Wednesday, July 9, 2008

Budget Woes

Today's headlines couldn't be worse economically. Price increases are hitting everyone, to the point that even P&G is raising prices. Comair is laying off 500+ employees. Even the casinos are struggling!

And people wonder why our County budget problems are so tough. (http://news.cincinnati.com/apps/pbcs.dll/article?AID=/20080709/NEWS0108/807090303/1169/NEWS#pluckcomments)

Quick summary of the problem. Outside of fees for certain transactions, we rely on four major sources of revenue to pay for the services we provide (through what is called our general fund):

- the sales tax (.5% goes to our general fund); (note: things like gas and food are exempted, so in a tight economy, where people are more limited to such basics, we get even less--which is exactly what we're seeing right now)

- the property tax (most goes to specific levies and schools, but we get some)

- a tax from the sale of property (property sales have tanked due to the housing market, so revenues are way off here)

- interest (interest rates are low, so we are also off by millions here)

Bottom line: the nature of this economic slump (lower consumer spending and higher prices, slumping housing market, low interest rates) is almost a perfect storm with respect to the revenue streams we rely on.

So despite a conservative 2008 budget where we made a lot of cuts and consolidations and forecast revenue increases conservatively, the revenues are still well below anticipated (more than $10 million).

The answer? We have to do what every other company and household is doing right now -- make the tough decisions to cut back on spending. Like everyone else, we simply can't spend money we don't have, and there's no way around this basic reality.

We're asking each department to live the rest of the year on a 6% smaller budget, and although it's fun for no one, I'm confident they will make the best decisions about how to provide the services they need to provide at a cost that our general fund is able to bear.

And long-term, the real answer is that we have to redouble our economic development efforts so we grow, grow, grow--creating jobs and increasing spending in our region and county.

If you have other ideas on where and how to save money, please comment below . . . .

9 comments:

revitilization said...

utilize volunteers/ambassadors/concerned citizens (on patrol), church/community groups, high school/college students to assist with some of the tasks that would otherwise be funded via the county payroll or outsourced.

transportation--sell off old/inefficient vehicles, utilize scooters/bikes/motorcycles/horses other modes of transportation

paperwork--my experience with all gov documentation is a ton of paperwork--do whatever is necessary to make everything electronic--virtual. Again, utilize local colleges/universities --interns & co-op students to do this as part of their education.

taxes--check out the back taxes for major developers in Hamilton County--I think my builder owes the county lots of $$

agree, economic development is key ... we need to move more corporate and regional headquarters into the county. Was someone working with one on one with US Playing Card? If not, find out what made their decision to cross the river.

Anonymous said...

budget cuts are fine, but does the county have any investments or some kind of a saving plan as well? It would be great to have a surplus.

David Pepper said...

Great question, Anon.

Beyond budget cuts, the only way we're going to get out of this mess long-term is to grow our way out of it. We need new jobs, new and expanding businesses, and an economy where both our own citizens and more and more visitors spend money.

That's why we have worked hard to bolster economic development efforts throughout the County, are excited to finally be moving forward on the Banks project and to see other results of downtown revitalization, and are conducting essential broader marketing to bring tourism here (such as this week's convention, etc.). We are also working to conduct essential job training to get our citizens prepared for the jobs of the future. Of course, we also need to create the most competitive environment possible for new jobs and businesses.

Almost all of these efforts are being done without using the County general fund dollars that are in such short supply, by the way (a point that is sometimes lost).

Once we trim our budgets through the painful process we're in right now, my hope is that these pro-growth policies will set the stage for a better economy and higher revenues down the road, leading to the surpluses we need.

More to come on building this pro-growth economic agenda.

Jeff Capell said...

Overall I think the way the Commissioners are handling this year's situation is mostly correct. If the Commissioners tried to impose line-by-line cuts on the Courts or independently elected officials, there could be legal challenges to that, but it's harder to challenge when the Commissioners simply report that money isn't there and demand that everyone share in the sacrifice.

As for things that might be done this year, I'd like to see the Commissioners eliminate some unnecessary programs that it does directly control, such as 4-H and Portune's pet home improvement program, and then the across-the-board cuts could be reduced by that amount.

Also, some version of furloughs need to be considered. I don't know if shutting the entire government on the same day is the best way; perhaps having rolling furloughs where 10%, 20%, etc of the workforce is off on a given day until everyone was furloughed for a day would be less drastic.

Beyond this year, the Commissioners are going to have to separate programs that are a required or necessary function of government vs. programs that are simply nice to have. The two programs I described earlier, Portune's pet home improvement program and 4-H may be nice, but aren't a necessary function of government. The Sheriff's office may need to focus on it's core duties and leave the rest behind.

Extending the workforce to a 40 hour week like the rest of us, and cutting the head count by the same proportion should be strongly considered. With fewer employees that drastically cuts benefits costs, even if you had to increase the salaries to account for the extra 14% time on the job.

Anonymous said...

At the Commissioners' Budget Meeting in December, after the defeat of the jail tax & the very real threat of eliminating the Deputies in OTR, a lady stepped up with, IMHO, some very wise & sound advice.

1. Start collecting Court Costs from the Defendants.

2. Start charging room & board at the jail & the satellite incarceration facilities - Queensgate, River City, Reading Rd., etc.

3. Start bonds on those put out on probation. The Defendant screws up within 3 months, they can kiss 100%of the bond good bye.

All of these items are perfectly legal & there are Court decisions to support such methods.

Do you have any idea of the delinquency in the Court Costs? Do you realize how much it costs the taxpayers to send 2,3, notices to some person who gave an incorrect address to begin with?

There's probation officers in the County who love the idea of probation bonds, as I've found out. Actually, it was the lady at the meeting who talked with some POs about it & I've subsequently learned of her lobbying efforts. I think, not sure, the lady is a volunteer with one of the Court Watch groups. Very visible, very much respected in the Courts & in the City.

Hardship for the Defendants & their relatives? I don't hardly think so. The overwhelming percentage of them don't pay child support anyway. It's the taxpayers who are attempting to manage in an effort to ward off hardship, put food on the table, pay bills on time & keep gas in the tank. Bottom line, the majority of Defendants aren't indigent. And this region, including the County, needs to realize this fact.

In addition, there needs to be more Deputies in that Court House. Things get rather ugly in there on a very frequent basis these days, so I've been told. The Sheriff should put 2 Deputies per floor, to monitor the hallways. A Deputy needs to be ensconced in each Court Room for the protection of the Judges, their staff people, victim witnesses & onlookers who know how to behave themselves in a Court of Law. There's entirely too many people without human instinct in there with regularity.

That was back in December the Commissioners were told. Todd Portune claimed the ideas were being looked at. This is July & the County is low on the dough.

How much longer will the taxpayers have to wait for the equitability to be spread fairly & evenly among everyone, including the Defendants who claim repeatedly that they are indigent??? We're tired of paying their way to commit crimes in Hamilton County.

Anonymous said...

David,

I think we limit ourselves and do not allow the county to grow more progressively. What is your stance on allowing adult entertainment as a part of an entertainment district in downtown Cincinnati?? Every major city that attracts major conventions unfortunatly has a demand for and entertainment district and adult entertainment as well. The Sheriff is obviously opposed to these type of venues and that is probably the biggest reason they have not been around. The question is not if you would attend a place like that but if you are serious about growing the economy I think some open mindness to these type of venues would help further downtown growth. If you are opposed to this what are your reasons and why? Most cities have an adult district why are we so closed minded in this city? I think to attract young people there is going to have to be more open mindness so self expression is encouraged instead of repressed. Why arent you setting up more programs to attract more businesses to the downtown area and working towards making it more "business friendly?" No business should be discriminated against! Work towards making it inviting to all kinds of entreprenuers instead of just the 3cdc and the corporate elite calling all of the shots. There is an image that the playing field is not open to every business person in this city unless they are connected with the right people. How can you put an end to the red tape and open it up to everyone that has an idea? Until that happens the city will never reach its full potential to be what it can be! Why cant we have everything every major city has??? Cincinnatis goal should be to have a downtown an outlet for every single person that searches for one! Even outlets that some people would rather not see. Everyone should have the choice to go where they go and do what they want to do! Casinos should not be of of question either. Look what they did for Lawrenceberg!

Cincygal said...

Adult entertainment downtown..what? Go to butler county. As for 4-H, how much is really put into that program? And dont even think about the Fairgrounds, a little but of economic development there would go a long way for the County.

Anonymous said...

Noone said you had to go cincygirl.
I worked in the cincinnati convention business and met many convention goers and this was the biggest thing the majority think was missing! People get bored out of their minds after the conventions let out and are always talking about all of the other places they have been for conventions. The county needs to put together more programs to make businesses want to open downtown. (Tax Credits, and other incentives) They should also lift the ban on adult entertainment. Im not saying it needs to be on every block but a few upscale venues near the convention center or in a new entertainment district would get be a big plus for selling new conventions) Every major city knows this! Cincinnati is missing many convention opportunities. Like Jeff Ruby said we are the only major city that doesnt have an entertainment district! Jeff Ruby can open a place with ease because of who he is, but an entertainment district will never get started unless there is help by the county and city to map out this area and draw up major incentives to people to want to open in downtown. The message should be we are open to all ideas and yes we want your business! (Not just have the 3cdc and the Banks working group take care of all of the development needs) It has taken our city way too long to get things done on the banks and downtown because the corporate groups hold the outsiders out instead of inviting them to bring their buisnesses from all over the country and open in cincinnati! (We are too scared of change!)
David, Your Friends in San Fran have alot of entertainment there, maybe they could explain to you why entertainment is good for a city!

Quim said...

4H ?
Does the county really spend that much on the 4H club ?
There are reasons to give it some support.
http://www.amconmag.com/2008/2008_06_30/article.html

Free Blog CounterEnglish German Translation