Overview
The city has a fiscal year that starts on October 1st and ends on September 30th. Garland splits its budget into two parts- ops and maintenance (think salaries, office supplies, furniture, small equipment purchases, etc.) and CIP (buildings, large equipment, streets, and other public works projects). Operations and maintenance was reviewed from Jul 31st – Sep 19th. It is the City Manager’s job to create and submit a budget, and it is our job as the council to look at every aspect of it, propose and vote on changes, and generally turn over every rock and look behind every tree.
Budget review began quite literally 90 days after my election, and I’ll tell you, this is where my lack of a social life paid off.
For those unfamiliar with the city budget, the printed summary runs about 500 pages. The line item budget is another 162 pages. Each department adds its own pound of paper to the stack over the ensuing days so that by the end of the process you are literally carrying two reams of paper around to each meeting.
Funds
The most surprising thing to me from this budget season was how difficult it was to keep the different fund rules in mind when attempting to propose changes. I’ll explain:
In our private finances, most of us have a single pool of income that we can spend from. For instance, if I have a job, my wife has a job, we have a few investments that pay dividends and I get $20 for mowing the neighbor’s yard, all of that income comes into the same bank account and I can spend it on anything that my wife allows me to. Government doesn’t work that way. There’s a public health fund for immunizations, and hotel fund for marketing, a general fund, etc. These funds are created based on the source of the income. The hotel fund is generated by the 7% tax on hotel stays. The state mandates that the funds be spent on marketing, heritage projects, the arts, etc. When I post about the Lyles House later and refer to the hotel fund, you’ll understand that these aren’t tax payer dollars, but instead dollars from visitors to Garland that the state has a hand in controlling.
Process and Questions
My process for tackling the budget involved reading the document as a whole a few times and making a *ton* of notes in the margins. I met with individual constituents, exchanged many emails, and stationed myself in the coffeeshop downtown for a few hours on a Sunday to open myself up for discussion and Q&A. I had several communications with city staff to get clarity on my notes, discussed the issues throughout the budget work sessions and then distilled my remaining questions into a small list.
Here were my questions (in black), and what I was hoping to achieve (in blue):
1) To classify the music in the square as a tourism-promoting event and save money on the hotel shuttle program, could we make the following changes and have the events pass muster with the state rules, and would it impact other projects that are currently proposed within the fund?
- Remove the $75,000 out of Parks / General Fund
- Add the $75,000 to the Hotel fund, rethink the program to tie the music into the city’s history
- Remove the $137,500 for the shuttle from the hotel fund.
- Add in an additional $25k for promotions/brochures/ads and incentives for hotels to drive traffic to our events via their concierge services and use their shuttles instead of a city shuttle?
Net result:
General fund, $75,000 saved
Hotel fund, $37,500 saved
The music in the downtown square has been a large success this year. I was looking for ways to get the event paid for out of the hotel fund instead of the general fund. That way it’s less driven by property tax dollars but by tourism dollars instead. We could fluctuate the amount of downtown programming based on state-controlled money instead of asking for our local property tax payers to foot the bill. The laws surrounding this fund are massive and convoluted, and so my question/idea was not able to be enacted.
2) What is the revenue impact of adjusting the O&M tax rate plus or minus $0.01? (Page B-6)
I wanted to find out exactly how much money would be lost/gained by adjusting the property tax rate, so I could look for ways to lower the tax rate.
3) What is the revenue impact of adjusting the Fire, Police, and General salary increase by plus or minus 0.1%? (Page B-6)
I was thinking about targeting 2.9% for raises- that’s 1.9% COLA plus 1% merit. 3% was proposed. The amount saved would have been miniscule, and I did not challenge the 3%
4) What is the projected operating cost of Neighborhood Vitality owning and operating the proposed trailer in addition to the $10,400 proposed? (D-104)
Our neighborhood associations are getting assistance from the city in holding larger than normal events via equipment rentals. Why, you ask? Well, I asked the same thing. Apparently I’m completely out of the loop on this type of thing and the tax payers keep asking for it. I’d just assume use a private supplier and leave the city out of it. I was very much alone on this position.
5) Vaccines increased by 9.2% this year. Do we have any other sourcing options? (Page B-52)
The money for vaccines comes from the state, which also has a deal for sourcing. We’ve looked, and cannot do better outside of that deal. While it doesn’t come out of our property taxes, our state sales tax pays for this program (which competes with our education dollars), so I was digging into the item with that in mind.
6) Can we get an itemized estimated cost for each of the proposed elections? (D-13)
Elections are expensive. I wanted to know what the numbers looked like for a potential city charter election. I’m hoping that if our charter committee recommends an election and we pass it as a council, that we can piggyback the issue onto an existing city-wide election. We spent roughly $172k on elections in 2016-2017.
7) What is the expected life span of the logo-printing machine? Are there significant cost savings over outsourcing? (Page B-60)
Logos on city vehicles (and we have quite a large fleet) fade, chip, peel and have to be replaced over time. The city chose to purchase instead of outsourcing. It’s a pretty pricey piece of equipment, so I wanted to check per unit pricing and projected equipment life. It was best to go ahead and purchase.
8) What are the costs associated with running the day laborer center? (Page B-64)
We staff the day laborer center with one person during the year.
9) What portion of the chamber of commerce’s total budget is the city responsible for? (Page B-39)
It’s a complex organization from the funding perspective, but I wanted to ensure that the tax payers weren’t footing the majority of their bill. Chambers of Commerce should be largely self-funded through membership dues and donations.
10) Based on the ramp-up time referred to by streets in Council Member Williams’ questions, and considering that additional project management may not be available until Jan 2018, is the streets department capable of spending the full proposed $26M+ in 2017-2018?
Contracts can be entered into at present cost for future work for streets. My idea here was to get a feel for how to stop spending twenty year money on library books based on our cash increases to streets funding. I’ll explain later in this post.
11) “The impact of the ACA to City health-care costs for FY 2017-2018 is estimated at $9,300”. Is that total, per policy, per insured? (Page B-58)
That’s total. Whew.
Changes and Debated Items
Firefighters’ RSB
The very short version of this long and hotly debated issue is that the Firefighters lost their TMRS-provided COLA benefit back in 2008. Since then, they’ve been trying to find a way to supplement their retirement fund. They have been seeking relief from the city. We looked at many ways to do this. Eventually we committed to an introductory 0.5% of salary city contribution with 1% employee matching. We must still determine the details of the actual retirement program, which will occur over the next few meetings. We have a self-imposed deadline of 11/15/17 to determine how this is going to work. Establishing the amount in the budget commits the city to action instead of continuing to kick the can down the road.
Events
Our special events have been a bright spot in the city over the past two years. They have also gone over their extremely limited budget (and overages have been approved by council). It seemed wise to go ahead and carve out a bigger piece of the pie for them up front instead of trying to find the money later. This brings more transparency to the process and allows tax payers to see what they are getting for their money. I’d like to stress that the likelihood of going over the budget was extremely high this year as well. This will keep the true cost of this department very clearly reflected in the budget.
Lyles House
The Tinsley-Lyles House is one of the first homes ever built in the area and plays a key role in the story of how Garland came to be. The city has sat on this house for nearly 40 years without making a firm decision. We’ve set aside $20,000 to bring in a preservation architect and a structural engineer to create a laundry list of what needs to be done to preserve the home. This project will earn its own blog post later on.
Library Books
My predecessor, Councilman Jim Cahill identified a problem where we were spending 20-year bond money on library books to the tune of nearly $1M per year. This is insane if you think about it. It would be like taking out a mortgage to buy a set of encyclopedias that will be obsolete in a year. He devised a plan to slowly shift us over to cash funding for books. Based on the amount we were prepared to spend on streets this year ($20M in cash, an increase of $5M), I asked that we go ahead and move all library book purchases to cash funding, and use the CIP money to fund streets instead. This means we’re spending cash on short term assets, and 20-year CIP money on 50-year assets. It finishes the project that he began, albeit at a much faster rate, and ensures that we are spending money correctly.
Hotel Shuttle Program
One proposal that was brought forward this year was for a downtown shuttle program that would bring hotel patrons in from hotels into the downtown area. The demand for this program is non-existent, as the hotels have their own shuttles and people aren’t really asking to go downtown. There was discussion around the idea, potentially using existing assets, using DART, etc. Eventually we struck the idea from the budget. We encourage departments to be innovative and try new things. While we nixed this from the budget, the council recognizes and appreciates creative thinking.
Successes
I consider the library book funding shift to be a personal success. It is incredibly important to me that we spent the right type of money for the right type of project. Twenty-year bond money should fund capital improvements that have a lifespan longer than twenty years.
I felt that we had a moral imperative to attempt to compensate for shortfalls in the fire and police department’s retirement system. Thankfully, four other council members agreed with the approach that we developed to try and address this issue. This is not to say that the rest of council disagreed or was anti-first-responder; we just had differing approaches to solving the problem.
Additionally, the council shares my strong desire to aggressively fund street repair. We have taken a majority of the additional tax revenue this year and invested it directly into the city’s infrastructure. This mirrors much of the feedback that I’ve received from my constituency regarding their priorities.
Failures
I was unable to achieve a property tax reduction this year. While many cities had a “windfall” – and I put that word in quotes since we’re a non-profit entity and there shouldn’t BE a windfall – in both sales and property tax, Garland’s economy is slow enough that we are just now catching up to pre-recession levels of overall funding. Because of sluggish sales tax numbers, we must maintain a high property tax rate on relative low-value homes. This by itself wouldn’t bode well for the future if we didn’t have multiple large deals getting ready to begin paying out in 2020-2030.
I also would have liked to have seen the council make a firmer decision on the future of the Tinsley-Lyles house, but the timing was wrong to fit a final decision into the time given to us for budgeting. I’m happy with our plan to get the big ‘To Do’ list together for that historic home and hopefully take meaningful steps to determine its future soon.
Future Considerations
We have a respectable amount of money in our Hotel Fund that should be put to work in Garland. Determining the best way to promote the city, whether it be through investment in retail, museum, heritage space or the arts, will be key in the coming years.
I will continue to work through the various models for ensuring that we invest in our infrastructure at the appropriate pace. Overspending will compound our debt problem and create a long-term asset depreciation cliff that will leave a future generation in this same situation. Underspending will cost us more overall as well. There are certain parts of our infrastructure that can have their life prolonged for pennies on the dollar if we fix them over the next year. I have complete faith in the city’s engineering staff to bring council an effective list of needs each year. I also have faith in council to prioritize those needs and get them funded at an appropriate level the way they did this year.
Conclusions
My campaign slogan was ‘Smart Spending, Safe Streets’. I believe that the rest of the council and I achieved that goal this year. We funded streets, police and fire effectively. We looked at programs that were working and supported them, and we removed funding for programs that didn’t have a firm foundation to rest on. Is there more work to do between now and next Oct 1? Absolutely. I’m grateful for my position on the council’s audit committee so I can use the next year to tie our spending and our controls together in my head. It will help me form a more complete picture of the city’s operations, allow me the insight to propose effective strategic changes and hopefully reduce the size and scope of our city government.
And hey, if you enjoyed this budget season there’s only 132 days until the CIP budget process begins.