Addressing Media Coverage of the DeKalb’s Latest “Surplus”

The Daily Chronicle is irritating me this week.

DeKALB – It wasn’t long ago that DeKalb had only a $22,000 surplus in the general fund.

Now, with the Fiscal Year 2011 audit almost complete, city officials say they are looking at a $6.3 million surplus.

The DeKalb City Council on Monday will be asked to amend last year’s budget, allocating $3.6 million of that surplus into eliminating the deficits found in funds for the city’s airport, workers compensation and capital projects.
The big gains in the general fund came from a variety of sources, Assistant City Manager Rudy Espiritu said, but primarily can be credited to a bigger return on investments, bigger gains in city revenues and cost-cutting measures such as the 20 layoffs the city approved in 2010. [emphasis added]

This is not the first time they’ve mentioned only the layoffs and left out the Voluntary Separation Program (VSP) and in this case it’s not forgivable. Why? Because the VSP was specifically designed to help eliminate General Fund deficits that, earlier in the year, were projected to grow to $5 million by 2012.

Let me put it another way: they mostly closed the gap by getting rid of people, but that doesn’t really fix the things that need fixing. Here’s the comment I left at the DC website:

This is not the complete story. In mid-2010, the city laid off 19 and terminated one. There was also a voluntary separation incentive and 14 people took that. I should HOPE they’d see some savings from getting rid of 34 people. The problem is, while it makes the budget numbers look good temporarily, the structural issues remain. If growth remains stagnant, we’ll be right back in the same old bad boat in a year or two. Key to the structural issues will be the new labor contracts. Keep your eye on those.

Crow as the city will about how they’ve brilliantly managed the challenges of the Great Recession, in my view there’s nothing special about it. Since 2008 they’ve raised taxes, fees and fines 12 ways to Sunday, gotten rid of workers and even borrowed money to get rid of workers.

Also, they cannot even explain why sales tax revenues seem to be recovering (I’ve asked.) What if it’s related to a temporary phenomenon, such as the relatively low gas prices we’ve been enjoying?

There was an alternative proposal to 2010’s Reduction in Force, and that was a 12-1/2% across-the-board reduction in wages. Now, that — THAT would have been brilliant. It would have saved jobs and reset wages to levels the struggling residents of this city could better afford. It undoubtedly would have produced positive effects in the pension situation and in the local economy. It would have been good for DeKalb.