Deficit puts renewed focus on services, need for citizen input

The financial picture of Annapolis looked so different just a few years ago.

As Chief Administrative Officer Doug Smith laid out yesterday during a quarterly budget presentation at a City Council work session, the city was flush in tax revenue as year-over-year property values increased.

A few years ago, Smith noted, the city had several financial options at its disposal:

1) Hold down spending and put surpluses in a reserve fund
2) Direct new tax revenue toward one-time infrastructure projects
3) Reduce the tax rate
4) Reduce the city’s debt load – pay down a portion of our bond obligations
5) Direct spending toward increasing salaries and benefits, hire more personnel and create new programs.

By and large, the previous administration and City Council chose the last option. Alderwoman Sheila Finlayson said yesterday that improving salaries and benefits has helped maintain a competitive work force. But in the aftermath of those spending increases, coupled with a steeply declining economy, the financial picture is bleak today.

Mr. Smith and Finance Director Tim Elliott yesterday presented projected figures that show a $2.6 million structural budget deficit for the current fiscal year ending June 30, 2010, and a $6.4 million structural deficit for fiscal year 2011.

Simply put: The city is spending much more money than it’s taking in – and significant changes must be made immediately. To put the situation in context, Mr. Elliott said Annapolis’ financial circumstances are the worst in his 26 years working for the city.

Now, Mr. Smith noted, the city has fewer financial options: raise taxes, cut spending or do both. In the face of this challenge, Mr. Smith made clear yesterday that raising taxes is not an option for the Cohen administration.

The answer is to cut spending. What is the administration doing about that? First, the mayor has asked department heads to submit budgets that are 5 percent below their base budgets for the current fiscal year. Likely, Mr. Smith and Mr. Elliott said, those reductions won’t be enough alone to bring the budget back into balance.

The administration will also rely on the Blue Ribbon Commission report and is eagerly awaiting the formal presentations next month from the mayor’s transition team, the Idea Team, which will recommend efficiencies in government. Also next month, a mayor-appointed committee on contractual employees will also produce recommendations.

The question is not if the city should make cuts – the question is what gets cut. To that point, Mr. Smith, Alderman Ross Arnett and others said the city must determine what the government services that the city cannot live without.

That’s where we need you, the residents, who best know what city services are essential and what services that, in less prosperous times, should be reduced or eliminated. Please let us know your thoughts in the comments section below, send the mayor an e-mail at mayor@annapolis.gov or reach out to your alderman.

Much must be accomplished before the mayor presents his budget to the City Council on March 8 and the council adopts the budget in late May. We need your help as the city leaders attempt to forge the best path during this difficult time.