What's Old is New Again

The five meetings held by the City last month to introduce its new Office of Neighborhood Initiatives and the conceptual framework for its mission, revealed something interesting and important about the City:

Long time residents located their fondest memories—“better days”-- somewhere in the past, and wanted to recreate a City and neighborhoods where good things happen like they used to in the old days. To some extent, they lamented change because they saw its negative consequences.

More recently arrived residents described the virtues of the City as it exists today and said what attracted them to Geneva is what it is now, how little it has changed—compared to other places they know, blah suburban McPlaces or big cities seemingly losing their warmth and given over only to the pursuit of wealth.

What is critical is that both groups valued quality of life and community, and both expected Geneva to be a place where they can be found. That suggests a powerful, intergenerational alliance might be formed between them today, and that should be an important aspect of the Office of Neighborhood Initiatives, trying to harness a commonality of purpose between some of Geneva’s longest, and shortest-term residents. That commonality exists in what the older residents say they remember about Geneva and what the newer residents say brought them here by a recent choice.

The Office of Neighborhood Initiatives may strike some as a new effort with a lot of new faces, but at its core, it is a revival of the traditional community values which are, themselves, the most progressive concept to hit Geneva in decades.

Maybe Geneva Needs a "Kamikaze Council":Listening to the Drumbeat of the Numbers

Our most recent appearance on Ted Baker’s Finger Lakes Morning News focused on the City of Geneva’s 2010 budget, its multi-year financial plan, and the economic climate’s effect on municipalities in general. If the City maintains a “business as usual” approach, it will lead to business unusual, as in bankruptcy.

We believe that one thing New York State has done correctly with regard to cities has been to require the filing of multiyear financial projections with the State Comptroller’s office. While these are only non-binding financial models, Capraro points out that they at least force cities to consider scenarios beyond the present. They reduce the possibility that cities can claim to be taken by surprise when faced with reduced revenues and increased expenses. In essence, multi-year planning forces elected officials to do one of two things:

1. Nothing: i.e., pass the problem down the line, and hope it either works itself out or blows up after your term is up.

2. Something: i.e., accept the reality, prioritize expenses, seek out new revenues, change the way business is done to make the business model work. Make a decision.

As Ted rightly pointed out, changing the way the City does business is politically risky. Things are done the way they are because someone benefits. As we’ve pointed out ad nauseam in multiple posts, the existing structure is set up to benefit economic development through tax exemptions, to administer city services without strategic deployment of resources, and to privilege vested special interests.

A new and more dynamic approach would see City government as a partner of the people, using sensible and effective means to meet critical needs. This new way of doing business may leave elected officials on the outs with the outspoken minority, but it would bring government back to the people in a way that is both useful and affordable.

In short, Geneva doesn’t need a Council that takes unnecessary risks, but it does need strong, focused, creative leadership to right the ship and make Geneva shine! Ted suggested the image of a “Kamikaze Council” that might go down in a blaze of sacrificial glory for the cause. Capraro reminded us the drum beat of the numbers is relentless. Click here to listen.

"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.