Originally posted 3/11/12, re-posted 4/2/11 – This editorial is the opinion of Bill Coburn, publisher of Sierra Madre News Net and 17 year Sierra Madre resident. It is not intended to reflect the views of any other person or entity with whom I am associated.
The City has been hit with two major financial blows in the last few months, the end of Community Redevelopment Agencies, and a windstorm that is ultimately expected to cost more than a million dollars, somewhere closer to a million and a half if I remember the figures correctly. Since CRA money was used to pay for part of the payroll for City staff and many programs/projects associated with the CRA area (mostly the downtown area of the City, though it extended to Sierra Vista park and the city yards) we’re told that the effect on the budget will be close to $800,000. Add to that a million dollars plus for wind related damage repair, and that’s quite a substantial financial blow to our General Fund.
There are three major sources of revenue for our General Fund, property taxes, the UUT and Vehicle License Fees, which account for 41%, 33% and 11% of budget revenue, respectively. That’s 85% of our budget revenue. We have no control over property taxes or Vehicle License Fees. Both these sources of revenue are channeled through the state. History shows us that funds collected through the state rarely change for the better, from a City standpoint. It is far more likely that the state will find a way to reduce the revenues sent to the City than increase them, particularly with the fiscal crisis the state is facing. The ONLY one of the three major sources of revenue that we have any control over is the UUT, and that is revenue which, when collected, stays here in the City.
One of the reasons we currently have a balanced budget is that all department heads were given the task of reducing General Fund expenses by $900,000 just prior to approval of the 2011 – 2013 budget. This following, as the City Manager describes it in her cover letter to the Council “departmental reorganizations, close monitoring of costs, and constant emphasis on “doing things more efficiently,” all in an attempt to maintain a balanced General Fund budget.” In other words, the city is already running a pretty tight ship. I recognize there is always room for improvement, but in a City that has already begun planning to lay off staff , further cuts will certainly mean additional cuts in staff and services.
Money that is generated for the purposes of funding public safety and spent for that purpose means other General Fund money can be spent on maintaining staff and services in other areas. Yes, money has been generated in the past by the UUT that exceeded expectations. But suppose there is a fire, earthquake, or another windstorm. Suppose there is some unanticipated problem with the water supply that requires a large expenditure. Cash in reserve is a good thing in those situations. The City Council has, on two occasions, passed on increasing the rate, one of those times when the Citizens’ Oversight Committee was recommending that it SHOULD raise them. So here’s an opportunity for the Citizens of the town to vote to protect their City’s revenue stream, and to show trust in the officials that THEY have elected into office to do so as well.
The additional revenue stream will reduce the possibility that our bond rating will be downgraded, with the higher interest rates that accompany that. Should one of the aforementioned catastrophes occur, requiring expenditures that exceed our General Fund/Reserves balance, it would be in the City’s best interests if we could borrow at a lower rate.
One candidate told me that as far as he was concerned, if a Council member (or candidate) is talking about their concern for our bond rating, they are really talking about their intent to borrow more money. I don’t see it that way. I see it as they are doing their civic duty, as an elected official (or potential elected official) of putting the City’s best interests first, and protecting it against potential financial disaster by anticipating and preparing for the worst. And that’s what I want my elected officials to do. I am voting for them to protect the City’s interests, not mine, though one would hope that they are often in line with one another.
As long as we’re on the subject, I hear a lot of concern about the fact that 53% of our budget goes to fund emergency services. That is a very high percentage to be sure. But let’s bear in mind that the PD was one of those departments that had to make cuts as part of the $900,000 in reductions, as we also consider that perhaps one of the reasons that the emergency services percentage is so high is that the other departments are, in fact, so low. Maybe, just maybe, the other departments have done a good enough job reducing their costs that the numbers appear skewed toward public safety. Again, I recognize that there’s always room for improvement, but let’s factor in some credit for a job well done as part of the discussion, too.
Anyway, I think that our General Fund reserves have taken a big hit, and that we, as residents of the City, need to replenish them if we want to protect our City. I don’t see any other source of significant revenue with which we can do that. This is in the best interests of the City. I’ll be voting yes. The companion measure, Measure 12-2, is advisory only, but it should be approved as well, so that the Council will know what the residents want done with the money generated by the UUT.