Guest Column: City budget the result of many tough choices

In recent months, no issue in Annapolis has dominated the debate or been as divisive as the city budget.

Tomorrow night, exactly six months after the alderpersons and I took office, this debate will draw to a close when the City Council votes on the fiscal 2011 budget.

The $75.1 million spending plan I am proposing is $11.4 million smaller than the $86.5 million fiscal 2010 budget approved by the prior council. It dramatically reduces spending. Even more significantly, it fundamentally restructures our government in a fiscally responsible way.

The proposed budget achieves the two primary goals I laid out at the beginning of the year: It ensures a balanced budget, and it does so without raising the property tax rate.

Annapolitans have spoken clearly that this is not the time for government to ask taxpayers to pay more. Additionally, the budget achieves several other objectives: It ensures sufficient cash on hand to pay our monthly bills; it provides for the full repayment of our $10 million line of credit; it restores our reserves to the required 10 percent level across all funds; it maintains core services; and it protects public safety by avoiding the layoff of a single uniformed police officer or firefighter.

Many cities this year are facing the same challenge of having to either raise taxes or reduce spending – or both – because of declining revenues. Some Maryland cities, such as Bowie and College Park, are reducing their budgets by about 5 percent. Others, such as Gaithersburg and Westminster, are reducing their budgets by as much as 9 percent. Of these four cities, all but College Park are raising the tax rate for fiscal 2011.

To my knowledge, Annapolis is making the single-largest budget reduction of any city our size in Maryland: 13 percent. This is the amount needed to truly bring our expenses into alignment with anticipated revenues.

There is no way to achieve a budget reduction of this magnitude without impacting employees. Regrettably, not only have I had to lay off more than 30 employees, but our workforce is earning less and paying more. I am grateful to our dedicated public employee unions for agreeing to accept furlough days, wage concessions and increased health care costs. These concessions are vitally important for the city to survive this budget crisis.

Taxpayers also are going to feel the impact through reduced services. Trash collection is being cut back from twice weekly to once per week. Certain bus routes are being eliminated and hours of operation curtailed. I also am asking the council to raise a handful of fees such as water rates and bus fares, but only where necessary to more accurately cover the cost of providing the service. I am not using the budget crisis as an excuse to raise fees across the board. Instead, I will be working with the council to objectively analyze fee rates later this year.

The proposed budget is the product of much input and collaboration from scores of alderpersons, employees and involved citizens. Some people believe it cuts too much; others believe it does not cut enough. I believe it takes the right approach to ensure effective delivery of services while providing the best value to the taxpayer.

This extraordinary budget crisis has been unprecedented for our city government. It has challenged all of us who serve as city employees in ways we never would have expected. But at the heart of every crisis lies an opportunity. Tomorrow night, the City Council will have a unique opportunity to lay a solid foundation for a new era of fiscal responsibility.

The fiscal 2011 budget is not the end of the process; it is the first step in a continuing journey to make City Hall more effective, efficient and transparent. Together, we will make Annapolis the best-run city in Maryland.

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The writer is the mayor of Annapolis.

Budget Update

As the City Council moves toward finalizing a budget for fiscal year 2011, my goal remains to balance the budget in a responsible way without raising the property tax rate.  In working to achieve this goal, I have had to propose unprecedented cuts including laying off 33 employees and cutting services.  These cuts have made significant progress in closing the deficit, but more work is to be done.

Options to close the deficit

To fully close the deficit, the City Council and I are exploring a wide range of options that include cutting more positions and services, offering retirement incentives to employees, negotiating unprecedented concessions from employee unions to reduce payroll, eliminating departments and consolidating functions, seeking assistance from our federal, state, and county partners, and reviewing fee increases such as bus fares and other fees for services.  The last resort would be to raise the property tax rate, but I still believe we can balance the budget without resorting to that.

Public participation and accuracy of information

Citizen input is vital to this process.  I am encouraged that all over town people are expressing support for this fiscally responsible approach.  Many members of one group in particular, Annapolitans for a Better Community (ABC), are strongly supportive of measures my administration has been taking.  Certainly, not everyone agrees, and I value legitimate, factual differences of opinion.

Unfortunately, the ABC group’s leadership recently sent out an email with some inaccuracies that are so glaring that they require correction.  For instance, the email claimed that “the Mayor has been clear that a tax increase will be necessary…” and that I was among a group of alderpersons “moving rapidly toward a 25 – 35% property tax increase.”  These statements are wholly inaccurate.  I hope that in the future, the ABC group’s leadership will be more careful to confirm the accuracy of their information before sharing it with their group’s members.

What led to this unprecedented deficit?

How did the City get into this unprecedented budget crisis?  The first reason is that the current fiscal year 2010 budget had a structural deficit of $4.5 million.  The budget was balanced on paper but it relied upon $4.5 million in one-time surplus money from the prior year, so the budget wasn’t truly balanced to begin with.  The second reason is that loss of State aid and the slowdown in economic activity has resulted in more than $4 million of projected revenues failing to materialize.  This combined drop of $8.5 million is almost 10 percent of the approved FY10 budget of $86.5 million.

By comparison, Anne Arundel County’s proposed FY11 budget is only 0.2% smaller than its current FY10 budget.  A 10 percent budget cut in local government, even in recessionary times, is almost unheard of and we’re still not where we need to be yet.

Next steps

Throughout this budget process my goal has remained consistent: to balance the budget without raising the tax rate.  Once we right the ship, then over the next couple of years we can replenish the cash reserves which had also been depleted.  This will not be an overnight fix, but by bringing our expenses into alignment with our revenues for FY11 and then replenishing our reserves over the next couple years, we will restore the City’s financial footing in a responsible way.

The City Council is scheduled to finalize the Fiscal Year 2011 budget on June 7th.  The final budget picture is not yet clear.  I do not yet know exactly how the City can best close the budget deficit, and many variables are still unknown.  Two of the four unions have not yet ratified their contracts, and a variety of service cuts and fee increases are still being considered.  The City Council and I will likely be working up until the last day to achieve a balanced budget in the least impactful way.  Still, in the words of Alan Greenspan I am cautiously optimistic that we can do it without raising the tax rate.  I still subscribe to the following statement I made in the State of the City address when I presented the proposed budget on March 7th:

“As I committed to last year during the campaign if it was at all possible, I would avoid asking taxpayers to pay more through an increased property tax rate, and part of it is, I do not want this city’s first budget when we encounter financial difficulty to be solved by going to the taxpayers to ask them to pay more. We need to do what we can in-house to control costs because everybody in this city is experiencing the effects of this recession, whether they are residents or business persons.”

As always, I welcome your feedback and thank you for your support.