Budget Reality (again)

On Monday, City Council was presented the working documents for the FY 2011-2012 fiscal year budget. While it's a better year than the past several, we still expect to have to make $4.8 million in additional cuts to the budget. This will be a painful process and we will do our best to find the program and service reductions in the least impactful areas possible. But we need to be realistic that we will all feel the reductions.

It's important to share that of the city's +/- $250 million annual budget, nearly $75million of this goes to RCPS off the top. Then the city must provide certain programs and services, carry out certain required and necessary administrative functions (managing and operating the city generally, collecting taxes and administering the courts and legal functions, funding public safety and human service programs and services required by the state etc.). So at the end of the day, the city has only a little more than 1/4 of the budget to discretionarily spend - the money that funds our more typical activities, maintenance of the city, operation of parks and greenways, management of infrastructural operations and systems etc. With nearly $25 million less money in the last three years, and having to cut this out of the discretionary areas (while maintaining public safety, increasing funding to schools to offset state funding cuts as best as possible), it has been a challenge.

Our city manager, Chris Morrill said it best when he said that we have cut the low-hanging fruit, the medium-hanging fruit and the high-hanging fruit. Now we are cutting limbs.

So this is the less than positive news but I think it's important to try to be as realistic as possible so that folks understand the "new normal" we are living in where we have to find ways to adapt to less revenue and increasing costs - clearly a daunting challenge.

The great news is we have excellent city personnel who are working tirelessly to deliver services and programs, provide public safety to the city and its residents, educate our kids, provide recreational amenities and keep the city looking wonderful and other services - all with 188 fewer staff positions and no raises or cost of living adjustments for several years (we are working to find the resources for a one-time bonus by une 30 of this year). Our budget staff are some of the best around and our administration is handling the many challenges with a genuine understanding of the effects additional cuts will have on the daily lives of our citizens. The initial budget we just received truly reflects this. And council recognizes the need to be fiscally responsible while continuing to position Roanoke and its residents on a positive course for the future.

We will get through this difficult period and I really believe come out in a stronger position on the other side. We've worked through the most challenging financial times faced in a long while, and believe we have generally done well and worked with our partners in the business, non-profit and other outside agency community to more efficiently operate and deliver for the taxpayers.

I hope folks will continue to call and email to provide input on areas to protect and areas where reductions may be palatable.

Thank you.

September meals tax up 2.6%

September 2010 meals tax collections exceeded September 2009 by 2.6%. Additionally, we remain ahead of budget projections for the current fiscal year. This is great news as it indicates that overall business for restaurants has increased - people are spending more money at restaurants in the city than expected.

Year to date, Roanoke City Public Schools have received $35,000+ more than they had expected or budgeted for. If the trend remains and meals tax revenues continue to meet or exceed expectations, our schools will receive the funds budgeted for and our city restaurants will have improved business overall.

I'll continue to update the numbers monthly.

Work Ahead

Now that summer is officially over, the pace will pick up on Council. We will begin in earnest, having already had our first budget work session, to put together a budget that is devised in a very different way than has been done before. It's a process known as Budgeting for Outcomes, which essentially requires public leaders to set a price for the city government and to figure out what citizen's most value and how to spend taypayer dollars. I'd encourage you to read about it at http://www.psg.us/resources/osborneletterbfoupdate.html.

We will also have to begin to grapple with a Capital Plan in the city that offers little wiggle room in terms of debt capacity and the stability of our bond rating. So it would seem to me that we'll stick again with more infrastructural and existing capital projects in the current five-year plan.

We'll also be dealing with putting together a Master Plan for the former Countryside Golf Club property. Any plan should have significant recreational components that include well-designed green spaces. Other ideas that I heard at the multiple public meetings for neighbors of the property and other stakeholders could include some nice and compatible housing, a village center, a conference center, playing fields and other ideas. All stakeholders will have the opportunity to provide more public input beyond the meetings already held, and I hope folks will take advantage of that opportunity.

We're already working and have just gone through a third draft of the city's annual legislative plan, and members of Council will likely go to Richmond to lobby the General Assembly on certain requested legislative changes. I'm sure there will also be a lot of talk about our need for the Commonwealth to stop the massive funding cuts to public education.

We've got a busy fall ahead and I'm sure more will arise as we head into winter. There's a lot to be done.

A tough year is ending

I've not posted in a while on this blog, largely because it's a relatively slow time in terms of city council business. We adopted the FY 2010-2011 budget in May, and after lots and lots of meetings and work leading up to adoption, June is a slower time.

It was a difficult year, with major reductions or eliminations of services, reduced school funding and a generally difficult financial period. City staff worked dilligently, with an eye towards efficient delivery of services at reduced funding levels. Staff carried out this task with optimism, seeing opportunities during this time to create a more streamlined government focused on the core services that government should provide residents. There's more work to be done, but difficult times force us to think outside the box.

It's also important to recognize that, by and large, taxpayers have recognized that expectations for services and programs like they were only a few years ago is unrealistic. Having the community understand the difficult task of simply balancing the city's budget has made the process immeasurably smoother. Protecting the city's school system from debilitating cuts in funding, and largely supporting the temporary 2% increase in the city's prepared foods tax to help offset these reductions to our schools, was a real testament to the priorities Roanokers have set for our community.

The next fiscal year's budget will be as tough, if not tougher, than the one we just adopted. The practical effects of the national recession have caught up to Virginia and caused localities to endure the brunt of the revenue reductions that are passed on by the Commonwealth. We should continue to work as a community to maintain realistic expectations and to make sure that the priorities of residents are also the priorities of the city government. Let's find more opportunities to better serve residents with a disciplined, responsible government.

Budget Meeting tomorrow

Tomorrow, beginning at 9am, we will be meeting to begin the tough discussions necessary to prepare next fiscal year's budget. It should be an all day meeting, and anyone who is interested and can sneak away from work for a bit I would certainly recommend attend. If nothing else, it will provide insight into the way the budget is put together each year.

Please feel free to share any comments on specific programs or services that you feel should or should not be looked into for cost-savings.

Pools Will Open, Schools a Bit Less Fortunate

Earlier today Roanoke City Council met for what is known as Budget Study. Essentially, Budget Study is where the Council finalizes the next fiscal year's budget before it goes to a formal vote to be adopted into law.

During this meeting, we discussed an item that I believe to be important to the youth of the City. We decided, after weeks of debate and searching for the resources, to open both the Fallon Park and Washington Park swimming pools for the upcoming summer. At one point there was talk of a public/private partnership that would have kept Fallon Park open and seemed to be the only financial way to do so. That fell through, however, and during the course of those negotiations the City projected a slight increase in revenue and other resources that could be available.

I would have had trouble supporting the opening of one pool and not the other. Though public/private partnerships can be a model for good government, in a City as divided as ours, opening one pool without the other would have sent the wrong signal to our residents. So I'm happy we were able to find the resources that will allow children from various parts of town to have recreational opportunities this summer that will hopefully keep kids busy and out of trouble.

On another note, we did not agree to provide the schools with additional resources to help boost enrichment in summer school offerings, stave off elimination of teachers' assistant positions or fill ten empty elementary teacher positions. I believe this is a mistake and, if you recall, made a proposal a few weeks back that would have provided $1.6 million of taxpayer money from the Budget Stabilization Fund (rainy day fund) to accomplish just this (http://courtrosen.blogspot.com/2009/04/proposal-for-additional-funds.html).

Our school division is ranked second worst in the Commonwealth of Virginia. We have suffered from declining achievement for years, and while efforts to attract new business and create new jobs have been many, until we make fundamental changes to the way we educate our children and prioritize our schools, I simply think these efforts will prove to be less than effective. We cannot make small, incremental changes in the way we educate this City - we must make a tidal wave of change to turn around a system that has not improved in many years.

I appreciate my colleagues willingness to increase City funding to the schools... I truly do. The state did not fulfill their financial obligation, and as much as we choose to blame the state for shirking its responsibility, these are still our schools whose success will affect the future of our City. Major policy changes and programs have been enacted over the last couple of years with the by a dedicated school board and superintendant. And it is my belief that until we dedicate ourselves to seeing through a major overhaul of our school division, a tidal wave of change, we will fail to see a major turnaround in our economic climate here and our ability to create new, highpaying jobs for our residents.

Education is the key to fighting poverty in our City and to improving the quality of life for everyone. I'm disappointed that we did not do more to avoid the programatic elimination that RCPS has been forced to undergo. But I know that they will do the best they can with the resources they do have. And we should be grateful for their dedication.

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...

Continued Budget Work

This past Monday, City Council continued its work of finding ways to reduce expenditures in the required effort to balance the City's FY2010 budget. As everyone knows, we are experiencing a severe economic contraction that is affecting government, businesses and non-profits, as well as families trying to make ends meet. Tough decisions have to be made, ones that are not fun but required.

As one member of City Council, and as I look through the line items that as a whole make up the entirety of the budget, it is important to me that as we reduce services and eliminate programs, we make an effort to do as little harm to as few people as possible. But there is no doubt, and I fully recognize and understand this, that any reductions or eliminations will negatively impact some citizens. We all wish that the economy was robust and expanding, but as we face the reality of the seriousness of the situation, there is no escaping the fact that we are significantly short in our revenue. Additionally, I believe that it is imperative and responsible for the City to do anything and everything we can to provide the school system additional funds to continue progress that is being made to improve our schools and to avoid unnecessary teacher layoffs.

I hope that anyone with suggestions or other input will contact me via this blog, my email or cell phone. I welcome it. Tough decisions will be made, and there will be unpopular reductions or cuts. These are unavoidable.

But now is the time for City Council to step up, make the tough decisions that have to be made, and show that in times of crisis, leaders can and will step forward and work to carry the City forward. I will do my best to be a part of the team that must work to help continue much of the progress we have made.

The 17th House District

This past Saturday, Del. William Fralin announced that he will not be a candidate for re-election to the Virginia House of Delegates this upcoming election. And as one might expect, jockeying for position began in earnest almost immediately. There are a lot of good folks out there who are considering runs for this seat, including many of my fellow Democratic colleagues.

I continue to be asked about my interest in running for Del. Fralin's seat, so I thought it appropriate to post on my blog to be clear in response to the inquiries: I will not be a candidate for the nomination of my party for the 17th House district.

I am flattered by the encouragement that I have received. It's humbling to have people suggest that I could do a good job representing the 17th in Richmond, but now is simply not the right time for me personally or professionally.

First, Brooke and I, within the next three weeks, are expecting our first child. I want to be around as much as possible to experience and get used to fatherhood and the many wonderful things it will bring to my life. And I want to continue to spend as much time with my wife as she will allow! Undertaking what will certainly be a challenging campaign is something I am not willing to take time to do right now.

The second reason I will not be a candidate is because I feel a responsibility to the citizens that elected me to Roanoke City Council to help as we work through what can be described as nothing less than a fiscal crisis. We are in the midst of trying to figure out how to balance the City's budget while avoiding harm to our schools and other major services. Personally, and I only apply this to me, I am not ready to turn from this task and believe that I have a responsibility to continue working hard on the many issues affecting our citizens. We have a bright future ahead of us, and again, the time necessary on the campaign trail is more than I am willing to commit at this time and in the midst of preparing the City's FY2010 budget.

I certainly wish whomever decides to enter the race the very best of luck and will look forward to hearing issues that affect our City and region discussed during this campaign season.