Budget monster—fact or fiction?
The Hooker Oak Alliance and its Dan Herbert-led slate of candidates have sounded a siren cry of budgetary misinformation that the current council majority created a projected $40 million deficit. Their campaign rhetoric is inconsistent with historical fact and present-day reality.
Historically, the city manager projects long term deficits even though the city typically ends up with an actual surplus when the fiscal year ends. Those budgets are based upon prudent assumptions of estimated expenditures on the high side and revenue projections on the low side. Those budgets, including the current one, have been unanimously approved by council.
The difference between projected deficits and actual balanced-budget outcomes is largely due to receipt of higher than projected sales-tax revenue. Actual expenditures are also typically lower than projected due to personnel vacancies.
Dan Herbert should know this. He voted for these budgets. He should be setting the record straight, not twisting facts for partisan advantage.
Dan, and the Hooker Oak Alliance, should know that structural change in how the budget is forecast is what “increases” the projected deficit. In 1992, when Tom Lando replaced Fred Davis as city manager, he inherited Davis’ five-year budget with a projected $25 million deficit. However, in 1997, there was almost a $6 million reserve. Shortly after Herbert joined the Council in 1998, Lando reduced the appearance of projected deficits by changing to a two-year budget cycle.
The present-day reality is that the structure of budget projections has changed again under new City Manager Greg Jones. Projections are now 10 years out. Thus, a larger deficit should come as no surprise compared to previous two-year projections. It is a false comparison to judge one by the other.
The truth is that budget projections must take into account one basic fact: nearly 85 percent of city expenditures are for fixed personnel costs.
The truth is that annexations supported by the entire council greatly increased demand for city services and personnel to provide them.
The truth is that needed personnel for a unanimously approved new fire station balloons the projected deficit.
The truth is that capital expenditures such as acquisition of creek-side parkland using funds legally earmarked only for capital projects of that very type have little if any bearing on projected operating budgets.
The true deficit warning cry is to be aware of its institutional causes that go beyond party lines or philosophy. It is a reminder to work together to best meet our city’s growing demand for services.