20060430 An analysis of the FY 2007 Westminster City Budget

An analysis of the FY 2007 Westminster City, Carroll County, Maryland Budget

Why a tax increase is not necessary.

The following was posted on the Westminster Eagle Website on April 30, 2006.

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Feedback on Westminster budget? Here's mine

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April 30, 2006 By Kevin Dayhoff

Recently the City of Westminster (City) announced a proposed budget of $27,334,713.00 for Fiscal Year 2006 - 2007, (FY 2007) which begins July 1, 2006, ends June 31, 2007, and has requested feedback from Westminster citizens.

The proposed budget includes a 6-cent increase in the City’s property tax. This will raise the property tax from 40 cents to 46 cents – a fifteen percent increase, probably the largest in the City’s history.

There have since been published reports of folks who do not want a tax increase. Well duh, who among us wants to pay more for anything unless we are to receive a commensurate increase in a tangible product or services in return?

The City, in press reports, has said that the 6-cent increase is needed for “rising fuel prices (an increase of $65,000;) health care costs (an increase of $212,542;) the city's growth ($?;) new technology (an increase of $40,000 – G10.-391 and the General Fund’s portion of the last installment on the new financial accounting system - $348,468;) road maintenance (an increase in the road overlay program of $500,000) and ‘so many other things ($?)…’”

What has been lacking in this year’s budget discussion is any published analysis of the budget so that citizens may arrive at an informed decision. Citizens need to know what has been proposed for our health, safety and welfare and just what a 6-cent increase in the property tax looks like to those of us who have to pay the bill.

Moreover, it is imperative upon those folks who disagree to do more than be disagreeable; they must recommend a thoughtful and intelligent alternative suggestion for debate and discussion.

Disagreement is not inherently a negative thing, as long as it promotes a meaningful and constructive exploration of the issues in order to arrive at a win-win consensus that will make as many folks happy as possible.

Westminster has one of the more sophisticated, intelligent and well-educated citizen-bases in the state; and yet, an alternate proposal has not been presented.

So, let’s explore the matter and see what we can do to develop an intelligent alternative approach that says no to a tax increase.

For this analysis of the City budget, it would be helpful if you had a copy of the proposed budget handy. Most of the expenditures and revenues will be identified by their “account number” - a “G” number; for example, “G26.5000” is the identifier for “Hospital Insurance.”

A copy of the proposed budget should be easily available by calling (410) 848-9000 or stopping by City Hall.

Nevertheless, do not worry if you do not have a copy of the budget handy at the moment, as hopefully, I will still be able to explain where cuts are possible to avoid a tax increase.

If, after reading this analysis, you agree that there are cuts available to avoid a tax increase, it would be certainly helpful for the City to know where your suggestions of additional proposed cuts can be found by referring to the “G – account number.”

As we discuss the following numbers, bear in mind that each penny increase in the City’s property tax nets the City $143,947.50. A 6-cent increase will net the City $863,684.00.

The last several budgets have been very difficult.

To be sure, the last number of budget years have been extraordinarily difficult. For several years after September 11^th, 2001, the economy was stagnant and municipal revenues greatly curtailed – and in some instances, City revenues got smaller or even disappeared. To add insult to injury, the state balanced its budget on the backs of local government.

All the while, in the last several years, the City has witnessed an increased demand for services and expenses have disproportionately increased.

For example, one line item in the City’s budget, account number G26.5000, “Hospital Insurance,” was $767,920 in FY 2005; $948,054 in FY 2006 and has now jumped another $212,542 for this year to $1,160,596.

The salary and operating cost of trash removal, G12.4300, increased from $752,245 in FY 2005 to $858,134 in the FY 2007 budget or an increase of $105,889.

Fuel costs have increased for FY 2007 by $65,000.

Beginning July 1, 2003, the new police retirement plan, the Law Enforcement Officers Pension System (LEOPS) began an increased expenditure in excess of $364,000 per year.

During these difficult budget years – through FY 2006: the City built two parking decks; re-built a portion of Uniontown Road, upgraded the parking meters, built a much needed additional parking lot on West Main Street, supported the renovation of the Carroll Arts Center, embarked on an expensive upgrade of the 25-year old - 1978 financial accounting systems, gave the police officers an enhanced pension system - the Law Enforcement Officers Pension System and gave the police officers a unilateral last minute, “triple-step” pay increase for FY 2006, which cost $125,686.

All of this was accomplished without a tax increase. In fact, FY 2005 had $812,000 left over – almost the amount of money generated by a 6-cent tax increase.

How was this accomplished without a tax increase? For one thing, it involved many sleepless nights and an exacting conservative approach to examining each and every budget line item and making many difficult decisions. Not to mention, an overriding conservative approach to keep government as small as possible and meet the many demands on finite resources with no tax increase.

It should be noted that the Westminster Common Council took the $125,686 in unilateral pay increases for the police out of my proposed FY 2006 budget line item of $250,000 set aside to address the increasing salary disparities for the City’s employees. In addition, while take home vehicles were taken away from non-police officers, that benefit was expanded for police officers.

Did the police officers deserve the pay increase? Yes. So do the other employees.

In the last several years, what did not happen is any substantial pay or benefit increase, beyond routine cost of living increases for the out-of-date and uncompetitive salary structure of non-police employees, in spite of the fact that it has been well known that it is needed, since February of 2003.

Needless to say, this has disheartened many city employees.

Where to begin?

The City budget is divided into four funds: General, Housing, Sewer, and Water. Most of the following is a discussion of the General Fund budget.

A review of the water and sewer budget indicates that water and sewer service will never be as inexpensive as it is today. It is a matter that is beyond the City’s control.

In the last number of years, federal and state regulations, (unfunded mandates - laws passed down without the money to pay for the costs,) and changing interpretations of existing water and sewer appropriation laws have caused a great deal of financial strain on the City’s water and sewer service.

And we must not ignore a 1966 court decision that requires the City to provide water to anyone requesting it within a reasonable distance of the existing water service area – whether it is in the city limits or not. It may be time to find a good court test of that decision which causes the city to have essentially no say in many residential annexations, for which we, as a community have made a collective decision, that we have no interest.

We must support the City employees.

First off, the $555,375 for City employee salary reserve that is set aside for pay equity implementation needs to remain in the FY 2007 budget.

The $92,164 - two percent matching contribution to the preferred compensation plan for eligible employees, must be funded.

It has been suggested that to not support the tax increase is to not support the employees. Nothing could be farther from the truth.

Scapegoating the employees is unquestionably unfair, especially since the main reason we have not had a tax increase in the last several years is because the hardworking, dedicated professionals who work for the City. They have consistently rolled up their sleeves and done more with less – all the while doing the work for less pay than they deserve. It should also be noted that the City fully funded LEOPS for the police officers without a tax increase or unwanted political attention.

How are we to pay for this?

Let’s not forget the $812,000 unallocated surplus carryover (money left over in the previously audited budget at the end of the year) for this year’s FY 2007 budget - an increase of $258,944.

And this year, for FY 2007, the City will see an increase in state Highway User Fee (HUR) revenue of $96,809.

Tax revenue for the FY2007 budget will increase by $1,706,438 – read: 1.7 million dollars - due to increased property values and increased commercial tax base through annexations. Compare that to a decrease of $11,832 for FY 2005 to 2006.

To recap - please add $258,944 in increased unallocated surplus carry-over; to $96,809 in increased HUR revenue; to $1,706,438 in increased tax revenue and that adds up to: $2,062,191 ($2.06 million dollars) in additional funds with which to balance this year’s budget.

And yet, a review of this year’s budget indicates that it is extremely tight.

Where’s the money going?

Well, it includes the $555,375 pay equity implementation; $212,542 for increased health care costs; $65,000 in increased fuel costs; the general fund’s portion, $110,156, of the last installment of the financial accounting technology upgrades; and trash and waste collections will increase $105,889. Your calculator should say: $983,962.

Okay, something doesn’t add up – looking at the big numbers, we still have approximately $1 million available.

Other additional increases in the proposed budget:

Well, FY2007 proposes an increase in the road overlay program of $500,000 from the previous fiscal year (for a total commitment of $750,000, this year.)

And then, for example, there are other increases FY2007 over FY2006:

$40,000 in technology upgrades, G10.-391;

$23,750 to replace the carpet in City Hall, G10.-921;

$26,660 increase for downtown revitalization, G10.1014;

$24,100 for engineering services to correct City boundaries with GPS, G12.21OH/G12.210H2;

$400,000 to purchase “workforce” properties for resale to qualified low-income residents, G10.10952;

$119,000 to repair the City swimming pool, G18.14103;

$223,000 to replace Trucks #40 and 24, G12.61003;

$51,428 to replace two police cars, G11.151103;

$25,000 for Pa. Avenue phase two streetscape improvements at the intersection with Union Avenue, G12.52PH3;

$75,000 for the SHA sidewalk retrofit program, which is the City’s 50 percent share of $150,000, G12.52SW3.

This totals another $1,007,938 – to include the road overlay program brings the total increases to $1,507,938.

Rescind the recent decision to hire a City Administrator.

Not mentioned in this list is the newly created City Administrator position, which has been reported to cost $100,000. Perhaps we may want to amend that cost by adding the $22,500 for the consulting group hired to find this person and additional dollars for benefits, relocation expenses, office space, staff support and computer equipment. It has been whispered that this new position will cost the taxpayers as much as $200,000 – over a penny to the tax rate.

Hiring a City Administrator is an affront to the employees and destroys a sense of team. Westminster citizens “hired” the mayor to do this job. In 1991, the last time the city hired a City Administrator it didn’t work. Previously in the 1980s, the City also did away with the position in lieu of the department-director cabinet form of government. It works. If it isn’t broke, don’t fix it.

Money to be used on the City Administrator is not necessary and could be better spent elsewhere. The City Administrator will only add an additional insulating layer between employees and the elected officials. The City Administrator position does not have support of many employees. Often citizens currently have direct access to city employees and can get things done quickly and efficiently. The City Administrator adds a complicating layer between public and city departments.

A City Administrator is another step towards “Big Government.” Westminster has never been tolerant of “Big Government or “tax and spend” management.

How many additional cuts in the budget are necessary to avoid a tax increase?

The simple answer is that a 6-cent increase in property tax will net the City $863,684. If you would like to avoid a tax increase, $863,684 in additional cuts are necessary.

Please go to the previous section and identify the cuts you would propose.

To get the conversation started, how about considering cutting:

$23,750, G10.-921, to replace the carpet in City Hall;

$40,000, G10.-391 in technology upgrades – pay for Finance’s technology upgrades first;

$223,000, G12.61003, to replace Trucks #40 and 24 – re-evaluate at half year;

$51,428, G11.151103, to replace two police cars – re-evaluate at half year;

$25,000, Pa. Avenue phase two streetscape improvements – apply for state grant;

$75,000, G12.52SW3, SHA sidewalk retrofit program;

$100,000, City Administrator position;

$24,100, G12.21OH/G12.210H2 for engineering to correct City boundaries;

$300,000 reduction in the road overlay program (that leaves $450,000 for this important work).

That totals $862,278 – and no tax increase.

This is not the year for a property tax increase.

The above is just a suggestion that attempts to spread the cuts over the widest range of expenses, without a cut in core services. Perhaps you may want to develop a different list of cuts and give that feedback to the City for their consideration.

Taking into consideration the precipitous increase in property assessments, citizens will already be paying a great deal more in property tax this year. Add to that, for example, the increased costs of gasoline, gas and electric, and health insurance; this is not the year for a property tax increase. Not to mention the chilling affect a tax increase will have on vital economic development and jobs creation right here at home.

What do you think?

Please get a copy of the proposed budget, review the above proposed expenditures and perhaps identify some different expenditures that we, as a community may want the City to consider cutting.

After doing your homework, write or e-mail our elected officials today. Better yet, attend the public hearing, with your proposed cost cuts and present them to the City. Be friendly, positive and constructive – after all, these folks are our friends and neighbors.

The location of the Public Hearing on the Proposed Real Property Tax Increase for the Tax Year beginning July 1, 2006 has been changed from City Hall to the John Street Quarters of the Westminster Fire Department located at 28 John Street, Westminster, Maryland. The time and date remain the same: 7:00 P.M. on Monday, May 1, 2006. Please contact the City Clerk at (410) 848.4938 with any questions. If you can’t attend the meeting, the public comment period should remain open for several weeks, so still submit your suggestions.

Putting together a budget is hard work. The choices and decisions are difficult. We are all in this together. Only by putting out heads together and working with the City, we can be sure to arrive at win-win for everyone.

Kevin Dayhoff writes from Westminster Maryland USA.

E-mail him at: kdayhoff@carr.org

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