Downsizing Local Government

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Today a local city council member pitched some ideas to begin a discussion about sources of potential cost savings. To be fair, it was something of a brainstorming session and not a fully fleshed formal proposal; meant to provide a starting point for a discussion that will inevitably end up in formal council session. The suggestions are informative and this review is presented with no intent to draw fire to the messenger. They help us anticipate the consequences of changes to funding government as we have known it.

Some of the ideas to help make it through the next five years:

  • Freeze salaries for city employees
  • Freeze hiring except for public safety positions
  • Reduce 100 positions per year for the next 5 years through attrition
  • Reduce the undesignated fund balance
  • Reduce the Public Utilities fund balance by assessing a right-of-way use fee
  • Reduce open space expenditures
  • Have Special Service Districts reimburse the police department for overtime
  • Reduce higher tier landscaping expenditures
  • Extend life of vehicles by a year
  • Halt all non-critical capital improvement projects
  • Reduce employee (retiree) health costs

The council member opened in part by pointing out that as goes the private sector, so follows the public sector. It seemed he was asserting that the business model in the private sector would set the bar for the public sector. Mentioning that businesses were reducing matching contributions to 401Ks and other benefits, he segued into health care benefits. More on that later.

The first three items on the list are clearly related to reducing personnel costs. While there is an argument that efficiencies offer an opportunity to “get more for less,” that can also be an indictment that government is not currently efficient. With two or three decades of cost cutting and streamlining philosophy behind us, it is doubtful that there is much more waste that will be wrung out and eliminated. It may be there, but we’ve been looking a long time and there is no reason to believe we’re any better at finding it. Getting more for less then means that the current structure supported by fewer workers will be tasked to provide the same or more services. Translate: longer lines and waits. City workers will work more for diminishing purchasing power as their salaries stagnate. Public safety employees, even though somewhat shielded, will do more for less too because the outlook for the economy is a predictor that they will have more on their plates.

Reducing the undesignated fund and open space expenditures along with assessing a right-of-way fee for utilities can be grouped uncomfortably together. Fine with reducing discretionary spending, but when unforeseen events occur, there will be a bill payer. So, the council ought to prioritize the funded items so that we know up front what falls below the line when a hurricane pays a visit and necessary work must be accomplished. The open space discussion was even the more intriguing. Turns out that the city pays farmers to defer selling to developers so that the green is preserved. One wonders if these same farmers are paid to not plant concurrently. Nevertheless, there will be less of that too. But it’s not like there will be a rush to develop anytime soon. However, it seems that this city has not followed convention assessing utility fees for right-of-way. Now there’s a way to raise revenues by taxing the consumer through an intermediary.

The next four are all about accountability. If a region of the community incurs costs disproportionately to other areas, charge that district the incremental costs. In this case, there is a city initiated development area that has added at least one unanticipated burden on the entire community. While the city officials like to tout the revenues in excess of debt service of bonds this particular area has generated, it now appears that all the costs associated with the development have not been captured. Like a million dollars just for police overtime. Seems accountability may trump labor efficiency. Anyhow, a less controversial initiative might be the leveling of the landscaping playing field. Seems that some areas of the city get a higher “tier” of landscaping than others. In a resort area, that might make some sense. But there is a significant maintenance difference, it turns out, between annuals and perennials or whatever. And who could argue about extending the life of vehicles? Well, the individuals who did the business case that convinced the council to select the current scheme. Business case? There was one at some point, right? The service life of these vehicles wasn’t arbitrary all this time was it? Finally, halt all non-critical capital improvement projects. Wow; but then again, it probably requires establishing.

While the city has continued to pay the employee and employer cost of the Virginia Retirement System, there is an area that has attention. It was the number one belabored topic: health care. Here we were, surrounded by Republican believers, and there rose up a filibuster against reducing the current health benefit. Proposal: require public servants who retire before age 65 to provide their own healthcare during the interim years. Rationalization: 89% of public servants who retire begin a new career or take a job until “normal” retirement age; most of those jobs have health plans. Question: Why should the city continue to subsidize health care for personnel not on the active rolls? Objection: How do we justify this?

So what can we glean from this?

  • Cost savings will be achieved on the backs of public servants
  • The environment will not be a priority
  • There will be a funding shell game that in the end reduces services
  • We have a harbinger of an even lower standard of health care coverage

Cross posted at - Blogging our way to Democratic wins in Virginia Beach!