Peachtree City has about a $25 million annual budget. Of this, $12 million is for police and fire/EMS, $3 million for public works, $4 million for recreation (including library) and $4 million for everything else (finance/purchasing, engineering, planning, zoning, code enforcement, court, IT, public relations, HR, etc.) Please excuse the rough numbers as they are for discussion purposes only.
Some of you just added those numbers up, and it only came to $23 million. The rest is debt payment.
One way or another City Council is going to solve a $1.2 million budget shortfall problem in FY2011. Many of you will find that number huge in comparison to the total operating budget. I agree. Now for the killer.
What most of you don’t realize is that we have a near $20 million shortfall in the next five fiscal years. That’s not the city’s budget each year, that’s the city shortfall.
In fiscal year 2014 we’re looking at not a $1.2 million problem but a $6 million problem. Hopefully now you see why I’ve been so adamant about our city’s fiscal policy.
There’s plenty of blame to go around and we must understand we will NEVER EVER again make the mistakes of the past. During retreat, it was shown the genesis of this problem started well before the economic downturn.
The financial policy put in place was ill-conceived; however, it was executed extremely well. Every single dollar was spent. “True” revenues did not match up with expenditures. Special purpose revenue money was used to “balance the general fund budget” when it shouldn’t have.
Allow me to give you some assumptions about the shortfall.
(1) A decrease in value in the tax digest next year. For most of us, this means the value of your home and thereby your taxes paid. For FY 2012 the estimate is 0% change, in FY 2013 it’s 0.5 percent increase, etc. I find these appropriately conservative on which to base future revenue.
(2) No department increases in budgets or pay raises in FY2011, 3 percent increase in FY2012, 4 percent in FY2013, etc. Again, this expenditure profile seems to be appropriate right now. Of course things change but we’re using these numbers as starting points.
(3) City debt payments will average about $2.5 million for each of the next five fiscal years. These three points, greatly simplified, account for perhaps 90 percent of the budget modeling concept.
We have a near impossible task of solving the out-year budgets. We cannot continue business as usual.
Of course, no one is going to recommend eliminating an entire department. We’re not going to ask city employees to work for nothing, either.
However, we can ask expenditures be slowed. We can ask employees to understand the economic environment everyone else is living in and ask they not be immune. We can do something about the revenue side in a major way.
If we take into account the $500,000 reductions we’ve already approved this year and solve the $1.2 million next year, we’ll save millions in the out-years.
Being on City Council means making decisions that won’t endear yourself to city employees because, like a business, dire financial situations means making hard decisions.
I am not going to balance the budget on the backs of city employees. But I will ask they accept the economic situation the entire country is in and not ask to be excluded from certain cuts.
One sensitive issue is that of furloughs. It’s being used all around the country to get by until the economy recovers. Furloughs would not delay any services if done properly.
I agree it’s equivalent to a pay cut. Asking furlough(s) equivalent to a 1 percent pay cut is clearly not unreasonable in this economic environment.
Employees need to ask themselves this: When raises come back, do you want that raise based on a pay cut or on their current pay rate? There is a difference. An actual pay cut starts their raise from a lower base value. The furlough method starts at their current rate. I’m not trying to be affable, but realistic.
Allow me to briefly address the morale argument. Why don’t we consider the morale of the 1,000-plus people living in PTC who are unemployed right now? Or the thousands who have taken a pay cut?
Why is it that only government employees’ morale is discussed and not the morale of citizens who are unemployed or have taken pay cuts while seeing the government employees asking for raises?
Sure, I had a hike in my medical insurance rate this year. I had one last year. There will be one next year too. So did everybody else in the work force. Please tell me what makes government employees so special they are immune to what’s going on around us, whereas commercial businesses are not.
For those who are going to nitpick and say I don’t value the city employees, please don’t. Of course I value them. I sometimes see them working all hours of the night at City Hall. I see them cleaning bathrooms at our parks. I’ve talked one-on-one with many of them and they truly enjoy their jobs. I totally respect the hard work they do for the sometimes seemingly low pay.
Of course some will pick on the top 10 percent of paid employees and ask how do they get such pay? They’ve earned it through decades of dedicated service. I understand.
My own personal experiences have taught me many lessons. I worked until midnight (and beyond) many times. I wasn’t paid extra for it. I enjoyed my job. Not once did I ever think, “I’m not getting paid enough. I’m irreplaceable.”
I went to work every single day knowing my boss could easily say, “Eric, I’m sorry, we have to let you go.” (I’m sure at least one citizen will editorialize on that about me.) I had to tell employees on more than one occasion they were being let go.
Of course it’s hard to do. But sometimes you’ve got to do it. I was grateful to have a job, let alone ask for a pay raise when I knew I could be replaced.
I am aware about paying extra for medical insurance or extra for gas or extra for anything else. If necessary, I’d do what I would need to do to keep my family together. That’s what it’s all about, isn’t it?
I mentioned retirement benefits in my list of cost saving ideas. How is it that Peachtree City full-time employees get TWO retirement plans?
1. A defined benefit plan (i.e., reaching a certain age with a minimum number of years service that calculates to monthly retirement pay. I’ve researched our city’s program and believe it to be very lean for its kind. But it’s got to go for future employees.)
Employees also are entitled to, at the same time as the defined benefit above:
2. A city-paid contribution to their 401k plans (for those lucky enough to be making wages that allow them to save extra each month.) This costs our citizens more than $400 a day, every single day of the year for this benefit.
I’ve NEVER heard of a business giving both to their employees at the same time. Please don’t tell me the 401k is to keep employees from leaving or to encourage people to apply for city jobs.
Current employees need to choose one and only one of the two plans mentioned above. Future employees need to go on the contribution-based plan. Our citizens will thank us 30 years from now.
There you have it; temporary furloughs and a choice of retirement plans. This is not balancing the budget on the backs of the employees.
It’s easy to be the nice guy and say how you’re going to protect employees and their benefits and how you’re going to “keep your campaign promises,” no matter what.
Well, I’m keeping my promise to try and get this city back to fiscal responsibility. If it means being the bad guy, so be it. I’m trying to be pragmatic, doing what’s right for the city.
Now for the revenue side of the equation. Of course it would be nice to have all the commercial and industrial zoned areas filled and whistling away. Realty check time again. We’re doing whatever we can to fill them by making Peachtree City the most desirable place to set up business.
Succumbing to a millage tax increase before implementing alternatives is a disservice to the citizens. Using city reserves is not solving the problem. We’re all aware of the ill-conceived SPLOST from last year.
During the campaign I said, (and I was the only one to say this), we can reject this awful SPLOST now (mainly because of the wasteful and unneeded bypass at this time) and come back next year with a valid SPLOST that truly helps the county and the cities.
The idea of a DEDICATED debt reduction SPLOST is the best solution for eliminating nearly $13M of budget shortfall for the next five years. This would go a long way to solving our out-year budget problem – permanently.
This would require future councils to maintain fiscal discipline. A long shot, I know, but fortunately we have an election every two years.
No sugar coating. Tough choices indeed. I will not ignore the future of this city and pass along this budget problem to the next council. It needs to be addressed now without fear of political consequences. A dedicated debt reduction SPLOST is a must.
All of us on City Council want what’s best for the city. Our personal aspirations are not a factor. I’m extremely pleased to be on a council with those who are like-minded in this regard.
Councilman, Post #1
Peachtree City, Ga.