Friday, July 9, 2010

Budgets (Yeah, more about it)

The city is going through a budget crisis. In our current budget, our operating revenue, the amount funded by property taxes and other sources such as franchise fees, business licenses, permits, etc continue to drop. The property appraiser office of Miami-Dade has already warned us that next year we will see a drop in ad valorem (property) taxes of ~26%, and tax revenue collection has slowed this year. As of May 31, tax collections were 93% of target. Some of this has been offset by lowered expenses. As of May 31, the expenses were 96.4% of the projected. We still have four months to go.

The Dark Cloud in all of this is that we are currently about $195,000 in the red on our budget as of May 31. If the current patterns hold, there are no new unbudgeted expenses, and revenue collections stay the same, we might stop the bleeding here, closing FY 2010 at around $200,000 over.

That's a big if. June ad valorem tax collections were only about $7,400 instead of an anticipated $160,000. This might be just be slow payment and could be made up later.

On the cost side, the interim city manager's salary needs to be added back in and a new police chief has been hired, all of which will cost money. There are several lawsuits still pending that might require payment. Our legal services bill remains in doubt. And the new police contract has still not been finalized.

The Silver Lining is that the interim city manager, Bob Pushkin, is taking this seriously. At the Citizens Budget and Oversight Commission meeting on Tuesday, July 6, he presented a series of budget reduction proposals for FY 2011 that would save the city around $1 million, approximately the same amount of the ad valorem revenue drop anticipated. Pushkin also presented alternate versions for the commission in relatively easy to understand formats showing the effect if millage rates were changed, not a popular option but a possibility. Nothing should be off the table.

Now I am not going into the details of the plan. It will be presented in some detail at next Tuesday's commission meeting and explained better than I can here.

I have certain reservations on the budget proposal from a math perspective. The assumptions don't include any drop in non ad valorem revenues (about 1/5 of operating budget at about a $1 million) and that strikes me as an oversight worth noting.

Bob Pushkin spoke to that and I believe it will be considered in the next steps.

I have certain policy reservations too but I am keeping quiet on those as the budget is a work in progress.

In addition to the presentation next Tuesday, there will be two budget hearings to be scheduled. Once that schedule is announced, show up. It matters.

Kevin Vericker
July 9, 2010

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