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Lack of agreement on two items prevented City Council members from approving the City’s budget for fiscal year 2018. It is expected that these will be resolved at the Council’s Dec. 11 meeting; by State law, the Council must pass a balanced budget by the beginning of the next fiscal year, which begins on Jan. 1, 2018.

At a special City Council meeting on Nov. 20, aldermen moved closer to passing the budget, discussing a handful of budget amendments that were relatively small in the context of a proposed budget that shows total expenses of $280.5 million. That amount excludes more than $50 million in inter-fund transfers, which can result in double-counting. 

Highlights of the Proposed Budget

In preparing a “baseline budget,” City Manager Wally Bobkiewicz asked each City department to reduce its operating expenses by 4% from the expenses budgeted in the prior year. City staff took into account other factors impacting revenues and expenses, Mr. Bobkiewicz said. The City’s baseline budget for its General Fund, its main operating fund, initially showed a deficit of $6.1 million.

That gap has been plugged and the budget balanced by a combination of inter-fund transfers, expense reductions that include personnel cuts, and revenue enhancements that increase some taxes, fines, and fees and implement a few new ones.

By eliminating some City positions and consolidating others, as well as creating new but lower-paying positions, the City Manager initially proposed a net reduction of about 22.8 full-time employees (FTEs). This included seven vacant positions, a reduction of 28.3 FTEs, and the addition of 5.5 FTEs, one of whom will be the video-records clerk needed for the Police Department’s body-worn cameras.

With the addition of a crossing guard, the restoration of the Youth Advocate and of one FTE and two part-time positions for Victim Services, the net reduction in employees hovers at about 20.

The proposed increase in the City’s portion of the property tax bill is 1.45%. According to City documents, that would mean an increase of about $20 in the City’s portion of the property tax bill on residential property valued at $400,000. The City’s portion represents about 20% of the entire property tax bill.

If the budget is approved as it now stands, parking here would become more expensive, as would overstaying one’s welcome at a parking meter. Drivers would pay an additional 1-cent-per gallon gasoline tax; ride-share companies would be taxed on a per-ride basis; owners of Airbnbs would be taxed at the City’s hotel-tax rate; and those who purchase tickets for athletic contests here would pay an additional 1% tax.

If Council makes no further changes, the General Fund would have a surplus of about $600,000.

Expense Reductions

With an initial $6.1 million deficit in the operating budget, many of the proposed changes involved personnel. For 2018 the City Manager’s proposals entailed eliminating some positions and creating new ones; merging the Environmental Services and Infrastructure Maintenance Bureaus; eliminating the Bureau Chief positions of the two bureaus and replacing them with one Bureau Chief; creating the position of Environmental Services Coordinator to support environmental sustainability, forestry, and natural habitats; consolidating the positions of the Levy Center manager and the Chandler-Newberger manager; reducing the staff in the Police Department’s Victim Services division and transferring that division to the City’s Health and Human Services Department; and eliminating the Youth Advocate position.

City staff and Council members learned early in this budget season, however, that some of these proposals were unpalatable to many residents. Opposition was loud and immediate, and in meetings held in October and November, Council members made some adjustments to the City Manager’s proposals, most of them for personnel.

Victim Services and Youth Advocate: The City Manager initially proposed to transfer the oversight of Victim Services from the Police Department to the Health and Human Services Department and to reduce the staff in Victim Services from 5.3 to 2.5 FTEs. While the proposed transfer appeared to sit well with Council members, the proposed staff reductions still appeared to rankle some Council members and many community members. Aldermen finally agreed to add back  one FTE, bringing the total of Victim Services staff to two full-time and two part-time (28-hours per week) employees.

Staff also initially proposed eliminating the Youth Advocate, who provides social services for at-risk youth and their families. After hearing concerns, the position was restored as a full-time position. The Youth Advocate will be employed in the Parks, Recreation and Community Services department but work out of the Police Department headquarters

Environmental Services Coordinator: In response to protests against eliminating the position of Environmental Service Bureau Chief, Mr. Bobkiewicz proposed to add the position of Environmental Services Coordinator. That person would “manage programs, not personnel,” said Assistant City Manager/Chief Financial Officer Martin Lyons, and the position would be similar to that of the Arts Coordinator.

Levy Center Manager: City staff initially proposed having a single person serve as manager for both the Levy Center and the Chandler-Newberger Center. In response to many requests, Council decided to  maintain a full-time manager at the Levy Center and eliminate the position of manager of Chandler-Newberger Community Center. Mr. Bobkiewicz said Karen Hawk, who coordinates the Ecology Center and the Noyes Cultural Arts Center would also handle managerial duties at Chandler-Newberger.

Alderman Ann Rainey, 8th Ward, who has been in favor of a full-time manager at the Levy Center since the beginning of the budget season said, “I believe that we’re going into a new era. Let’s give the new manager a real opportunity to beef up the programs.”

Crossing Guard for Dawes School: During the Citizen Comment portion of the Nov. 20 meeting, Kelley Elwood and her daughter Elizabeth representing 200 Dawes School parents, requested a crossing guard for the Oakton/Grey intersection, where many students cross to Dawes School. Alderman Cicely Fleming, in whose Ninth Ward the school sits, requested the crossing guard; no one objected.

Taxes, Fines, and Fees

Aldermen appeared to accept most of the revenue enhancements proposed by the City Manager, and Ald. Rainey proposed an additional one: the 1% increase on taxes to tickets for athletic events.

As it now stands, the following revenue enhancements are proposed for the City’s 2018 budget.

• Increasing the City’s portion of the property tax by 1.46%;

• Increasing the City’s tax on gasoline to 4 cents per gallon, a 1-cent-per-gallon hike, to generate an estimated $200,000 per year;

• Increasing the athletic tax by 1%, which could generate an additional $100,000 in revenues;

• Implementing a 20-cents-per-ride tax on rides provided by transportation network providers such as Uber and Lyft; and

• Bringing Airbnbs under the hotel ordinance so they could be taxed at the hotel rate of 7.5%;

• Increasing parking fees in City garages from $95 to $110 per month. This would include the Sherman Plaza rooftop.

• Standardizing parking meter times (switch all 9 a.m. to 6 p.m. meters to 8 a.m. to 9 p.m.) and standardize meter rates to $1 per hour;

• Increasing the fine for parking at an expired meter from $10 to $20. Increase the fine for a street cleaning parking ticket from $35 to $40; and

• Increasing the fee for a monthly permit to park in a City surface parking lot to $60.

Not enough aldermen objected to the Airbnb tax to block it. Alderman Judy Fiske, 1st Ward, objected to taxing only “mom-and-pop” Airbnbs and not the two commercial bed-and-breakfast establishments. “I do want to include commercial B&Bs. That’s a matter of fairness,” she said.

Although the Airbnb tax was approved for introduction at the Nov. 20 meeting, by Nov. 27, opposition to it had grown so that the vote was split, with four aldermen voting in favor of it and four against – Fifth Ward Alderman Robin Rue Simmons was absent. The Mayor can vote in case of a tie, and Mayor Steve Hagerty tipped the vote against taxing the commercial B&Bs. Only Airbnbs will bear the tax. 

City Clerk’s Budget

Sorting out the amount of money to be allocated to the City Clerk’s office appeared to be a puzzle that aldermen preferred not to solve at the Nov. 27 meeting. Devon Reid, the City Clerk, has objected throughout the budget season.

Mr. Reid said he needs two deputy City Clerks because he wishes to expand voter participation, particularly in light of the 2018 elections, and to restore passport-application processing to the Clerk’s office. He said his office stays open until 7 p.m. many evenings, and the extended hours could help generate additional income from passport applications, should the task of processing passport applications be restored to the Clerk’s office.

The person in charge of processing passport applications and real-estate-transfer stamps was moved earlier this year by mutual agreement from the Clerk’s office to the Collector’s office, which accounted for a reduction of $85,000 in the Clerk’s budget. Mr. Reid would like to have that amount restored to pay for a second deputy clerk.

If the Council does not increase the amount allocated to his office, Clerk Reid said at the Nov. 20 meeting, the office “would be potentially the lowest-paid clerk’s officer in the State.”

“It would mean you’re the most efficient Clerk’s officer in the State,” said Mayor Steve Hagerty.

“No,” Mr. Reid responded.

“I think we need to figure out a way to outfit your office right now,” said Alderman Tom Suffredin, 6th Ward. “This is a difficult increase. We do have an election next year, and it’s reasonable that your office will be busy, but it’s really hard to support the increase.”

The increase to the Clerk’s office will be settled finally by Council members as they wrangle about the budget at their Dec. 11 meeting.

Capital Projects

Proposed capital projects included the usual infrastructure repairs and maintenance of City buildings, parks, and recreation areas. This year, though, two major capital projects are in the works: the new Robert Crown Center, which could cost about $40 million, and an $11 million renovation project for the Main Library.

The City’s self-imposed debt limit is $113 million, and its debt from General Obligation (GO) bonds stands at a bit under $111.5 million.  It would balloon to more than $121.5 million in 2018-19 with the inclusion of Crown debt, and nearly $133 million in 2018 with both Library and Crown debt included.

Staff had recommended cutting capital projects paid for by issuing GO bonds from $12.2 million to $9.14 million in order to keep the GO debt about the same for 2019 as for 2018. The City will pay off approximately $9.5 million in G.O. bonds in 2018, and if it is to keep the amount of new G.O. bonds about the same, then Council should stay below the $9.5 million mark.

To that end, staff identified 13 capital projects – costing about $3 million – that could be cut back or eliminated for 2018, and at the Nov. 20 meeting, aldermen briefly discussed some of those but ultimately rejected the proposed cuts and added the Library and Crown projects.

“The proposed cuts are significant,” Mr. Bobkiewicz said, “for traffic calming, street repairs, etc. I just want to be sure you’re comfortable with [funding] Robert Crown, the Library, and the other projects.”

“Can you describe the implications if we leave the $3 million in?” asked Mayor Hagerty. “What does that mean for the 2018 budget?”

“Nothing for 2018,” said Assistant City Manager/Chief Financial Officer Martin Lyons. He added there would have to be sufficient money in the General Fund in 2019 to cover the debt service for bonds issues in 2018.

At the Nov. 20 meeting Alderman Tom Suffredin, 6th Ward, commended the Library for pressing forward with its proposed $11 million renovation project. “Even though the timing is lousy, it’s important to maintain City assets,” he said.

“Ald. Suffredin has clarified one of our problems – the plague of not maintaining City assets,” said Alderman Don Wilson, 4th Ward. “The City Manager asked if we are comfortable with this level of debt. No one is comfortable with this level of debt. … My inclination is to bump that limit up a little bit. We should be aggressive about maintaining our buildings.”

Mr. Lyons said he did not think that the decision to increase the capital debt limit would adversely affect the City’s bond rating.

 “We should just go ahead and tough it out,” said Ald. Wilson.

Although aldermen agreed on Nov. 20 to fund the entire capital improvement package, they stepped back from that consensus on Nov. 27 in their discussion of the Library’s capital and operating budgets.  (See story on Library funding.) Council will thrash that issue out as well on Dec. 11.

With the bulk of this year’s budget sessions behind him and about a half-million dollars in reserve, Mr. Bobkiewicz is already looking toward 2019. “We would like to have a budget talk for the [2019] soon,” he told the Council on Nov. 20. “We’d like a priority-based budget. We could identify some capital costs that could be paid through the general fund.”