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.

There was no plan

Toledo City Council and Mayor Carty Finkbeiner have debated, for what seems like years, the issue of garbage collection. Questions of whether or not to automate the process, contract it out, purchase new trucks, purchase cans for the citizens, what to do with the workers who have a contract that requires the city to find them other jobs if they automate....and all the myriad of follow-up issues that go along with any potential answer have been discussed.

I've been a proponent of contracting out the service because it would save me (and everyone else in the city) money. That's just a no-brainer.

The politicians, however, did not agree and in February voted to issue $9.6 million in debt for new trucks and garbage cans.

Many people asked how the city was going to actually pay for this new debt, considering the financial situation of the city, facing - still - about an $8 million debt for 2009, and as much as a $25 million deficit for 2010.

My question revolved around the difference in costs between subcontracting the service versus automation. I've still not seen a fiscal analysis of the two options and doubt one even exists.

Today we find out the truth - council had no plan for how the city was going to cover the costs of this purchase. They were just going to 'hope' that the money would be there, despite knowing that they couldn't meet current obligations, much less a new one.

So what are they going to do? Scramble for funds.

According to law, approved by the voters, a portion of the 'temporary' 3/4% payroll income tax goes directly into the CIP to fund various long-term projects in the city, like roads and major purchases. Often, the (correct) decision has been to issue notes or bonds for those purposes and pay the debt from the CIP. Additionally, the city has placed a restriction on itself that not more than 90% of the amount transferred from the 3/4% tax each year can go toward debt payments. This allows other projects to also be covered while keeping the city from incurring too much debt.

Now Joe McNamara wants to use the CIP to pay for the debt for the new trucks and cans. (Lisa Renee at Glass City Jungle has the press release.) Except that using these CIP funds for this purpose requires council to waive their 90% limit on debt.

From today's paper:

Mr. McNamara wants to use most of the money to pay 2010 debt-service costs for the purchase of automated trash trucks and containers.

He said the plan would cut the city's $7.8 million deficit by $2.5 million.
...
Mr. McNamara said it would be fiscally smart to go ahead with the plan and waive the policy, because the debt for the trash trucks and containers has been issued.

See? We'll just use CIP funds to make the first payment because we have no money in the general fund to cover our obligation...and look! By making this decision, we've cut our deficit!!! Aren't we smart!

This is the equivalent of taking out a loan to purchase a new boat when you can't make your mortgage payments - and then deciding to spend money out of your savings to cover the boat payment. That's really smart, isn't it?

So we're left with only one conclusion: city council made a decision to purchase items and had no plan for how to pay for them.

Well, perhaps that's not quite right. They planned to pay the debt, but didn't look at what other items would have to be cut in order to make that payment because there is only so much money available - and all of it is spoken for.

In fact, they've got more expenses than revenue - which they KNEW - but decided to add to the expenses anyway!

So the plan that will probably pass at next Tuesday's council meeting will be to waive their 90% limit on debt payments out of CIP and use those funds to cover the debt for the new garbage trucks and the new cans (because, you know, we just can't be trusted to purchase our own cans so we have to have government do it for us - and charge us more than we'd pay otherwise).

These people did not think. They didn't follow through on the implications of the purchase to get to the point of actually paying for it. They were well aware of the current deficit and the projected future one. They were well aware of the decline in revenues - and the potential that lost revenues would never return. They were well aware of the fact that the city was having trouble meeting every day obligations without adding even most costs.

And they put us another $9.6 million in debt anyway.

Remember - Joe McNamara, Phil Copeland, George Sarantou, and Steve Steele are up for election in November. Do you really want 'more of the same' when it comes to these kinds of financial decisions being made on your behalf?

Toledo government's 'loss' is taxpayers' gain

Toledo Mayor Carty Finkbeiner is at it again with a 'letter' to both mayoral candidates and Toledo City Council, chastising them for not 'raising revenues' for the city. (see bottom of post for the three-page letter)

He again cites his proposed increase in the trash tax and the elimination of reciprocity for payroll income taxes paid to other jurisdictions as 'revenue' the city should be collecting.

But the perversion of thought that passes for logic in Toledo politics is most evident in this statement from the letter:

"Our refuse fee is one of the lowest in Michigan and Ohio - $8.50 per month if you don't re-cycle (stet) and $1.00 per month if you do. We lost $8.4 million this year because it is so low."(emphasis added)

I'll skip over the whole point that our payroll taxes are supposed to pay for this service and the 'refuse fee' is over and above those payments. I'll also skip over his hyphenation of the word 'recycle' - and even the mention of Michigan prior to Ohio.

Let's look at the perspective Carty has with his claim that "we lost $8.4 million." Just who is the 'we'? He clearly means the city bureaucracy because he certainly isn't referring to the taxpayers.

And he considers the lack of imposition of additional taxation a 'loss.' Now, that may be true in terms of the government. However, he fails to see the reality of the situation in that failure to pass this additional tax meant the residents of Toledo 'saved' $8.4 million. Those who would have been taxed actually kept all that money to themselves.

And what happened to that money? Well, we spent it - on items we needed like food, mortgages, utilities, college educations or even amenities that helped our local economy. Or perhaps we saved the money, putting it into a bank account and providing a resource for a longer-term goal - or even assets upon which the bank could base lending to others.

This is a really terrific thing for the taxpayers and for our local economy. Rather than turning over the money to government, we kept it and used it for our own purposes.

Carty, instead of complaining that the city 'lost' something it had no right to, should be advertising how much 'extra' residents of this city had as a result of the failure to implement an additional tax.

But Carty, the local paper and the members of council who support this taxation see only one side of the coin: additional money from us that they don't have to play with.

And they conveniently fail to address the 'what if' when it comes to the trash tax: what if they lose a lawsuit over whether or not their so-called fee is, indeed, a tax and implemented illegally? If they lose that case, they'll have to repay what they've collected to date. Where will that money come from and how much more in debt will the city be then? Well, let's not even think of that, they must be saying to themselves.

Toledoans are fed up with the way this government is spending our money - continuing to fund studies and non-essentials while cutting police and other required services. They say there's no where else to cut, but we obviously don't believe them because we see them spending money on such frivolousness as life insurance coverage for themselves and other non-mandatory items they justify with the 'it's only' logic.

But the bigger problem in all this is the perverted reasoning and perspective that permeates the halls of One Government Center: that forcibly taking more of your money (at any time, but especially in a down economy) is somehow 'good' for you, while the opposite - you keeping your own money - is somehow a 'loss' for government and a really terrible thing for the city.

We have an election on November 3rd. Do we have the courage to elect people who believe that government's 'loss' is, indeed, the taxpayers' gain?

Or will we just elect the same old names and philosophies that got us into this mess in the first place?

The letter:

Toledo's mid-year financial situation is not good

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.

No increase in trash tax

Yes, I still call it a trash tax because that's exactly what it is. It is a 'fee' that is supposedly charged to 'encourage us to recycle' and penalize us if we don't. However, it's collected and deposited into the general fund of the City of Toledo and goes to pay for the daily operations of the city - not exclusively to fund the garbage service.

And there is still a lawsuit over this very issue, which makes for interesting reading. The city claimed it wasn't a tax and it was implemented properly, but when the suit asked for class-action status, the city claimed it was a tax so class-action wasn't allowable.

I know - but this is Toledo.

An increase in the tax has been on the table for a while now, pushed by Mayor Carty Finkbeiner as a way to balance the budget which is still facing an $8 million deficit.

According to the ordinance that was on council's agenda last night:

City Council enacted Ordinance No. 91-08 amending the refuse collection fees for three years beginning May 1, 2008. The legislation provided for yearly decreases in the rates paid by citizens who committed to recycling to encourage an increased level of recycling in the city. In May 2009, the recycling rate dropped to $1.00 per month and beginning in May 2010, the rate will be $0.00. Recycling levels have now increased to fifty percent and continue to rise due to greater environmental awareness and the pilot automation project that has been rolled out in parts of the city. For these reasons, there is no longer a need to reduce the rates to encourage recycling. In addition, it is necessary to provide an increase in both the non-recycling and the recycling rates to recover a greater percentage of refuse and recycling collection costs. This ordinance amends the current monthly refuse collection fees from $8.50 non-recycling and $1.00 recycling to $10.00 non-recycling and $7.00 recycling and authorizes the establishment of a recycling rewards program to begin January 1, 2010 with the new automated refuse collection system.

How convenient for the city that they no longer need to encourage recycling because of the participation. But isn't that always the case with these types of programs? They implement a 'revenue source' based upon penalizing a type of behavior. Then, when the behavior modifies and the revenue declines, they need to expand to meet the budgeted amounts. They do this with red-light and speed cameras and now with the trash tax. The real solution, however, is for the city to reduce spending and live within their (actually OUR) means - not forever attempt to increase the means, but that's another matter entirely.

Of course, this proposal would have really stuck it to the people who recycle. As I've previously pointed out, passage of this ordinance would have meant an 18% fee increase for people who don't recycle, but a 600% increase for those who do. It was the equivalent of a 3.91 mill levy, more than we pay in total for the two permanent improvement levies for Toledo Public Schools - or about what we pay for the Port Authority levy, 911 levy, Senior Services levy, MetroParks land levy, and the COSI levy COMBINED.

It also would have included some sort of bribe in the form of 'coupons' for local businesses - as if that would somehow make $120 per year more palatable. Yeah - right!

Council President Joe McNamara wanted to delay the vote on this issue because Councilman Frank Szollosi was not present. Thankfully, Councilman D. Michael Collins (also a candidate for mayor) objected and called for the vote.

Tom Waniewski, Lindsay Webb, Mike Ashford, Collins, Mike Craig and Betty Shultz voted no. Wilma Brown, Phil Copeland, McNamara, George Sarantou and Steve Steel voted yes.

So the ordinance failed.

Surprisingly, Republican George Sarantou who is also up for election this year, voted yes to raise 'taxes' on Toledoans. Webb, who made a campaign promise not to vote to increase the fees, has consistently voted against such proposals and should be commended for keeping her promise to her district.

The still unanswered question, however, revolves around the lawsuit. If Karen Shanahan and her attorneys prevail and this becomes a class-action, and the city then loses the case, the monies collected may have to be returned, in addition to eliminating that source of revenue to the city. As far as I can tell, no one in the administration nor on council has addressed what happens then.

But not to worry...I'm sure they'll come up with some other 'revenue enhancement' scheme if that's the case.

The payroll income tax shell game

Last night Toledo City Council rejected Mayor Carty Finkbeiner's plan to place a measure on the November ballot that would allow the one-time transfer of $3.9 million in Capital Improvement Plan (CIP) Funds into the General Fund.

The vote was 9-2 against, with Betty Shultz and Mike Ashford voting for the resolution. Phil Copeland was absent.

Generally, the members of city council supported their own re-allocation plan (which they're calling 'safety first') which will be on the September ballot.

Their plan, Issue 1, would change the allocation of the 3/4% payroll income tax.

Apparently, creating ballot issues in order to move this money around is habit-forming.

The temporary (since 1982) addition to our payroll income tax has a four-year term, so voters must continually approve its implementation, though some on council have speculated that it should be permanent.

Here's how the tax has been allocated over the years:

Prior to 2005:

* 1/3 for Police, Fire and Safety Department
* 1/3 for the General Fund
* 1/3 for the Capital Improvement Fund

From 2005 to 2008:

* 1/3 for Police, Fire and Safety Department
* 1/2 for the General Fund
* 1/6 for the Capital Improvement Fund

Since 2008:

* 1/3 for Police, Fire and Safety Department
* 1/3 for the General Fund
* 1/3 for the Capital Improvement Fund

Proposed Issue 1:

* for 2009:
- 1/2 for Police, Fire and Safety Departments
- 1/2 for General Fund

* for 2010-12:
- 1/2 for Police, Fire and Safety Departments
- 1/3 for General Fund
- 1/6 for Capital Improvement Fund

Even though the tax was not scheduled to expire until the end of 2005, then-mayor Finkbeiner and members of city council placed the change in allocation on the November 2004 ballot, citing difficult economic times as a reason to short the CIP. Promises were made then that the entire amount that 'could' be moved based upon the revised allocation would not be - that council would only move what was necessary to cover the budget deficit. Those same promises are being made today.

If Issue 1 passes in September, we'll have four changes to this tax in a five-year period. It's obvious our council and mayors have no idea how live within their means.

And why should they? Every time they threaten cuts to police and fire, the voters willingly 'pull the lever' for the latest proposal, bailing out politicians who do not know how to make a budget and stick with it.

Even the latest union contracts give a good example of their lack of sensibility when it comes to future commitments of funds. While many concessions were made by the unions, the pension contributions to PERS are rolled back only for 2009. Next year, those pension contributions and other terms will go back into effect. Council will have the same unsustainable union contract obligations to deal with in January 2010 as they did in January 2009.

This is why they want the ballot issue to pass - because it gives them more money for 2010, 2011 and 2012 than what they have right now, saving them (maybe) from having to explain budget deficits next year.

Except I don't believe that will be the case.

First, even if Issue 1 passes, the city still faces a $3.8 million deficit.

Second, with the additional monies allocated to the General Fund and the everyday obligations of the city, I expect they will find a way to spend all of it - just as they do now - with no thought to the long-term effects of a continually decreasing CIP Fund.

So council plays with 1/2, 1/3, 1/6, police and fire, general fund, CIP, one year, two years, four years ... moving allocations and dollars around - all in the hopes that you'll lose track of what exactly your money goes for so that they'll win the prize: an electorate that doesn't have a clue and has given up trying to find out.

A back-up plan if voters say 'no'

Mayor Carty Finkbeiner wants to take money from the Capital Improvements Fund and move it into the General Fund to cover the budget deficit for 2009.

City Council has already voted to place an issue on the September ballot that would re-allocate our 3/4% payroll income tax to help cover a portion of that deficit.

Tonight, city council will deliberate on the following resolution which would place a back-up issue on the November ballot to do, basically, the same thing - on a one-time only basis, move $3.9 million from CIP into the General Fund.

Here is the text of the legislation:

RES. 488-09

Providing for the submitting to the electors of the City of Toledo at the Regular Municipal Election to be held on November 3, 2009, the question of the approval of the issue under Ordinance No._____ –09, passed by the Council of the City of Toledo on August 18, 2009, by amending Chapter 1905 of the Toledo Municipal Code, to provide for reallocation on a one time basis of funds allocated to the Capital Improvement fund to the General Fund; and declaring an emergency.

SUMMARY & BACKGROUND:
Currently Chapter 1905 of the Toledo Municipal Code (Code) provides for the permanent levy of a tax on income at the rate of one and one-half percent (1-1/2%) from and after January 1, 1967. Additionally, Chapter 1905 of the Code provides for the levy of a temporary three-quarters of one percent (3/4%). On March 4, 2008 the voters of Toledo approved the continuation of the additional ¾% income tax for the period of 2009 – 2012 with an allocation of one-third (1/3) for Police, Fire, and other Safety Department responsibilities, one-third (1/3) for the General Fund, and one-third (1/3) for the Capital Improvements Fund.

Due to extraordinary economic conditions that have impacted local and national economies the City of Toledo is facing a significant General Fund deficit for the year 2009. While several steps have been made to reduce the size of the projected deficit, it is likely that a sizable shortfall will remain unaddressed if immediate action is not taken. Ohio law and he Charter of the City of Toledo require that the City balance its budget.

Pursuant to the mandate of Chapter 1905 of the Code as enacted by the voters, the City has allocated one third (1/3) of the three quarters percent (3/4%) income tax to the Capital Improvements Fund. Fortuitously, the City has also been awarded funds in American Recovery and Reinvestment Act of 2009 grants (Stimulus Funds) for capital improvement purposes.

The Council of the City of Toledo desires to reallocate an amount not to exceed three million nine hundred thousand dollars ($3,900,000) from currently allocated and unencumbered amounts in the Capital Improvement Fund to the General Fund to help address the projected budget deficit. This would be a one-time reallocation to address a pending fiscal exigency and would not affect future allocations to the Capital Improvements Fund.

The approval of the electors of the City of Toledo is required to reallocate portions of the Capital Improvements Fund to the General Fund because the original allocation was mandated by the people. NOW, THEREFORE,

Be it resolved by the Council of the City of Toledo:

SECTION 1. That there by submitted to the electors of the City of Toledo at a Regular Municipal Election to be held on November 3, 2009, the question of the approval of reallocation on a one time basis of funds allocated to the Capital Improvement fund to the General Fund.

SECTION 2. In accordance with Ohio Revised Code Section 718.01, the Board of Elections of Lucas County, Ohio is directed to provide for the submitting of the question of passing Ordinance No. ___-09 at the Regular Municipal Election on November 3, 2009.

SECTION 3. That the Clerk of Council be and he is hereby authorized and directed to file with the Board of Elections of Lucas County, Ohio a certified copy of Ordinance No. ___-09 and a certified copy of this Resolution for the submission of the aforesaid Ordinance at the Regular Municipal Election to be held on November 3, 2009, and the said Clerk of Council is further directed to request the aforesaid Board of Elections to provide for the submitting of the questions of passing said Ordinance at such election.

SECTION 4. That is the desire and request of this Council that ballots for said questions shall be substantially in the following form:

Proposed reallocation in 2009 on, a one-time basis, of funds in an amount not to exceed three million nine hundred thousand dollars ($3,900,000) allocated pursuant to the provisions of Chapter 1905 of the Toledo Municipal Code, for the Capital Improvements Fund to the General Fund.

A Majority Affirmative Vote is Necessary for Passage.

Shall Ordinance No. ___-09, providing for the reallocation in 2009 on, a one-time basis, of funds in an amount not to exceed three million nine hundred thousand dollars ($3,900,000) allocated pursuant to the provisions of Chapter 1905 of the Toledo Municipal Code, for the Capital Improvement fund to the General Fund be approved?


______________For the reallocation of Capital Improvements Funds to the General Fund.

______________Against the reallocation of Capital Improvements Funds to the General Fund.

SECTION 5. That the Clerk of this Council shall and hereby is directed to file a copy of this Resolution with the Board of Lucas County, Ohio no later than the 19th day of August 2009.

SECTION 6. That this Resolution hereby is declared to be an emergency measure and shall be in force and effect from and after its adoption. The reason for the emergency lies in the fact that same is necessary for the immediate preservation of the public peace, health, safety, and property and for the further reason that this Resolution must be immediately effective in order to comply with the statutory deadline for submission of the question to the electors at the November 3, 2009 Regular Municipal Election and for the further reason that this Resolution must be filed with the Board of Election at least seventy five (75) days before the election.

Carty did send a letter to city council stressing that if the September issue is approved, they could remove this item from the November ballot, but if voters reject the transfer of funds in September, this measure could still be supported and allow the city to have a balanced budget, as required by law.

No need to cut spending if we use 2010 monies for 2009

Toledo City Council has an item on the agenda for next Tuesday committing to spend 2010 revenue to cover the 2009 deficit - if voters approve the change in the 3/4% payroll income tax allocation.

Here is the resolution:

RES. 456-09

Committing to the electors of the City of Toledo at the Primary Election to be held on September 15, 2009 voting on the approval of the change of the allocation of the three-quarters percent (3/4%) income tax for the period commencing upon passage by the electorate and ending December 31, 2012, that Toledo City Council will utilize newly available funds in the General Fund in 2010 to cover the deficit from 2009 operations.

WHEREAS, on January 6, 2009 City Council adopted Resolution No. 29-09, which submits to the electors of the City of Toledo at a Primary Election to be held on September 15, 2009 the question of the approval of the passage of Ordinance No. 28-09, providing for a change of the allocation of the three-quarters percent (3/4%) tax on income for the remainder of 2009 and ending December 31, 2012; and

WHEREAS, the Council of the City of Toledo desires to modify the allocation of the ¾% income tax for the remainder of 2009 to one-half (1/2) for Police, Fire, and other Safety Department responsibilities and one-half (1/2) for the General Fund, and for the period of 2010 - 2012 to one-half (1/2) for Police, Fire, and other Safety Department responsibilities, one-third (1/3) for the General Fund and one-sixth (1/6) for the Capital Improvements Fund; and

WHEREAS, the current projected General Fund deficit for 2009 is $8.9M and the change of the allocation would allow for $3.9M to be used towards this deficit in 2009 as committed by Res. 118-09 adopted on March 31, 2009; and

WHEREAS, a $140.7M income tax projection for 2010 would allow for $7.8M to be utilized within the General Fund, covering the remaining 2009 deficit now estimated at $5M; and

WHEREAS, City Council unanimously adopted Res. 399-09 on July 7, 2009 strongly urging the electors to approve the Safety First Plan, Issue 1 on the September 15, 2009 Primary Election ballot; NOW, THEREFORE,

Be it resolved by the Council of the City of Toledo:

SECTION 1. That Toledo City Council does hereby commit to the electors of the City of Toledo at a Primary Election to be held on September 15, 2009 voting on the approval of the change of the allocation of the three-quarters percent (3/4%) income tax for the period commencing upon passage by the electorate and ending December 31, 2012, that Toledo City Council will utilize newly available funds in the General Fund in 2010 to cover the deficit from 2009 operations.

SECTION 2. That the Members of Toledo City Council commit to utilizing newly available funds in the General Fund in 2010 to cover the deficit from 2009 operations pending the September 15, 2009 vote on the change of the allocation of the three-quarters percent (3/4%) income tax.

SECTION 3. That this Resolution shall take effect and be in force from and after the earliest period allowed by law.

This is insane! And probably qualifies for 'stuck on stupid' designation, as well.

Just like with the coupons in exchange for a trash tax increase, they're trying to bribe us into passing Issue 1 so they can keep moving around monies because they can't stop spending. Only this time, the 'bribe' is a promise to use future funds to cover overspending now.

Which means, in case you missed it, that next year we won't have the necessary funds to cover 2010 expenses, especially when many of the costs 'saved' this year will be back in place as of January. Remember the PERS pickup and bonus payments for police and fire union members? When those provisions go into effect in 2010, we'll be right back where we started with unsustainable contracts and costs higher than we can afford.

But don't worry, we'll just face those budget deficits then. And if we use 2010 money to pay for 2009, we can say we balanced the budget without raising taxes - during an election year!!! Yippee!!!
(sarcasm off)

Of course, this doesn't address the problems inherent in Issue 1 - that removing money from the capital improvements fund to meet yearly expenses means less money for such long-term items as road repair. But maybe you won't notice if all council talks about is this 'commitment.'

And then there is that little caveat in the resolution:

"...$140.7M income tax projection for 2010 would allow for $7.8M to be utilized within the General Fund, covering the remaining 2009 deficit now estimated at $5M"

With the current decline in population and the high unemployment numbers, will the city be able to realize $140.7 million in income tax collections? They're having trouble meeting this year's projection - what happens if things in Toledo get worse? (It's been known to happen...)

Just like cartoon character Wimpy, Popeye the Sailor Man's mooching friend, says, "I'd gladly pay you Tuesday for a hamburger today."

Only this isn't funny.

UPDATE: A friend who is a city auditor in Ohio provided this insight on the issue on my Facebook page:

"...I believe the only way this can be done is through the issuance of a tax anticipation note (TAN). If this is the case, not only will the TAN have to be paid back next year but it will have an interest premium attached. If they borrow $5 million (which they will have to do since I assume the tax won't be collected until next year) at 5% that amounts to $250,000."

If that's the case, more questions need to be answered before council votes on this on Tuesday!

Carty is right when it comes to Issue 1

Issue 1, to change the allocation of the city of Toledo's 3/4% payroll income tax, is on the primary ballot September 15. Mayor Carty Finkbeiner has announced his opposition to it.

Currently, this tax is split:

* 1/3 for Police, Fire and Safety Department responsibilities
* 1/3 for the General Fund
* 1/3 for the Capital Improvement Fund.

Voters approved this change in allocation in 2008 beginning with collections in 2009.

The allocation prior to the 2008 vote was:

* 1/3 for Police Fire and Safety Department
* 1/2 for the General Fund
* 1/6 for the Capital Improvement Fund

As I wrote at the time,

Since the tax generates about $57.7 million per year, that means:
* $19 million to police/fire/other safety department responsibilities
* $28.75 million to the General Fund
* $9.6 million to the Capital Improvement Fund

But the 2008 vote changed the allocation to equal thirds of the tax and, as a result, changed the dollar amounts to roughly $19 million each.

All members of city council and the mayor supported the passage of this change. But as I questioned at the time:

Now, it should be easy to see that with the CIP getting more money, the general fund (including police/fire/other safety department responsibilities) gets less - $9.75 million less, to be exact.

So, despite the claim by Council President Mark Sobczak that "(i)t'll be business as usual...", it really won't be if the general fund has to go without approximately $10 million starting in January.

So where will roughly $10 million in cuts come from? Inquiring minds want to know.

That question was never answered and the change in allocation is being blamed for part of the budget deficit.

So now, we're back to the beginning - sort of - with the Issue 1 language which will again change the allocation:

* For 2009, 1/2 to Police and Fire and 1/2 to the General Fund - nothing for the Capital Improvements Budget (CIP).

* For 2010-12, the term of the temporary tax, 1/2 for Police and Fire, 1/3 for the General Fund and 1/6 for Capital Improvements.

So before we've even gone a full year with the new allocation, they want to change it again.

One of the problems is that city council has already raided the 2009 CIP fund to balance the 2008 budget. They're also talking about raiding the 2010 CIP budget to balance 2009, which is still around $8 million in the hole. Even if voters approve this new allocation, it will not be enough to balance the 2009 budget.

If we keep raiding our capital budget, we won't have any money for structural items like roads, which are a major expenditure out of that fund.

Additionally, I'm tired of city council changing the allocation of this TEMPORARY addition to our payroll taxes. It was originally presented in 1982, the year I graduated from high school, as a temporary tax, but the city relies upon it as a permanent source of revenue. They've continued to spend as if they will always have this income - and the voters have continued to vote in favor of renewal because they're told doom and gloom will result if they don't.

Why did city council want to change the allocation in 2008? They wanted to put more money toward the CIP and they used that idea - and road improvements - as a reason for Toledoans to vote for it. Now, they've decided they want the money for their own pet projects in the General Fund, so they want to again raid the future (CIP) for the present (General Fund). Of course, the ever-present appeal to fear that they need the funds for police and fire, will be utilized.

Well, if they stopped funding all the non-mandatory items, perhaps they'd actually have the funds for the essentials - like police and fire. It's what we do with our own budgets but something government, and Toledo in particular, seems to not understand.

I mean, really, do we need to spend $150,000 on a study about a solar field on the landfill - or money for police and fire? That is the question council should be asking - but they don't. They spend money on such 'studies' while then telling the voters they've cut everywhere they possibly can and there just isn't any money left.

Yeah, right.

I wish the voters would tell council no on Issue 1. Not because I don't want more of those dollars allocated to police and fire, but because council needs to be sent a strong message that they can't just keep moving money around to suit their needs. This ballot measure robs Peter to pay Paul - and costs us more in the long-term than the temporary change will gain us for 2009.

City Council and the Mayor need to learn to live within their means - actually, to live within OUR means - and to make better decisions, not play a constant shell game with our tax dollars.

State and local savings down the drain

If you found a way for government to save millions of dollars, had a task force endorse your savings plan and recommend it to the legislature and the governor, only to have the politicians reject it, would you be mad?

You should be, because that's exactly what is happening in Ohio when it comes to a mandated prevailing wage for government contracts.

Marc Kilmer, a policy analyst with the Buckeye Institute for Public Policy Solutions, wrote the following:

Will Common Sense Prevail?

The General Assembly and the Governor just finished work on a contentious state budget where they had to find billions of dollars in savings in order to balance it. It is a testimony to the power of organized labor in Ohio that common sense state construction law reforms were ignored in this process. The power of Big Labor is also why the state's archaic -- and costly -- prevailing wage law is still on the books. But what's a few hundred million dollars in savings for the taxpayer when you can keep union bosses happy?

Taxpayers pay around $3 billion every year for government entities at the state and local level to build schools, government buildings, and university structures. It's a lot of money, especially during an economic downturn when local governments and the State of Ohio are struggling to find ways to balance their budgets.

Given the large amount of money at stake, it makes sense to look for better ways to complete the construction at a lower cost to taxpayers. That's exactly what the Ohio Construction Reform Panel did, and in April its members overwhelmingly approved a set of proposals that have the potential to shave 10% off the cost of government construction. That's a $40 million a year in savings to the state and a $300 million a year in savings when applied to all government entities.

These common-sense reforms were absent from the recently-passed state budget, though. Labor unions and some construction firms are not keen on any reforms that may cut state construction spending. Efficiency and a good deal for the taxpayer do not produce as much money for union workers or some construction firms as does the state's current inefficient process.

This is the same reason why Ohio's prevailing wage law is still in effect. This law artificially inflates wages on some state construction projects, meaning that taxpayers fork over anywhere from 5% to 15% more than they should for these projects.

There are vested interests who do not want these laws repealed. The prevailing wage law and other construction laws benefit firms that are older, well-established, and unionized. These companies and their unions lobby hard against any true reforms to current construction laws.

On the other side are many construction firms that, logically, think they would have a better chance to get state construction jobs if the playing field weren't rigged. They would love to be able to submit lower bids and compete for the chance to work on our communities' schools and other government buildings, but they don't have a fair chance today.

In the end, the problems the state's construction laws cause these firms is nothing compared to the problems these laws cause Ohio's taxpayers. If the recommendations of the Ohio Construction Reform Panel were adopted and the prevailing wage law were repealed, it could mean anywhere from $450 million to $750 million in savings every year for state taxpayers.

Competition for state construction jobs should not be rigged to benefit a few. It should be a fair process that looks for the best quality at the best price. Unfortunately for Ohio's taxpayers, legislators have steadfastly resisted calls to change the state's construction laws to streamline the process, increase competition, and lower costs. Those who benefit from inefficiency have a lot of sway in Columbus.

With everyone, including politicians, saying we need to reduce the costs of government and find ways to save taxpayer money, why are we still insisting on paying an inflated amount for public contracts?

Kilmer's article examines these costs with state and local governments, but not specifically to any city. Many local governments have rules similar to the state's - and even living wages (which are higher than the prevailing wage), like Toledo and Lucas County. How much extra do these policies add to the City of Toledo budget deficit?

No one really knows - because locally, no media outlet or organization - and certainly not government - has spent the time to gather the information and share it with the public.

Proponents of such laws say that they 'help' the 'working men and women' 'earn' a decent wage. However, government only does business with certain companies, so the rest of the entire community is paying more than necessary so that certain individuals can 'earn' a specific wage. The end result is that everyone is paying more so a few can benefit.

My question for all our council and mayoral candidates is this: how much would taxpayers save if Toledo didn't have a prevailing and living wage requirement and what would the savings have to be for you to support the repeal of such mandates?

How is this a good deal for taxpayers?

According to the Journal of the City of Toledo, when city council approved Ordinance 373-09 (beginning on page 8), the contract with the Toledo Police Patrolmen's Association (TPPA), it also agreed to the following:

Other provisions - Grievance Settlement.
The City agrees to pay $25,000 to the TPPA to withdraw any and all outstanding grievances filed prior to June 24, 2009 with the exception of grievances on employee parking, eliminating of the tax officer position, on call compensation/payment for fuel, sergeant-at-arms position, permanent shifts, and layoff grievances.

Tax Payment. A one-time payment will be made by April 15, 2010 based on the sliding income tax collection schedule as follows: if the 2009 audited books reflect an income tax collection greater than $148 million, the employee receives 2% of his/her base rate; if the 2009 audited books reflect an income tax collection greater than $150 million, the employee receives 4.5% of his/her base rate; if the 2009 audited books reflect an income tax collection greater than $152.5 million, the employee receives 7% of his base rate; if the 2009 audited books reflect an income tax collection greater than $155 million employee receives 9% of his base rate.

So, let's get this straight: the city is going to pay the union - not the members, but the organization - $25,000 to get them to drop a bunch of grievances? Since when did taxpayer money get to be used to buy off settlement of grievances - many of which the union never should have had to file in the first place?

And how much are we really saving if the city has to pay up to 9% (based upon income tax collections) in a lump sum? Police - and firefighters who have the same terms in their contract - are going to be financially rewarded if the city collects more than it estimated? Of course, there is the chance that the city doesn't collect more than it budgeted in income, but history indicates the unions have a safe bet on this one. However, a lump sum is just a one-time payment so there is no cumulative effect on the base wage.

How 'bout if the city, after balancing the expenses based upon the project income, REFUNDS any extra income to the taxpayers who paid it in the first place, rather than pay off the unions????

Oh - but the city hasn't yet balanced the 2009 budget. Even with the 'savings' from these contracts, the mayor is still estimating an $8 million budget deficit for the remainder of the year - with no source of extra funds to the cover the shortfall.

And if the administration's projections for next year are even remotely accurate, there is no money to pay for 2010 basic services, much less a lump sum for police and fire fighters.

Yet council approved both these contracts with no idea whatsoever of how they were going to pay for the terms they agreed to.

Are taxpayers just supposed to hope that the city doesn't collect more than the budgeted $145 million in income taxes so we don't have to pay out the lump sum? And if we don't get more than that, we still have an $8 million budget deficit to pay for, which is why Carty Finkbeiner is asking council to increase the trash tax and eliminate reciprocity for people who live in Toledo but work in another city.

What it boils down to is this: the city has no money, but if it collects more money than it budgeted, police and fire will get lump sum payments (of up to 9% depending), reducing the amount of 'extra' money that could be used cover the deficit.

And city council and the mayor think this is a good deal for taxpayers???? I think we got screwed...

Toledo is broke but has money for a study?

Yes, of course we do! Can you say 'stuck on stupid'????

The City of Toledo - still - has a budget deficit. According to Mayor Carty Finkbeiner's July letter to City Council, it's just over $8.6 million. Yet last night, council passed Ordinance 383-09 "Appropriation for engineering & planning by Tetra Tech of Municipal Solar Field, $110,000 Water Improvement."

This is on top of the $65,000 they've already spent, but if they spend the additional money now, they might be able to get some federal dollars for this.

This is just more twisted logic. First they needed to spend the money to show that we're 'supportive' of the solar industry.

(I hate it when politicians think that 'being supportive' of an industry means they have to spend our tax dollars, rather than their own by purchasing stock or making a personal investment in these companies!)

The additional money is urgent, they say, because maybe, just maybe, we'll be able to get help from Washington for the project. So what happens if we DON'T get any funds from DC? Then what?

Council and the mayor will justify this expenditure by saying it's from the water fund, not the general fund, so the budget deficit is not impacted. What they fail to understand is that it's their philosophy of spending that's the problem.

First, the water fund is supposed to be solely for the water system and service. How, exactly, does a solar field fall under that limited use? It could only be by a good stretch of imagination, or perhaps a 'willing suspension of disbelief.'

Second, what did the $65,000 study buy us? Where is the report from the expenditure of those funds? Why hasn't that been released for all to see PRIOR to spending more money? Where is the analysis of the return on investment for this project? Where is the detailed listing of available funds to go forward, if that decision were to be made? Why would we spend more money for a study if we don't have the money to build it when the study is done?

And third, if this is such a fantastic idea, why don't they put their own money toward the project? Let them 'invest' their dollars, rather than our tax dollars. What, you say, they wouldn't do such a thing? It must not be such a good idea, then, is it?

Our Toledo politicians have bigger problems than funding a study of a solar field on a dump. But they don't seem to want to address those. They'd rather keep spending - and getting nice headlines from a local paper who loves the idea.

For last year's deficit, they took money out of the Capital Improvements Program (CIP) fund and moved it into the General Fund in order to balance 2008. This year, the number of CIP projects are reduced as a result.

They've voted to put a temporary change to the distribution of the 3/4% payroll income tax on the ballot so they can, again, move money from the CIP to cover their general fund expenditures, including a police class.

Carty is still pushing for an increase in the trash tax. Though that was supposed to be for garbage service, it's being used as a general tax to supplement general fund activities, an action likely to cause them to lose their lawsuit over the issue. And there has been no public discussion among council members on the impact of losing that lawsuit and the potential cost to the city to reimburse residents for the money collected.

Additionally, Carty is still pushing for the end of 100% reciprocity for Toledo residents who work in other jurisdictions - basically, a tax increase on citizens who live in Toledo but work in areas like Sylvania, Maumee or Oregon. Council has rejected this in the past, but we still have a deficit, so who knows?

The problem is that they have no idea how to live within their means - our means, actually. They're too busy promoting their own pet projects and programs and expecting that they'll just get the money from somewhere, though that 'somewhere' ends up being from us - and we're completely tapped out.

I don't care how good of an idea you think it is, we just don't have the money.

STOP THE SPENDING!!!!!!!!!!

JUST STOP!

Toledo deficit still at $8.6 million, mayor again calls for tax increases

This press release in via email (at 6:30 a.m.) from Mayor Carty Finkbeiner:

FOR IMMEDIATE RELEASE
Saturday, July 18 2009

Notice of 2009 Budget Deficit

Attached is a copy of a letter from Mayor Finkbeiner to City Council regarding the 2009 budget deficit. In the letter, Mayor Finkbeiner attached an analysis of savings for the tentative agreement with Local 92 and the expected cost savings with the TPCOA contract.

###

Debt, debt and more debt

Toledo City Council has several items on their agenda for their meeting next Tuesday, including issuing debt for multiple purposes. Some of them, like bonds for street improvements, are relatively routine. Others, like the $12.2 million for new garbage trucks, are not.

Interestingly, the city is again refinancing the bonds for the repair work on the Martin Luther King Bridge (Cherry Street Bridge for those of you who still haven't gotten used to the new name). Here is the text of the ordinance:

Providing for the issuance and sale of bonds in a maximum aggregate principal amount of $10,000,000 to provide funds to pay costs of improving the Martin Luther King Bridge in the City by rehabilitating, reconstructing and replacing the bascule lift spans and the bascule piers, installing new mechanical and electrical control systems, and relocating and reconstructing the operator towers, in each case together with the necessary appurtenances and work incidental thereto; and declaring an emergency.

SUMMARY & BACKGROUND:
This is one of a series of ordinances that authorize the issuance of general obligation bonds that the City plans to sell in August 2009. The amount received from the sale of the bonds authorized by this ordinance will be used, together with other funds, to retire a prior bridge improvement note maturing on October 22, 2009. With the issuance of these bonds and the retirement of the prior note, the City’s outstanding debt will be unchanged. There will be no negative impact on debt limits.

Pursuant to Ordinance No. 723-07 passed November 13, 2007, a note in anticipation of bonds in the amount of $10,000,000, dated December 4, 2007, was issued for the purpose described in Section 2, which note was retired with funds available to the City and the proceeds of a $10,000,000 note issued in anticipation of bonds pursuant to Ordinance No. 146 08 passed March 25, 2008, as a part of a consolidated issue of $18,950,000 Capital Improvement Notes, Series 2008 1, dated May 29, 2008, which note was retired at maturity with funds available to the City and the proceeds of a $10,000,000 note issued in anticipation of bonds pursuant to Ordinance No. 548-08 passed September 9, 2008, as part of a consolidated issue of $18,760,000 Capital Improvement Notes, Series 2008-2, dated October 23, 2008, which note was retired at maturity with funds available to the City and the proceeds of a $10,000,000 note (the Outstanding Note) issued in anticipation of bonds pursuant to Ordinance No. 130-09 passed March 31, 2009, as part of a consolidated issue of $16,840,000 Capital Improvement Notes, Series 2009-1, dated May 28, 2009, which Outstanding Note is to mature on October 22, 2009.

Note how many times the city has issued notes in anticipation of bonds, paid off bonds with new bonds and paid off notes with new notes?

Each time this is done, the length of time we pay interest on this money is extended.

And we're doing the same thing with bonds to pay for a paving project on Blackstone Drive between Homer Ave and Manhattan Blvd.:

Providing for the issuance and sale of bonds in a maximum aggregate principal amount of $115,000 to provide funds to pay costs of improving Blackstone Drive from Homer Avenue to Manhattan Boulevard by grading, draining, curbing and paving; and declaring an emergency.

SUMMARY & BACKGROUND:
This is one of a series of ordinances that authorize the issuance of general obligation bonds that the City plans to sell in August 2009. The amount received from the sale of the bonds authorized by this ordinance will be used, together with other funds, to retire a prior Blackstone Drive improvement note maturing on October 22, 2009. With the issuance of these bonds and the retirement of the prior note, the City’s outstanding debt will be unchanged. There will be no negative impact on debt limits.

Pursuant to Ordinance No. 162-06 passed March 28, 2006, a note in anticipation of bonds in the amount of $195,000 was issued for the purpose described in Section 2, as a part of a consolidated issue of $15,235,000 Capital Improvement Notes, Series 2006-1, dated May 25, 2006, which note was retired at maturity with funds available to the City and the proceeds of a $195,000 note issued in anticipation of bonds pursuant to Ordinance No. 555-06 passed March 27, 2006, as part of a consolidated issue of $12,260,000 Capital Improvement Notes, Series 2006-2, dated October 26, 2006, which note was retired at maturity with funds available to the City and the proceeds of a $195,000 note issued in anticipation of bonds pursuant to Ordinance No. 146-07 passed March 27, 2007, as part of a consolidated issue of $11,015,000 Capital Improvement Notes, Series 2007-1, dated May 24, 2007, which note was retired at maturity with funds available to the City and the proceeds of a $195,000 note issued in anticipation of bonds pursuant to Ordinance No. 639-07 passed September 18, 2007, as part of a consolidated issue of $10,770,000 Capital Improvement Notes, Series 2007-2, dated October 25, 2007, which note was retired at maturity with funds available to the City and the proceeds of a $155,000 note issued in anticipation of bonds pursuant to Ordinance No. 145-08 passed March 25, 2008, as a part of a consolidated issue of $18,950,000 Capital Improvement Notes, Series 2008-1, dated May 29, 2008, which note was retired at maturity with funds available to the City and the proceeds of a $155,000 note issued in anticipation of bonds pursuant to Ordinance No. 547-08 passed September 9, 2008, as part of a consolidated issue of $18,760,000 Capital Improvement Notes, Series 2008-2, dated October 23, 2008, which note was retired at maturity with funds available to the City and the proceeds of a $115,000 note (the Outstanding Note) issued in anticipation of bonds pursuant to Ordinance No. 129-09 passed March 31, 2009, as part of a consolidated issue of $16,840,000 Capital Improvement Notes, Series 2009-1, dated May 28, 2009, which Outstanding Note is to mature on October 22, 2009.

(I wonder how much it costs us to do each one of these transactions? I know we pay a bond counsel - attorneys - each time ...)

Now, these two items do not impact debt limits, but the $12.2 million in bonds for the garbage trucks and the $8 million in bonds for 2009 street improvements do. From those two ordinances:

The amount of the City’s outstanding debt will be increased by $12,200,000 by the issuance of these bonds. They will be subject to legal debt limits and reduce the City’s legal borrowing capacity.

and

The amount of the City’s outstanding debt will be increased by up to $8,000,000 by the issuance of these bonds. These bonds will be subject to legal debt limits and reduce the City’s legal borrowing capacity.

To top it all off, the city also wants to spend another $110,000 on an engineering study for solar fields on the landfill. They've already allocated $65,000 for this solar field study, and now their "logic" is that they need to do more of a study and do it right now so that maybe the project will be eligible for federal 'stimulus' funds. From the ordinance:

"By completing the planning and engineering for the project immediately, the City of Toledo may be able to make the project eligible to receive federal funds." (emphasis added)

So let's hurry up and go forward with this because we might get other borrowed money to help fund it ... better not worry about the lack of return on investment (ROI) or long-term operational costs that may make the project an unwise decision. Someone may give us other taxpayer money for it!

And they're going to use the Water Improvement Fund for this expenditure, though I don't see how building solar fields on a dump has anything to do with our water system....

It's just more spending and more spending ... and more debt to fund the spending.

Will it ever stop?

The union contract 'savings' that aren't

On Thursday, the City of Toledo issued a press release 'documenting' the savings from the tentative contract agreement with the Toledo Police Patrolman's Association:


















As you can see from the chart, the PERS pension roll back is only for six months and only 7% of the 10% employee portion. Any new employees will pay their full portion of 10%, as the chart shows. This also means that the city is counting on hiring new police officers in 2010. If the city does not put on a class after recalling the remaining laid off police, there are no savings in that category.

The co-pay on the insurance is a good move and it looks as if that is included as a provision for all three years. But the elimination of the stipends and tuition reimbursements is only for 2009, which means these will be a continuing cost in future years.

Then there is the overtime deferral, with employees being eligible to use comp time instead. While it's listed as a savings in 2009 and 2010, there is no way the city can know this figure. The administration cannot predict how many patrol officers will choose the time versus the pay or some combination thereof. And it really doesn't matter because general accounting practices require the city to calculate the obligation on the books. The agreement calls for any overtime not converted into comp time to be paid out in March 2010, leaving the expense for the next mayor to deal with in next year's budget.

And there are no guarantees that next year's budget won't be as bad as this year's.

So the real savings in 2009 is only $1,605,785. Technically they're 'saving' more when you add in what they don't have to pay for the overtime, but since that money has to be paid out eventually, it's not a 'savings'.

And the real savings in 2010 turns out to be no savings at all. When you add the cost of the deferred overtime payments of $878,000 to the claimed savings of $774,000, you get a negative $104,000.

This contract's actual savings are about $1.5 million in 2009. And that's good for the '09 budget. But the agreement will actually cost us $104,000 in 2010 and even more in 2011 when the wages are scheduled to go up 3.5% (which also means that overtime and pension costs, because they are calculated upon the wage, will go up).

While we've dodged one of the small bullets aimed at us in 2009, we've done nothing about the cannon balls still coming in from this contract, and others, in the future.

I hope members of council recognize this prior to voting on the agreement tomorrow.

Will police concessions be enough?

The City of Toledo and the Toledo Police Patrolman's Association have reached a tentative contract and the TPPA has voted to approve it. Toledo City Council will vote today.

There were concessions by the union - many were not insignificant. They include no pay increases in 2009 and 2010, but a 3.5% raise in 2011; members paying 7% of their pension from July-December; paying a portion of their health insurance costs; and overtime payments being postponed until March 2010.

While these are probably good compromises, there are still problems for the citizens in terms of the long-term issues of unsustainable government costs.

I'm glad the TPPA will be paying 7% of their 10% pension contribution, since right now they pay nothing with the city (taxpayers) picking up the city's share as well as the employee's share (total of 29.5%). But having the union members make a portion of their own payment for six months does not address the problem that these pension pick-ups are unsustainable, and grossly out of whack with what the private market in Toledo is doing. Additionally, they 'traded' that concession for 6.5 more vacation days to be used over the same time frame.

The best part of the arrangement is that new officers will be required to pay their 10% pension share. Perhaps this is the start of addressing the problem, which exists in all of city government. If so, this is a good thing. However, if this is just a temporary step for the existing employees, we will find ourselves right back in the same mess for each upcoming yearly budget.

The same goes for the overtime. The city is not saving any money, just postponing when it will be paid. In effect, we're incurring costs we cannot now afford with the hope that the money will be available next year. Nothing in the economy or in the decisions about spending being made by the administration and council indicate that our situation in 2010 will be any different than now. In fact, because they've put off maintenance-type actions and removed money from the Capital Improvements Budget to balance the General Fund, we'll eventually find ourselves without the money for our capital needs as well.

Then there is the issue of the trash tax. Included in the tentative agreement is a little clause that says it is in the interest of both the union and the administration that the council address the deficit through revenue enhancements. In an interview with WSPD this morning (podcast will be here when posted), TPPA President Dan Wagner said the union agrees the budget must be balanced with either cuts in spending or additional revenue.

This contract does not solve the city's budget deficit. Neither will similar concessions by other unions who still haven't agreed on new contracts. So the administration is still insisting upon an increase in the trash tax (the equivalent of a 3.91 mill levy) and eliminating the payroll income tax reciprocity for Toledoans who work outside the city, both of which have been rejected by city council.

Stay tuned...

Less tickets means less money

Today's paper has an article about the decline in filings by Toledo Police in the Toledo Municipal Court.

According to the article, traffic filings in May were 1,165. That's only 34% of the number filed in the same month last year. Criminal filings were down 34%.

While criminal filings don't generate a huge amount of revenue, traffic citations do. If the traffic filings continue at this pace, the city could see an overall reduction in revenue of a similar percentage and I'm am absolutely certain that the city did not budget for a 66% decrease in traffic revenue.

In fact, the 2009 budget shows about a $200,000 increase in revenue for the Municipal Court in the city fines and court costs categories, which are the line items for traffic citations.

Unintended consequences - but only because council and the administration failed to take them into account.

Most of the younger officers are the ones who were laid off. They're also the ones most likely to be on road patrol and writing tickets. When I was the Clerk of Toledo Municipal Court, I could tell when a new police class took to the streets strictly from the increase in the number of traffic citations. That's what they do.

With the layoffs, the reallocation of staff within the department and the re-prioritization of work, it's no surprise that traffic citations are down. It should have been expected that the corresponding revenue would also decline. But the city planned for an increase in revenue, completely contrary to what they should have done.

So now the city is without 75 officers and the money saved from those layoffs is greatly reduced by the lack of revenue those officers were producing. Additionally, the city will have to find some way to make up the decreased revenue since the current budget was based upon the original numbers. Of course, I don't expect them to do so with more cuts...

The administration and council have not inspired confidence with their budgeting over the last several years. This is just one more example of why the city is in the hole.

Street cleaners - but no cops

It's 8:38 a.m. and a city worker on a street sweeper/cleaning machine has just passed in front of my house - twice (once going in each direction).

Now, I don't know if this 'service' is part of the assessed fees I'm charged on my property taxes, or if it's funded through something other than the general fund.

What I do know is that most people won't stop to ask about the source of funding for this particular task, but will wonder just why it is that their street can be swept but the city has a budget deficit of $27 million that has been reduced to around $15 million by laying off workers, including 75 police officers.

They will rightly wonder about the priorities of a city that can find the ability to sweep streets but not fund cops - or cut down the large dead trees on the public property on some of those same streets being cleaned.

And when the politicians tell us that they've 'cut everywhere they possibly can' and that 'there's nowhere else to cut,' the citizens who've had their streets swept will not believe them.

Need for fire tax eliminated by savings from garage consolidation

Last week, Mayor Carty Finkbeiner announced that he was going to combine garage facilities and that the city would save $500,000 by doing so.

This was great news and very welcomed by residents, especially because these cost savings had not previously been identified in any of the proposals or ideas for addressing the city's budget deficit.

So here's my question. Since the city just came up with $500,000 in savings they didn't previously have, do we still need to impose fire department billing which they 'hoped' would generate $500,000????

According to Carty, his balanced budget contained $500,000 of new income from these fees, but did not include the garage consolidation. With the consolidation saving $500,000, there is obviously no need for new fees of $500,000.

Right???

It's a tax, no matter what Toledo City Council calls it

Today at the agenda meeting for Toledo City Council, they will again discuss Fire Department billing of citizens.

I've been listening to WSPD this morning and the comments that were made by Council President Mark Sobczak - and I can only wonder if he's actually read the ordinance.

The first thing he said is that this is a 'soft billing' only - they will bill the insurance companies and if they insurance company doesn't pay, nothing more will happen. Here's the text of the ordinance:

If it can be reliably determined that there is no insurance coverage for a particular emergency incident which causes the Toledo Fire Department to use, or incur loss, damage, and wear and tear to apparatus, tools, equipment, and materials; the City may recover any such fees from the person or entity that received said emergency services or the person or entity responsible for the debts and obligations of the person or entity that received such emergency services.

and this:

Recipients of the services of the Toledo Fire Department shall be invoiced directly under the terms of this ordinance if they do not carry insurance sufficient to cover the impact to the City of Toledo’s loss of capital or material.

Granted, it does say 'may' in one section and 'shall' in the other ... but if the city has no intention of billing individuals, the ordinance should clearly say so. In this case, it says that if your insurance isn't sufficient to cover the bill, recipients "shall be invoiced directly." That's not soft billing. And even if Council believes what they're saying about soft billing, we've had way too many instances in the past of such 'intentions' going by the wayside when the city wants more money.

Then there is the claim that since citizens have this coverage as part of their basic insurance policy, this won't really cost them anything. Do they not understand that the cost of fire insurance for all people/companies will go up over time if this is passed?

There is a cost for insurance, even if you never have a need, because actuarial tables which determine those costs are based upon many factors in your area or similar demographics. Either the members of council who believe this are completely and totally ignorant and shouldn't then be trusted with making such decisions on council, or they are intentionally distorting the issue in order to make it seem 'okay.'

Sobczak also says that the city needs more money. Well, so do I. Unlike the city, I don't have the ability to arbitrarily increase my income. And every time the city decides to impose such costs on me, I have to cut out something in order to be able to afford them because, unlike the city, I anticipate and plan for future costs I may have to pay.

Sobczak then throws in the gratuitous, but ever-popular, leftist misdirection by saying that those of us who actually read the ordinance are just trying to throw a bunch of misinformation out there because we've got an interest in protecting 'big insurance.'

Yeah - right.

I'm far more interested in protecting myself than I am my insurance company. And acting in my own self-interest, I've actually read the ordinance and found that it's going to cost me a lot of money - either through a direct billing if I have a need for such services or through increased insurance rates if the legislation is actually passed.

That Sobczak - and most of the other members of council - don't understand this is no surprise. They've never had to run a business or actually make a profit, so they do not comprehend of unintended consequences of such decisions. They also don't seem to understand that every policy and decision has a cost - and often, the cost is greater than the claimed 'benefit.'

In this case, the city may - I repeat - may realize $500,000 of revenue from this tax. But how much will they lose in the long term when citizens and businesses leave the area or avoid coming here because these 'costs of living' and tax structures/rates are so high? We know this is already occurring, considering the decline in Toledo's population and the consistently high unemployment rates (higher than other urban areas in the state for the last 20 years or so) ... which is part of what put the city in the mess in the first place. How much worse will the financial situation get and will the further erosion of the tax base be more detrimental than the $500,000 they hope to raise? Undoubtedly.

Councilman Joe McNamara, in several emails to constituents, has said that the city's income isn't what it used to be and there is 12% unemployment and loss of population. So, he reasons (though not logically) the city needs to tax the people who are still here, even though he just stated that many of those people have lost their jobs. Can you say 'stuck on stupid'?

And while City Council is considering raising this tax on people, they are NOT moving forward with the privatization of garbage collection. Despite having an arbitration decision earlier this month stating that it will NOT violate the city's contract with Teamsters Local 20 if the city subcontracts for garbage collection, no ordinance to do so has yet been submitted to members of council, despite the claimed $3 million of savings each year. But Council did vote to expend over $9 million to purchase new cans for everyone (which they will somehow bill us for in the future - the cost and the interest, that is) despite not knowing how, exactly, they would pay for the cans.

And just last week Mayor Carty Finkbeiner found that the city could save another $500,000 by combining city garages. This was a new idea to save money and it was welcomed by the citizens, though it raised a serious question. The Mayor and City Council have previously said they've cut everywhere they possibly can and there are no other areas of savings in the city. Then they announce this 'savings,' completely destroying any credibility these politicians had left when it comes to Toledo's budget.

So if the city can come up with this new cost savings plan - and I'm glad they did - what else might they be able to do that they haven't yet 'discovered'? And why aren't they all going over the city with a fine-toothed comb before considering increased taxation on the citizens? Well, that's the question of the day.

Then there is the side issue of just how callous the city is being in sending a bill for engines, gloves, boots and 'do not cross tape' to people who have just lost everything they have in a fire. Aren't these Democrat members of Council supposed to be the party of compassion?

The fire tax failed last time by a vote of 6-4. It is scheduled for either first reading or a vote on May 26th. District 6 Councilwoman Lindsay Webb asked for a public hearing on the matter the last time it was up for consideration, but didn't have the support of her fellow members of council.

You need to act - or we'll all be faced with more government taxation.

Mayor Carty Finkbeiner: 419-245-1001
mayor.toledo@toledo.oh.gov

Toledo City Council: 419-245-1050

Michael.ashford@toledo.oh.gov

Phillip.copeland@toledo.oh.gov

Joe.mcnamara@toledo.oh.gov

George.sarantou@toledo.oh.gov

Betty.shultz@toledo.oh.gov

Mark.sobczak@toledo.oh.gov

Frank.szollosi@toledo.oh.gov

Wilma.brown@toledo.oh.gov

Mike.craig@toledo.oh.gov

Dmichael.collins@toledo.oh.gov

Tom.waniewski@toledo.oh.gov

Lindsay.webb@toledo.oh.gov

And if you don't live in Toledo, this still impacts you. This billing is for any person or entity that receives services, including people who are travelling through the city, so those of you who come into our fair city have every right to express you opinion, too.