City prepares to set its budget in wake of lower revenues, higher costs

Whether you are planning your personal finances or a corporate budget report, when times are tight, it is important to take a close look at the budget, pare back where necessary, invest discretionary dollars wisely and have good contingency plans. As city manager, I have taken this approach to the City of Columbia’s fiscal year 2008 budget.

Sales tax growth has lagged behind projections for several months, due to local and larger economic factors. While the growth rate of sales tax declines, revenues are further pressured by increasing costs of energy, liquid fuels, equipment, construction materials and health insurance.

This trend may linger for another year or two, but I strongly agree with analysts who say that Columbia has a strong, growing and enviable economy. Evidence of that can be seen in corporate investments that include two new grocery stores, a home improvement center and expansion of Columbia Mall, all of which will contribute to Columbia sales tax revenues.

Meanwhile, we are taking prudent actions now and planning very conservatively for fiscal year 2008. My top concerns are that city government invests in its work force, takes care of its ballot issue commitments, does its best to maintain current service and prepares to implement visioning goals.

Because they are city government’s most valuable assets, investing in the men and women who serve citizens every day remains my highest priority. Putting resources into the personnel packages is a significant decision in any budget year. It determines what is left for other supplies, materials and equipment, such as police vehicles. This year, I opted for modest pay increases and deferred purchases of new equipment.

While the fiscal year 2008 personnel package does not reflect the true worth of each employee, it moves in the right direction and squares with what citizens and employees have told us in surveys during the last two years.

Eighty-four percent of those responding to our 2007 citizen survey said they were satisfied with the quality of city services, so why not keep pushing that citizen satisfaction level up, and why not reward those whose exceptional performance gets us to higher levels? Considering the limited discretionary revenues projected for FY 2008, I believe the following recommendations are reasonable:

•?An across-the-board pay raise, mostly aimed at keeping up with health insurance costs, of 1.5 percent or 30 cents per hour, whichever is greater, for all employees.

•?Additional pay to employees who demonstrate exceptional performance using a new, meaningful performance review process.

•?Continuing the second part of a five-year process to review all city jobs for proper descriptions and pay levels.

•?Funding employee health insurance and voluntary health screenings.

•?Providing moderate subsidies for dependent health care.

•?Implementing a budget-neutral financial incentive to encourage police officers and firefighters to postpone retirement in order to mentor new employees.

Our retirees will also continue to benefit from fully funded pension plans, and we will provide coverage for Medicare-eligible retirees through a city-organized private insurance plan.

In order to provide equitable service to all parts of the city and to address top priorities identified in our recent citizen survey, I also recommend authorization of 19.35 new positions: seven full-time employees in Public Works, three police lieutenants, three firefighters and 6.35 full-time employees in our Parks and Recreation, Water and Light and administrative departments. The full fiscal impact of these positions will not be felt until the second half of FY 2008 and, if sales tax revenues continue to decline, some of those positions may not be filled at all.

In FY 2008, the city will continue improvements to streets, sidewalks, parks and utility infrastructures consistent with ballot issues passed in 2003, 2005 and 2006. It is time to plan for a new sewage treatment plant and upgrades to our existing water system as well, and I recommend, after significant public discussion, that the City Council consider authorizing two ballot issues during FY 2008 for these purposes.

As in the past, it will not be necessary to raise any city taxes in FY 2008, and fee increases are limited to protective building inspection services and four recreational programs. Customers of city electric, water, sewer and refuse services, however, will see higher rates. These increases cover climbing energy costs and other operating expenses while still maintaining rates that compare favorably with those in other communities.

Our ongoing rate studies are expected to provide more information for FY 2008 budget discussions. Rate proposals could change as independent consultants complete their review of appropriate customer cost allocations and as the council sets rate objectives that reflect the values important to Columbia residents.

I also recommend continued funding for community visioning to ensure the successful end of the planning process and to launch the implementation phase. Since the vision plan is not complete, I cannot predict its short-term fiscal impact. The community, however, owes a huge debt of thanks to the citizen volunteers who participated in this process, and I hope that everyone will attend the Sept. 13 “Community Choices” Open House to decide which priorities Columbia should pursue.

Sound financial planning and monitoring systems will give us adequate time, during this economic transition, to avoid extreme adjustments, and I am confident that we will adapt to changing conditions.

For more details, see the “Budget in Brief” that is part of the FY 2008 budget document, which is available at Columbia’s major libraries and online at www.gocolumbiamo.com.