Last week - the last week of August, that is - Toledo City Council held a finance committee meeting and received the financial data as of the end of June. (Personally, I'm with Betty Shultz on this and think a computer system that would allow for much more timely information is way overdue.) So we now have information about where the city is at the mid-way mark, with just a third of the year to go.
And it's not good.
Well, there is a bit of good in the overall bad situation: expenses, except for overtime, are pretty much on track according to budget. With 50% of the year gone, total expenditures are at 46% of budget. Overtime, primarily due to the minimum manning requirements in the fire department, is already at 60% of budget, and that number is likely to continue to increase, according to Tom Radwanski's statements at the committee meeting.
'Other salaries and wages' are at 133% of budget. For those of you not numerically inclined, that means that in half the year, we've spent everything we budgeted in this category - and then 1/3 more. Radwanski explained that number was high because of the number of severances paid out as part of the effort to reduce staffing. (Obviously, they forget that number might increase as part of the staff reduction and failed to budget appropriately. Surprised?)
He also said there are 'significant savings in regular wages due to furloughs and cutbacks' and that the concessions from the union contracts should help that number as the year goes on.
But, that's not enough to overcome the lack of revenues. According to Radwanski, "...we're not gaining ground."
With 50% of the year gone, here's how we stand in meeting the budgeted amounts of revenue:
* Income Taxes - Withholding is at 44% of budget
* Income Taxes - Individuals is at 56% of budget
* Income Taxes - Businesses is at 37% of budget
* Property Tax is at 43% of budget
* Estate & Other Taxes is at 36% of budget
* Intergovernmental Revenue is at 45% of budget
* Fees, Permits, Licenses & Inspections is at 23% of budget
* Fines, Forfeits & Court Costs is at 31% of budget
* Administrative Fee and Other Charges for Service is at 34% of budget
* Interest is at 22% of budget
* Other revenue is at 9% of budget
Now, some of these could be lower than the 50% mark due to the timing of the receipt of the funds. Radwanski told the council that interest income was down because of the city having less money to invest. He also pointed out that the new revenue category of 'Health Care co-premiums,' which was just negotiated in the union contracts, should help to offset a small amount of the other losses.
I was surprised at income from court fines/cost being only 31% of budget. It is staggering to see such a discrepancy. Either the budgeted amount was increased beyond what should reasonably be expected or the layoffs in the police department resulted in a significant decrease in filings. The city administration often fails to remember that less police usually equals less court filings which results in less money collected. I'm certain, based upon my prior experience with the city as the Clerk of Court, that they did not adjust those revenue line items when they laid off the police officers. But then again, are you surprised?
I've previously raised such questions about budget assumptions, including how they increase revenue projections. This is why the huge decline in fees, permits, licenses, etc. should not be a surprise at all.
One of the things the city did in the budget was to increase many of those line items by an across the board amount. Now, does it really make sense for the revenue from Firearms Dealers to increase from $656.50 to $663.07? Did the city really think an even-numbered fee would increase to give them seven cents? No - they just multiplied 2008 revenue by 1% and plugged in the number...and they did with most of the fees, permits and licenses categories in the 2009 budget, artificially increasing the amount of projected revenue even though they had to know there was no way they'd ever reach those projections.
Overall, revenue for the city was only at 40% of the budgeted amount or $102,696,000 out of $259,047,000 expected.
One issue I have with the presentation to council and the way the discussion over the budget is conducted is the emphasis on comparing this year to last year. Even the budget handout focuses on "2009 vs 2008 YTD Actual" amounts and percentage variances.
How we compared to last year is minor compared to what we've planned for 2009.
It's this emphasis on comparing collections and expenses to the prior year that tends to distort the picture. Knowing that our business income taxes are only down 21% compared to last year doesn't negate the serious problem that we've only collected 1/3 of what we've planned to get for the year. While it may be of some interest to know the percentage difference with 2008, it really doesn't help address the circumstances we find ourselves in for 2009. Does the city really think it's going to make up more than $12 million in that category in the last quarter of the year?
And what, if anything will they do about it - other than suggest stealing from the Capital Improvements Fund in order to cover a small portion of the difference?
It should not surprise anyone that the city will not be able to meet their revenue projections because many of them were questionable to begin with. That council did not question these numbers in the first place is part of the problem. Now they are suffering the consequences of 'hoping and trusting' rather than critically evaluating and properly budgeting - and us along with them.
We will, eventually, pay the price for their failure - either in the form of higher taxes and fees, or less service. And if the choice is less service, it will be in an area designed to promote fear (like in police and fire) in order to generate support for more money so they can continue to make bad decisions when it comes to the budget.