Proposal for Additional Funds

Yesterday, during discussion of the upcoming FY 2009-2010 budget, I proposed that the City withdraw a little over $1.9 million out of the Budget Stabilization Fund (BSF), also known as the "Rainy Day Fund." I did not take my proposal to use this money lightly and spent significant time researching and determining the benefits vs. costs of doing so. In the end, I decided that, in my opinion, the needs of our schools and certain city services were too important to not attempt to address additional funding for the next fiscal year.

It is my belief that the future success, prosperity and long-term stability of the City of Roanoke is directly correlated to the success of our public schools and certain other programs that benefit, in an educational way, the youth in our community. There is no doubt that we are faced with a national economic recession that has sent ripples throughout state and local governments. Had we not faced such an unexpected and immediate emergency, I would have been loathe to even consider using any of the more than $19 million of unencumbered funds in the BSF, but feel as though we have little additional ability to raise resources. I am not in favor of raising taxes as I fundamentally believe that raising taxes during a recession, with folks losing jobs and discretionary income in decline as well as significantly reduced pension and retirement plans, is not the answer.

The BSF is comprised of taxpayer money paid in over the years. It is not the City's money, and I don't believe we should fear using taxpayer money when there is a real need for it. That said, I understand why some members of City administration do not want to use any of these funds. There are two main reasons that some are opposed - I completely understand these reasons and would agree with them 99% of the time. To me, however, this is that rare instance where we should go into the BSF. The two main reasons not to go into the BSF are:

1) Bond-rating agencies look at local government reserves when rating the locality. Ratings are important because they impact the interest rate that a locality can borrow money for and a downgrade in rating will increase that interest rate. I contend, however, that a slight downgrade is not the end of the world. IF we were to be downgraded, it would increase the interest rate by .25%. In other words, if the City were to borrow $20 million, this increased interest rate would cost the City between $50k and $60k per year. Is this ideal? No. But given the state of the City's budget, I believe worthwhile given the immediacy of the need. Additionally, in the scheme of a $257 million per year budget, this interest payment is rather minor.

2) This is one-time money for what could be recurring expenses. That is, if we find ourselves in the same, tough budgetary situation next year, we would have the same expenses and would then have to decide whether to go into the BSF again to pay for the services. This makes sense, though again would contend that any emergency or unexpected need can always be recurring. No one can ever predict what will and will not be a recurring event. For example, even a natural disaster can be recurring. Locations are hit by tornadoes two years in a row, floods two years in a row or other uncontrollable events. Likewise, we may or may not be out of the current recession next year, and though it appears we will be in a similar situation, nobody can predict that.

I believe to the core that now is an emergency that we could have never predicted but that we should not ignore when the effects on our schools and certain city services that are vital to the future of Roanoke are in danger. Major decisions and policies have been set that we all hope will be successful and will fundamentally change and improve our schools. Now is not the time to watch those recently implemented programs to be allowed to disappear.

Below is a breakdown of the proposed money and where it would go. Please feel free to leave your comments, both positive and negative, regarding my belief that we should withdraw money from the BSF for the FY 2009-2010 budget.

Total $1,907,867

$202,867 - Would keep both Washington Park and Fallon Park pools open.
$60,000 - Would keep the bookmobile operational.
$25,000 - Would keep libraries open 5 days a week.

$300,000 - Would maintain enriched, technology and life skills courses in RCPS summer school.
$600,000 - Would retain 20 teaching assistants, all accredited and the future teachers of RCPS.
$120,000 - Would retain 2 guidance counselors.
$600,000 - Would enable 10 empty elementary teaching positions to be filled.

Again, I want to remind any reader that I did not take this proposal lightly, believe that the above needs are vital to the community's educational attainment and economic future, outweigh the costs associated with going into the BSF, and are the right thing to do.

Court

Budget Update and Roanoke Regional Partnership

City Council met Saturday morning, April 4th for a special meeting on the City and School budgets for the upcoming year. Overall it was a positive, collegial meeting at the end of which we voted to provide the schools an additional $1.5 million with a $500,000 contingency should some state revenue we expect to go to the schools not make it.

By working to provide this additional money, 31 teachers will not lose their jobs and three school nurses will remain in RCPS to provide health services to students, many of whom rely upon school nurses for their only source of healthcare. Given where we were financially only a month ago I'm proud that Council made this decision.

Truth be told I would have liked to have seen more resources go to our schools to avoid cuts in programs such as summer school, swimming classes for elementary students, pre-kindergarten and others. I believe we have a responsibility to make sure that kids in the City of Roanoke have access to an excellent educational system that prepares them for life. Our economic, social and cultural future as a city relies on it. And I do believe our current School Board and RCPS administration has made significant progress to this end.

The reality is that we have more than $19 million in a "rainy day" fund that we could use if the Council decides to. Using this money will certainly make it more expensive for us to borrow money (due to bond ratings, which are inherently flawed and likely to be changed at the national level), but if this is not a rainy day in the present economic recession then I'm not sure what we could consider an emergency. That fund is taxpayer money, so as we are forced to tell our citizens and employees that we have no money for X program or Y program, the fact is that we do have the money.

I totally understand why some in the city administration do not want to use this money, but again, I believe this is the rainy day that that fund is intended to offset. I do think this will be addressed again over the coming weeks. Taxpayers should expect it.

Finally, I do want to point out, and wish that it had been covered in the newspaper today, that the City Council restored 5% (half) of the previously decided reduction in funding to the Roanoke Regional Partnership. To me, this was very important because cutting economic development activities during times like these I believe to be an enormous mistake. Now is the time we should be ramping up activities. And I think this additional funding to the RRP signals Council's desire to focus on economic development, the efforts of which we must be successful at in order to create more and better jobs and to retain existing jobs.

More to come soon...