Saturday, November 21, 2009

Another 'I told you so' on Toledo's budget

In 2008, I questioned the revenue assumptions of Mayor Carty Finkbeiner - especially the projected revenue from red-light cameras.

Item #3 from the list I sent to Finance Director John Sherburne (who never replied) was this:

3. You've doubled the number of speed cameras but the projected revenue from all those cameras is 6 times more than in 2007. Why isn't the revenue projection just double?

That was in March. By October, The Blade was reporting that the city was facing a $10 million budget shortfall for 2008:

Mr. Sherburne said the primary causes for the shortfall include:

•Income tax collections through September that were down $6.6 million.

•Overtime costs for city employees that are $2 million over projections.

•Revenue from red-light cameras that is $750,000 less than expected. (emphasis added)

•Fuel costs that are $1.5 million over budget.

But failing to learn their lessons in 2008, the city did the exact same thing in 2009. As I wrote in November 2008 (city-presented budget assumptions in bold, my comment follows):

• Red Light Camera revenue is provided for at $2.584 million for 2009. While this is the same as for 2008 it reflects an increase over actual collections for 2008.

So what makes the city think that it's going to have INCREASED collections from these cameras in 2009? Every study - even from the camera companies themselves - shows that income/revenue from the cameras decreases over time. So far, in 2008, red light/speed camera revenue is $750,000 less than expected. What evidence does the city present to document why they think they'll have 30% more income in this line item? Do they plan to add more of these cameras to get to that point? And what will happen if residents, like those in Cincinnati, pass a charter amendment to prohibit the cameras? These are the contingencies the city should think about and build into their budget projections.

Valid questions - in more ways than one - because on Friday 13ABC reported 2009 revenues from red-light cameras were were far from meeting projections.(hat-tip Lisa Renee at Glass City Jungle)

The mayor left out a very important number when writing up next year's budget. Toledo's red light cameras were projected to earn the city $2.5 million in paid fines in 2009. But in reality, that number is only $600,000.

The revenue dropped because the state forced Toledo to make the yellow lights longer by one second and Toledo increased the fine to $120-- too rich for some drivers who simply refused to pay.

Police chief Mike Navarre say unpaid fines cost Toledo $1 million. "It's a problem with photo enforcement. It's a problem with parking tickets. It's a problem with people that don't show up for court on traffic tickets."

Those unpaid fines go to collection, but Toledo is now adjusting next year's red light camera revenue at just $900,000.

Note the side comment about the state requiring the city to increase the yellow light time? Most traffic safety studies show that increasing the yellow light times and going to all red in all directions for a moment prior to the lights changing to green increases safety at intersections more than cameras do. And there was much speculation that yellow light times had been decreased at camera intersections in order to generate more money in fines. But that's another topic ...

This line item is currently $1.984 million short. They overestimated their revenue by 331%!

What's even scarier is that, even with two years of data, the city is still projecting an INCREASE in revenue from this source. If they've only collected $600,000 in 2009, what makes them think they'll collect $900,000 in 2010? That's a 50% increase!!!

Does anyone in their right mind really expect a 50% increase in ANY Toledo revenue line item?

Will City Council actually question this figure this time around? They failed to do so previously and we've got pretty much the same people asking the questions.

Perhaps Toledo's best hope for a realistic budget is our new mayor, Mike Bell, and the common sense approach he showed during the campaign. I hope he and his new administration will question these outrageous assumptions and give us a budget based in reality - rather than wished-for revenues to cover the spending they just can't seem to cut.

3 comments:

Tim Higgins said...

Maggie,

In spite of his previous admissions of not knowing how the bills are paid in Toledo, the soon to be outgoing Mayor knows better than anyone that his budget is a piece of bad fiction. How can this be otherwise when a "balanced budget" shows so much red ink?

Ignoring red-light camera revenue issues, ignoring trash collection revenues (which still need to complete their day in court), ignoring unpaid taxes on the city's books all add up to a document which has little value to the new council and new administration.

Hopefully, Mayor-elect and City Council will be able to come to a meeting of the minds on the city's budget ... and quickly.

skeeter1107 said...

In an altered echo of Mr. Higgins referring to the budget as "bad fiction," the budget appears to be a slapdash document of limited use.

There really needs to be a sobered reckoning of what the City is really staring at. Stop the inflation of projected revenues, kill a few sacred cows, work with the money they have coming in. In other words, simply face the reality of their situation.

Otherwise, Toledo will find itself playing the same song and dancing the same accounting dance every year. The song and dance is getting old and the record doesn't sound so good anymore.

Lisa Renee said...

I'm not hopeful the new Mayor elect is going to provide the budget clarity some hope for, but I do agree now as I did when we've discussed this in the past that the red light cameras have only been about revenue, not safety and it was clear that the expected revenue was not going to happen.

If this were about safety, the City should be celebrating the fact that less revenue means less people are running red lights...I found the scenario in Cleveland interesting as well since they've also discovered they are taking in less than expected.

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