The Most Boring Blog Ever Written - The City Budget

Or, what do they think $40 million is - chopped liver

he city starts off a budget each year with an opening fund balance comprised of 6 separate funds.  To that they add "Estimated Revenues", and then they deduct "Proposed Expenditures".  After doing the math, they wind up with a "Projected Fund Balance" at the end of the accounting year.  As you can see, the entire budget is based on a "Our Best Guess" structure.  That's just the way it is.  The city doesn't get a paycheck that it can rely on month after month and if revenues head south, the sooner adjustments are made to the expenditure side of city business the more apt you are at protecting those fund balances.

When fund balances shrink, that is deficit spending.  If fund balances shrink to zero you are broke - and when you owe more than all your assets are worth, you are bankrupt.  Our city is not even approaching being broke.  In fact, even though this 08-09 fiscal year has been a challenge for our city, based on preliminary documents, they have been able to increase fund balances by about $3.8 million to over $40.6 million (projected for July 1, 2009).

  Fund Balances in State Legislators' Crosshairs  These fund balances are receiving a lot of attention especially from the state.  The city has over $40 million, our county over $180 million, Arizona K-12 schools over $300 million. That's a lot of cash sitting around.  Yet every one of them is crying poverty.  I guess being poor isn't what it used to be.

Until now, all I had in front of me was last year's city budget which projected a $9 million raid on fund balances to keep city spending up.  That has not happened - quite the opposite in fact.  That proposed $9 million raid was what had me up in arms, because that is the first step down the road to financial ruin.  Our city finance director explained to me that it is a common practice to guide the city budget towards a "worst case scenario" and that certainly rang clear with me since that is my personal finance preference.

If you or I (or the city) plan with an eye toward the imperfections and glitches that are always complicating the normal flow, then finding a workable path that is capable of reaching the goal can be found.  It's like driving down a rock-strewn and rutted dirt road - you have to keep your hands on the wheel at all times and watch and steer or you wind up in the ditch with a flat.  You may not be able to go nearly as fast as you would like, but it is more important to get there in one piece than to arrive on a gurney.

From my perspective, our city manager and finance director have done a remarkable job of keeping us on the road.  There is a tendency for the council to try and micro-manage the city budget and steer funds this way and that.  Instead, council should be giving broad direction to staff such as, "Find a way to continue the chip-seal process without a sales tax increase", and then step back and let them work.  Staff can make it happen.

Here are just a few of the city cubby-holes with cash stuffed in them.  HURF funds are down but not cut off, there's $8 million in the general fund that can be applied nearly anywhere.  There's $300 grand floating loose in ETDC to match a grant the city never got, to sink money in that rat hole called the Powerhouse -- and another over $4 million sloshing in a slew of funds as contingency, some of which can be transferred.  There's $100 grand in council's budget for an impact fee study that's been called off.

The city has money stuffed into more funds than you have fingers to point with.  Every fund and city department is in the black with no red ink anywhere in sight.  For the city and council to state that the street chip-seal program cannot be continued without a sales tax increase is a real stretch in my opinion.

The city council must do what's best for the entire city.  Raising taxes is the worst thing for the entire city - it's just that simple.  And, when you have $40 million sitting in the bank it's downright unconscionable.

P.S. -- I invite the city staff, the mayor or any council member to correct any inaccuracies or misleading statements in this article.

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