Councilmember Heystek’s Budget Projections Prove More Accurate Than Navazio’s –
Councilmember Heystek’s Budget Projections Prove More Accurate Than Navazio’s – The city is in the short-term proposing to balance the budget by using the reserve and then develop new recommendations aimed at restoring the 15% General Fund reserve.
Overall, General Fund expenditures will exceed its projected expenditure budget by over half million, $515,000, “due primarily to savings from new labor contracts falling short of the levels assumed in the FY2009/10 budget.”
In other words, the city’s revenues are lower than projected and the budget savings in the labor contracts fell short of the level assumed in the budget.
The staff report continues:
“Despite efforts to manage the FY2009/10 budget through expenditure reductions and other cost-saving measures, the General Fund is projected to end the current year with an unreserved fund balance of $4,652,000, or 13.3% of operating revenues, which implies a reserve level $585,000 below the level required by the City’s 15% General Fund reserve policy.”
If you look at the numbers it is fairly easy to see what has happened. The budget last spring originally called for around $850,000 in savings from labor negotiations with the city’s bargaining units. Councilmember Lamar Heystek, created an alternative budget to realize over 5% in savings. The council however, compromised at $1.25 million in savings.
However, the council did not hold the bargaining units to that number and it appears what has happened is that they have basically hit the original goal, realizing about $837,000 in savings, with one bargaining unit to go. In other words, the council majority and city staff were never committed to that $1.25 million number.
To make matters worse, Councilmember Heystek’s alternative budget argued that there would be a deeper loss of sales tax revenue for the next year than the city projected. Therefore his budget suggested there would be a 2% loss of sales tax revenue whereas the city argued there would be a gain of sales tax revenue. Who was right? Councilmember Heystek of course as the city has lost $200,000 additional in sales tax decline in the first part of the fiscal year.
It is interesting to note that Mayor Pro Tem Saylor criticized Councilmember Heystek saying he preferred to use Navazio’s “real numbers” rather than “making them up.” It turns out Councilmember Heystek’s “made up numbers” performed a lot better than Mr. Navazio’s “real numbers.” Navazio projected a 1% increase in revenues while Councilmember Heystek projected a 2% decrease in revenues. They compromised to a 0% projection.
Here is the actual:
“Sales Tax receipts through the first half of FY 2009/2010 indicate a decrease from FY2008/2009 results. While we had originally predicted 0% growth in this revenue, we are now estimating a decrease of 3.1%.”
So it turns out Councilmember Heystek’s numbers were too rosey as well. There is a time for optimism, but it seems when doing a budget it is better to underestimate revenue and overestimate costs rather than the reverse.
The City would be in far better shape had they followed Councilmember Heystek’s advice.
Unfortunately, only Councilmember Sue Greenwald backed Councilmember Heystek’s budget and the result is that the city is facing an additional $800,000 deficit instead of having a balanced budget.
So now the key question is what do we do about it. It appears that the city is going to do two things.
First, they are going to punt by absorbing the loss within the city’s reserve. Despite my use of the term punt, given the hole that the city has dug itself through the failure to follow Mr. Heystek’s advice and its failure to achieve the short-term savings on contracts (let alone the longer term issues that are far more serious), the city is making a reasonable decision by using reserve at this time.
However, the second solution is going to be another round of cuts to the departments, which means a further diminishment of city services. This is a problem. The taxpayers and citizens of Davis have to pay for the mistakes that council has made. First in the form of reduced services and next they will be asked to revenue a sales tax that entirely went to salary increases for the most highly compensated employees.
Mr. Heystek’s plan recognized that the city’s revenue projection was too rosy. In addition to Mr. Saylor’s dismissive remarks, we will remind you that Mr. Souza actually projected greater revenue from sales and property taxes than the previous year. As of today, the city has not seen that increase.
To summarize what has happened here was entirely predictable. The city fell short on the cost-savings end of the labor contracts. We certainly saw this coming which is why Councilmember Heystek pushed for a goal of around $1.5 million and settled for a compromise of $1.25 million. Neither of those were achieved.
Second, the City’s finance director was too rosey in his budget forecasts and predicted a small increase in revenue and the city has fallen well short of that.
So now that employee negotiations have failed to produce the needed savings in the short-term, the city will rely on its reserves to buffer until it can figure out which city services to cut.
—David M. Greenwald reporting
David–the city didn’t punt. They got tackled in their own endzone. It was a safety.
Crilly: Good one, lol.
And the object of the game is cut the basics, keep the frills, to justify raising taxes…
Crilly- they were tacked in thier own endzone by the center.
Don Saylor should not hold public office…
Mr. Musser- you have hit the nail squarely on its head. We need regime change.
David Greenwald said:
“So now the key question is what do we do about it.”
I know what I hope the council does about it: listen to Lamar instead of bicker all night. Take heed, Mrs. Sue Greenwald. Follow Lamar’s lead and try not to steal the show.
So much for David Greenwald’s new policy of censoring comments implying criticism of his faction, but allowing superfluous, nasty innuendo against those not promoted by his faction.
Here is the type of leadership we need in CA: http://www.njn.net/news/coverage/2010/budgetspeech.html
One obvious savings that is warranted is to fire Community Planning Director Katherine Hess for the NewPath lawsuit she has caused for the city. Authorizing the 37 cell tower permits “erroneously” and then not even notifying the public nor the City Manager. This is only one of her MANY screw-ups over the years. Her dismissal would save the city $166,000 per year and a lot more since every planning decision she makes brings on more problems for the city that WE wind up paying for.