the primary battle between then-Mayor Don Cass and his challenger now-current Mayor Stu Einstein. Rather than confronting the reality building on their watch, the former Council (or at least the majority of the former Council) decided to leave the fiscal mess for the new Council to sort out.

The City’s budget woes became a true political football, with the former Mayor and his Council running-mates vowing to “protect jobs” and “increase services” rather than promising innovation and financial responsibility. The needs of the taxpayer were sacrificed to the perceived desires of the voter, and the debates, particularly the Mayoral debate amongst the three candidates, became an exercising in defending—rather than challenging—the failing status quo.

Fast forward to the present day. It is 2009 and the City’s latest multi-year financial plan looks nearly identical to the previous one.

On the revenue side, City staff project a slight increase, about 1%, in overall revenue. Property tax revenue, attributable to a slight increase in property values, will increase. Sales tax will decrease for two years and then trend upward. State aid will likely plummet from just over $2,000,000 to just under $1,800,000.

On the expenditure side, surges in personnel costs—contract salaries, health insurance premiums, and mandatory state retirement contributions to cover the cost of defined benefits for retired City workers—will be responsible for a nearly 10% increase in expenses over the next five years.

The City manager was careful not to aggregate his data, but we can do the math. Over the next five years, he projects revenue to increase by 1% and expenditures to increase by 10%. Assuming a currently balanced budget, with money incoming and outgoing the same, in five years there will be a deficit of 9%. With a current General Fund of $16,600,000, that amounts to hundreds of thousands of dollars in deficits! Somewhere around $1,500,000.

With some slight changes in employee health insurance plans, a significant scaling back of capital improvement projects, and a freeze on the equipment amortization fund, the current administration was able to forestall financial woes, but not to avert the financial disaster on the rapidly approaching horizon.

This time, though, we are cautiously optimistic that the new City Manager and the Council have come to embrace a point of view that we urged a long time ago, namely that ‘business as usual’ will put the City out of business! Things must change!

There are still a handful of Councilors who disagreed with a “zero percent” property tax increase for 2010. In their words “everything goes up, our expenses go up, so property taxes should go up, too.” But that is no longer the majority view. We are starting to hear City Councilors talk about innovative ways of delivering services, about creative cost-sharing arrangements. In short, we see some movement towards a new view on City government.

As City Manager Horn stated (in three separate instances) in the MultiYear document, a failure to significantly change business practices will result in revenue decreases, increased expenses, and “significant deficits, not supportable by tax increases alone.”

To be clear, he specifically stated that tax increases were not an acceptable solution, even if they were capable of solving the problem, which they are not. He emphasized the fact that tax increases would be unable to meet the City’s challenges in the coming years. That’s because the problem lies primarily in what and how we are spending.

The City Manager’s conclusion, which we believe City Council must adopt wholeheartedly and with a more united focus than any other task they face, is to approach city operations from a “solutions-driven” standpoint. What does Geneva need and how can we best meet those needs? One thing the city needs is a lower tax rate, to help motivate investment.

We can no longer accept the status quo. We can no longer hold ‘sacred cows’ that keep us from evolving our business model and doing things better and more responsibly. We can’t do what was done before, as we discussed in our previous post, and throw up roadblocks to the conversation, to stall and create diversions. This is the most critical issue facing City government today, and it’s a game changer.

Should a Councilor Ever Have to FOIL?Say It Ain't So, Mr. Manager and Mr. Attorney

Some of her colleagues on Council took Augustine to task for using FOILed records (i.e., records obtained under New York’s Freedom of Information Law) in our recent post on filling it up at the City pump. One of our readers expressed the same concern in a signed comment to the post: “Forgive me for being rude, but the City of Geneva appears to function in a unique way. It is not common for Council members to have to file a FOIL request to talk to their own comptroller about the budget.”

We agree that it’s probably not common for Council members to file FOIL requests for public records available to any ordinary citizen for the asking. But there’s a reason we FOIL documents, thanks to an absurd protocol established by the previous City Manager and supported by the legal opinion of the previous City Attorney. In fact, that very issue is one which helped to launch NoStringsGeneva, back in March 2007. In our March 25, 2007 post, titled, “Shouldn’t City Councilors have Access to Public Documents?” we described the difficulty Capraro and Augustine had in getting a simple copy of the total compensation spreadsheet for then City Manager, Rich Rising.

Our request for the record was blocked by then-City Attorney, Clark Cannon. According to Cannon, an individual Councilor’s request for a public document was a violation of Section 13.2 of the City Charter. According to Cannon, “neither the City Council nor any member thereof shall give orders to any subordinate of the City Manager.”

Capraro, who was then on Council and made the request for the document in question, was being told by the City Attorney that he could not ask the Comptroller for a photocopy of a record! Of course, any member of the public, simply by filing a FOIL request, would have been given the record on demand. Instead, the Attorney told Capraro that the request should be made by “the entire Council” and only “in consultation with the City Manager.”

At the time we thought it sounded quite ridiculous for City Councilors to have less access to public records than members of the public not serving on City Council. We also thought it was quite ridiculous for City Councilors to have their requests mediated by the City Manager, presumably so that he would have a chance to ‘explain’ things before Councilors asked too many questions. We still believe that unfiltered, direct access to public records by all people is essential to government accountability.

Since 2007, we have used documents gained through FOIL requests in several posts. We posted public documents about the County Revolving Loan program, about the City’s Wastewater Treatment plant performance, about attorney’s costs. Usually they are simply the fact basis for our fact-based point of view, but sometimes, as in the case with the NYS Attorney General’s investigation, FOILing turns up records that reveal the secrets of City business, unknown to Council itself, such as the bill for legal fees for Rising’s proffer agreement.

Because we rely on only publicly available information, FOIL requests over the years have ensured that we have never violated our ‘no leaks, no gossip’ policy. While we do believe that City Councilors should have unimpeded access to city records, and therefore not be required to file FOIL requests, we want to make it clear that when City Councilors challenge Augustine’s use of the FOIL, their anger is misplaced. If Councilors and the public want City Councilors to refrain from FOIL requests, then the policy requiring it should be lifted. We believe the City Manager and the City Attorney and, by consent, Council itself can clear up this matter by announcing an end to the information lock down of the previous administration and allowing unmediated, direct access to the public record by Council members. In the meantime, we’ll continue accessing public records in the way clearly allowed and promoted under the law.

Fuel For Thought: Readers and City Manager React to Gas Post

In response to our post on fuel consumption and the City budget, we received two signed comments that raised interesting points or questions that warrant more discussion:

First, we agree with Mark that the main point of our post was to suggest that the City’s published budget is virtually impossible to follow, that the numbers just didn’t seem to add up, for whatever reason.

Our attention was first drawn to line items relating to fuel consumption (revenue and expenses) when the City announced that by mid-year 2008, the City had used up all of its allocation for fuel, thanks to a spike in the price of gas. Council budgeted for 2009 and then the price of gas went way down. Wouldn’t that create a budget surplus and effect the budgeting for 2010?

Every member of the public has the right to read the city budget, in its entirety, and to view the records that support the various budget line items. We did just that, and found the documents to be cumbersome and unnecessarily vague when it comes to reconciling various line items.

Yet, Mark goes on to state, and, again, we agree, that a reader who is unfamiliar with general municipal operations might get the impression that we were suggesting “something funny” is going on. That must be what happened when some Councilors read the post and accused Councilor Augustine of attacking staff “from the bushes.” Not only was the post not an attack on City staff—we went out of our way to express how cooperative staff had been-but we’re not sure how a signed blog entry on the internet could be more public: if there was anyone hiding in the bushes it wasn’t us. So rather than indulging those who like to jump to conclusions, we want to take some time to respond to the real questions raised by our readers, who apparently, like Mark, understand general municipal operations.

Tom also concluded that we were not claiming to have “hit on some kind of conspiracy, but a system of payment and accounting that was set up years ago and never adjusted.” There is value, he states—and we agree-in looking at these systems closely to make sure that what City government is doing today meets the City’s current needs, rather than simply doing things ‘as we’ve always done them.’

We point out that after the post appeared, the City Manager drafted a memo to Council
addressing the question of apparent discrepancies in the City’s published budget.(We’re not sure if it was his own response to our post or a response to other Councilors who may have read the post and asked for an explanation.) Our post had been on revenue and expenditures for 2006 and 2007, but the City Manager addressed figures for 2008, so we’re not sure how that clears things up. Also, in the same memo, he indicates that in order to reconcile figures for 2008 he had to use a “figure different than the 2008 figure represented in the budget documents,” so, actually, he’s acknowledging the same problem: the numbers don’t add up in the published budget documents. Again, he’s not exposing some conspiracy, but commenting on the numbers generated by the accounting system that’s in place.

Mark’s comment also addressed outside agency use of City fuel. While we don’t disagree that support of critical agencies is a nice thing for the City to engage in, we cannot agree with the implication that the City must do this, or should continue to provide gasoline at cost. Consider this: if the City purchases gasoline from the state contract at $2/gallon and the price at the pump is $3.50/gallon, for example, that is a significant savings for any agency that is billed at cost. But the City incurs a cost to maintain the gas station facility, to generate the bills and do the associated accounting. Even if the City were to charge a $.50/gallon surcharge, the agencies would still see a great benefit and the City would see some actual revenue to cover those costs. There is the additional question of whether the Geneva Housing Authority, which already receives substantial subsidies from the City for services that might not be wholly consistent with the City’s strategic imperatives, should receive additional City assistance for their County-wide operation.

The question of outside agency gas usage has been raised on the floor of City Council before, but never taken up for discussion. We hope that it will be now, given the City’s tight budget constraints.

And that leads us to the last question or concern that our post generated, both on the blog and at the most recent televised Council meeting. Our readers say that Councilors should not have to file a FOIL request to speak to a department head or to receive records. It seems that many on Council share this view, but as we will discuss in an upcoming post, the standing policy prohibits that—as one of our first posts back in 2007 discussed. So, perhaps our post raised yet another ‘old system’ that’s in need of a change.