The Prop 200 campaign sent out a bulletin yesterday assuring everyone that there would be plenty of money to pay for the Public Safety First Initiative, which is estimated to cost $150 million or so over the next five years and more than $60 million a year after that.
Realtor Bill Arnold cited a report from the Joint Legislative Budget Committee that estimates that revenues will grow by 7.8 percent in fiscal year 2011.
But he didn’t mention that the report includes this “Warning and Caveat: Is is responsible to base a budget on 7.8 percent estimated growth in FY ’11? Economic forecasting has limited ability to predict future, especially in unprecendented times.”
Even if the prediction is right, the state is now facing a $2 billion shortfall in the current year and $3 billion shortfall next year. It won’t be until 2013 that the state will reach the amount of money in income taxes that in collected in 2005 and the amount of sales taxes in collected in 2006. That’s a deep hole to climb out of.
And right now, city officials are estimating that it’s going to take several years before Tucson’s budget stabilizes. Once it does, we won’t just need money for public safety. We’ll need it expenses like pothole repair and upgrading our parks.
There’s no doubt that, as more money comes to city, more should be invested in public safety, just as more was invested since 2006. But locking in spending based on an uncertain hope that enough money will be there in a few years sounds like the kind of reasoning that, well, a Realtor would use to sell you a house you really can’t afford.
Here’s the JLBC report, which isn’t nearly as hopeful as Arnold would have you believe: jlbcProjections.pdf
This article appears in Oct 29 – Nov 4, 2009.
In 2008, the City of Vallejo, California declared bankruptcy. What does this have to do with Tucson and Proposition 200?
Vallejo was pushed over the brink as the economy tanked and the downturn in the housing market produced a large drop in city revenues. At the same time Vallejo’s public safety expenses grew to 75% of the general fund and were largely locked in via collective bargaining agreements. There simply was not enough revenue to cover the mandated obligations.
“But the largest share of the blame in Vallejo has centered on public-safety salaries and benefits, which make up about 75 percent of the city’s general fund budget. (Governing.com article)“
For Vallejo, the tipping point was 75% of general fund revenues obligated to public safety. Where is Tucson and what will be Tucson’s tipping point? (Please note that in no way do I expect Tucson to be the next Vallejo. However, we need a financial tachometer so we know when we are getting close to the redline)
Public safety now represents 65% of Tucson’s general fund (police, fire, courts, public defender, City Attorney). If Proposition 200 were to pass, most of these costs would be mandated and grow over the next few years. In addition to public safety, are there any other expenses that the City is required to make each year? – Oh yes there are; quite a few!
Let’s have some ‘fun’ now and dive into the detail of the various financial reports from the city (make sure you have some extra strength Tylenol because these will definitely give you a migraine). What you find is that over 90% of general fund revenue would be mandated, pledged, or contractually obligated if Prop 200 passes. And this is before you fill a pothole, turn on the lights at City Hall, or mow the grass at Udall Park. …If 90% of your revenue is already spoken for this leaves very little money for other services…I think this is a problem…
Here are some other contractual obligations you find in the financial reports:
$400 million of outstanding General Obligation bonds and Certificates of Participation for Governmental Activities. Bond holders are kinda funny in that they expect the City to make annual debt service payments on time. (pg 53, ‘08 CAFR)
$28 million/year of annual lease obligations. (pg 55, ’08 CAFR)
$600+ million of underfunded pension and retirement obligations. The City has made promises to employees but has not set aside sufficient money to pay for these. The $600 million has to be paid off over time as these are contractual obligations to employees. (pg 63, ’08 CAFR)
$40+ million Structurally Imbalanced Budget. The City is running a deficit but has balanced its budget through spending their Rainy Day Fund, borrowing more money, and other one-time windfalls. The City Charter requires a balanced budget. (Budget Revenue Presentation 9/15/09)
$18 million deficit in the Self Insurance Fund. This has to be paid off before the City loses a big legal claim and has no money to pay for it. (pg 93, ’08 CAFR)
$22 million shortfall in Unreserved Fund Balance (Rainy Day Fund). This is critical in maintaining our credit rating and needs to be fixed ‘promptly’ according to Fitch (FY 2010 Adopted Budget)
Those are the easy ones to find, I suspect there are other contractual obligations. It just seems to me that Prop 200 pushes too close to the financial tachometer redline.
Let me to anticipate some comments from the Yes on Prop 200 folks. Yes, some of these contractual obligations are already in the public safety budgets. I believe they still add up to over 90% of revenue. Yes, I expect City revenues to increase somewhat as we claw our way out of the recession. Even if you factor in better revenues, I can still show you that almost 90% of revenues are spoken for before you even fix the first pothole.
Allow me to offer some free advice (yes, I know free advice is often worth what you pay for it)
Elect the people who share your priorities and who will make sound decisions. Do not try to micro-manage them – let them focus on the big priorities. Allow them some financial wiggle-room to navigate the economic cycles. If they do no perform, throw them out. Or, better yet, how about you run for office?
If your organization receives money from the city and you are not a core service, I suggest you start figuring out how to live without these funds.
If you receive below-market rent or subsidized services from the city and are not a core service, you may want to adjust your budget to pay fair market value. If you can’t pay market rent, please contact “Two Men and a Truck” to help with your move.
If you drive in the city, don’t expect the potholes to be filled any time soon. You should get to know your local tire dealer and alignment specialist – you will be seeing more of them. Ask if they have a ‘frequent flyer’ program. Provide them with liberal amounts of donuts so you receive priority service.
Expect your garbage fee to go up as Environmental Services is carrying a $58 million deficit, even though it is an Enterprise Fund and is supposed to break even every year. (pg 120, ’08 CAFR)
http://www.cnbc.com/id/23385758
http://www.governing.com/article/vallejos-…
http://www.tucsonaz.gov/budget/docs/Budget…
http://www.tucsonaz.gov/finance/CAFR08.pdf
Adopted Budget 2010:
http://www.tucsonaz.gov/budget/
Very good article Jim, and very good comment Alan! Bravo, some good, clear thinking . . . just when it seemed we were surrounded by nitwits and numbsculls!!
Is this the same Bill Arnold that was stalking Senator Toni Hellon a couple of years ago and ended up with a restraining order against him? And he’s the spokesman for public safety???
I voted against prop 200 because it is foolhardy to expect that the city will “find” money to fund such a thing as this. I am for better law enforcement but it seems very much like writing a bad check, something I am sure were I do do I would be fostering with a more personal relationship. Lets not have the city doing the same.
Well I thought those City Parks were more important than publice safety, that makes a whole bunch of sense to me. I guess the next time I wait six hours for the Police to respond to my burglarized home I should not be upset. I’m kind of okay with criminals roaming our neighborhoods if it saves a buck aren’t you???
I remember a William “Bill” Arnold who was accused of donning a disguise to sneak up to a woman’s house to take pictures through the windows. Maybe if he just stopped being such a creep our town would be safer.
To won’t happen to me.
Prop 200 supporters say they will take 1500 more criminals off the streets. But the county jails the criminals. Without more jails it doesn’t matter if they police even catch who burglarized your house, the county will either have to build more jails to house them (more taxes) or let other criminals out. This doesn’t even take into account all the extra public lawyers and judges needed to prosecute and sentence those criminals (do we really need more publically paid lawyers???)
Police could reprioritize – not take on the burden of federal law enforcement, not pay everyone with a captains rank or above 100K, they could contribute more to their own pensions, hire civilians into non patrol jobs, stop taking home city vehicles, etc and I am sure the could hire a lot more police officers with those new found monies.
One of the lesser discussed provisions of Prop 200 is section g. It states that all conflicts arising from the initiative will be settled by civil actions only. Mr Arnold was nice enough to explain what that meant to me. According to him this section would allow any citizen to sue the city if they felt Prop 200 wasn’t being implemented properly! Can you imagine how unworkable that would be?