Budget Constraints Challenge City Staff to Review Services Provided

The annual budget process is nearing completion. Earlier this week the public hearing for the proposed 2011 budget was continued until the November 16th council meeting for two reasons. First, if anyone had comments or objections to the proposed budget, we wanted time to consider their input. Secondly, the approval of statewide ballot measures affecting government finances would have significantly reduced revenue for the 2011 budget.

In reaction to the threat of a drastic reduction in general fund revenue that would have resulted if Proposition 101 had been approved, we prepared two versions of the 2011 budget. Now that we know the outcome of the election, we can proceed with the version of the budget presented to council last month with only minor changes expected.

Even without the severe reduction in revenue faced in this election, the City has difficult choices on how to allocate available funds. A thoroughly analyzed, long-term solution to future budget shortfalls is also needed.

We recognize that future sales tax revenue is unlikely to keep pace with cost increases from inflation and regulatory requirements. Over the past several years, city operations have experienced greater rates of cost inflation than the rate at which sales tax revenue increases, if at all. For example, natural gas, electricity, fuel, asphalt, chemicals, and medical insurance usually outpace the general rate of inflation and increases in sales tax collections.

The 2011 budget presented to the city council was balanced through staff attrition; this is not a sustainable solution to budget shortfalls without a reduction in services or real change in how we deliver services.

Over the next several months, staff will evaluate services provided to residents and visitors.

We will review the city code and eliminate regulations that may be outdated or no longer necessary. We will evaluate whether we reacted to a small group of vocal citizens by taking on some new services or projects or whether they truly provide a broad community benefit aligned with our guiding documents. We will also consider whether it makes sense to utilize a private sector model in other areas besides our enterprise funds. A very traditional role of government is to provide basic health, sanitation and safety services, including maintaining public order and providing emergency response. Public services, by definition, benefit the population broadly. Imagine if all property owners contracted separately for their sections of the street or water and sewer lines to be maintained.

Critics must also recognize that the profit motive in the private sector is sometimes at odds with the public good. Some decisions should not be based on a risk-weighted cost/benefit analysis. Governments generally provide services that are not well suited for the private sector.

Clearly, government’s influence has increased over the years. At the local level, some expansion is a reaction federal mandates requiring more monitoring and reporting across all functions within the City. We have greater knowledge of risks to the environment and factors affecting the health and welfare of citizens, which prompts government oversight. We also have a higher standard of living than in earlier times when government was smaller. In some cases, the City has added services that local citizens have requested. How many times have you heard someone say, “Why doesn’t the City do something about….”

Expectations for the level of basic public services and quality of life amenities are not the same for all citizens. As we continue to evaluate what services we provide and where we spend taxpayer dollars, we welcome your input.