The City of DeKalb did me a HUGE favor. When I first went to look for the FY2013 Comprehensive Annual Financial Report (CAFR) earlier this month, it hadn’t been uploaded to the city’s website yet (though it is there now). So, I turned to the Illinois Comptroller’s online collection of local government reports instead.
The report forms there (called AFRs) have barely changed since FY2004, which allowed me to work up, in no time at all, some year-over-year comparisons of the type I do so love to create for you. This set I call “A Documentary of the Biernacki Regime” because it encompasses the 10-year tenure of former city manager Mark Biernacki.
Thanks, CoD!
To start, I compiled data for five important and relatively stable revenues. They are property tax, city sales taxes, utility taxes, the city’s share of state income tax and the city’s share of the state sales tax. There is one other major tax category in the AFRs called “Other Local Taxes” that I did not include because it can change from year to year by $1 million or more — hardly stable. As it is, the five revenue sources comprise 72% of the $30 million General Fund budget (even more if you subtract transfers in from other funds) so I feel it’s fairly representative of revenue trends.
[easychart type=”line” width=”425″ title=”Select Revenues by Fiscal Year” groupnames=”Property, DeKSales, Utility, ILIncome, ILSales” valuenames=”’04,’05,’06,’07,’08, ’09,’10,’11,’12,’13” group1values=”2.56, 2.64, 2.79, 3.14, 3.72, 4.04, 4.09, 4.36, 4.11, 4.13″ group2values=”2.86, 3.91, 4.36, 4.25, 4.38, 5.75, 5.80, 5.95, 5.92, 5.85″ group3values=”3.18, 3.6, 3.67, 3.66, 3.81, 3.57, 3.32, 3.99, 3.79, 3.53″ group4values=”2.32, 3.02, 3.36, 3.69, 4.27, 3.95, 3.47, 3.56, 3.75, 4.13″ group5values=”4.09, 3.82, 3.97, 4.31, 4.37, 3.92, 3.75, 4.08, 3.96, 3.87″ watermark=”3.77, 4.37″ minaxis=”2.3″]
The blue watermark highlights the shift from steady growth before 2007 to anemia that persists today. Remember, too, that revenues remain stubbornly flat despite hikes — in some cases multiple hikes — to local taxes since 2008.
Next I sampled expenditures for the same time period. On the AFR, operations expenditures are separated very broadly into general government, public safety and public works classifications. “Admin” is my abbreviation for the “general government” portion. “Fiduciary” is about pension spending, “Health” of course refers to health insurance expenses and “Comp” is Workers Compensation. I’ve included the city’s airport appropriations as well.
Some of these are not strictly General Fund expenditures but were included because they are typically subsidized by general revenues.
The expenditure sample is smaller than the revenue sample and you might therefore conclude it is less representative than revenues. I would like to have included salaries — now standing at about $17 million — but they, like “Other Local Taxes” above, vary so much from year to year I could not make it work. (I’d gladly explain further in comments if you’re interested.)
[easychart type=”line” width=”425″ title=”Select Expenditures by Fiscal Year” groupnames=”Admin, Fiduciary, Health, Comp, Airport” valuenames=”’04, ’05, ’06, ’07, ’08, ’09, ’10, ’11, ’12, ’13” group1values=”2.51, 3.63, 3.95, 4.45, 4.66, 4.06, 4.23, 4.76, 3.8, 5.19″ group2values=”2.31, 2.34, 2.65, 2.96, 3.4, 3.69, 3.92, 4.2, 4.07, 5.05″ group3values=”3.09, 3.57, 3.6, 4.72, 4.87, 4.89, 4.93, 5.03, 5.36, 5.61″ group4values=”0, .8, .63, .62, .68, 1.35, .95, .66, .48, .88″ group5values=”.74, .76, .84, 1.04, .99, 1.11, .84, 1.16, 1.26, 1.59″]
Growth in expenditures was checked a little by workforce reductions, but for the most part has continued unimpeded. This would be fine except, as we saw earlier, revenues are barely holding their own. Fixed/stable expenses, as these are, should generally be matched with fixed/stable revenues and that’s simply not what is happening.
In fact, let’s further illustrate the point. All revenues and expenditures from the previous charts except for Comp and Airport are shown below. It’s a little busy but the helpful watermark lays bare the structural budget issues the financial consultants warned us about last spring.
[easychart type=”line” width=”425″ title=”Combining the Sample Revenues and Expenditures” groupnames=”Property, DeKSales, Utility, ILIncome, ILSales, Admin, Fiduciary, Health” valuenames=”’04,’05,’06,’07,’08, ’09,’10,’11,’12,’13” group1values=”2.56, 2.64, 2.79, 3.14, 3.72, 4.04, 4.09, 4.36, 4.11, 4.13″ group2values=”2.86, 3.91, 4.36, 4.25, 4.38, 5.75, 5.80, 5.95, 5.92, 5.85″ group3values=”3.18, 3.6, 3.67, 3.66, 3.81, 3.57, 3.32, 3.99, 3.79, 3.53″ group4values=”2.32, 3.02, 3.36, 3.69, 4.27, 3.95, 3.47, 3.56, 3.75, 4.13″ group5values=”4.09, 3.82, 3.97, 4.31, 4.37, 3.92, 3.75, 4.08, 3.96, 3.87″ group6values=”2.51, 3.63, 3.95, 4.45, 4.66, 4.06, 4.23, 4.76, 3.8, 5.19″ group7values=”2.31, 2.34, 2.65, 2.96, 3.4, 3.69, 3.92, 4.2, 4.07, 5.05″ group8values=”3.09, 3.57, 3.6, 4.72, 4.87, 4.89, 4.93, 5.03, 5.36, 5.61″ watermark=”3.77, 4.37″ minaxis=”2.3″]
The three additional lines emerging above the watermarked area are all expenditures. They are not being accompanied by growth in key revenues. And they are not going to go away.
And here’s another way to look at the data. I’ve added up all five of the sample revenues for one bar and all five of the sample expenditures for the other.
[easychart type=”vertbar” width=”425″ title=”Sample Revenue and Expenditure Totals” groupnames=”Revenues, Expenditures” valuenames=”’04, ’05, ’06, ’07, ’08, ’09, ’10, ’11, ’12, ’13” group1values=”15.01, 16.99, 18.15, 19.05, 20.55, 21.23, 20.43, 21.94, 21.53, 21.51″ group2values=”8.65, 11.1, 11.67, 13.79, 14.6, 15.1, 14.87, 15.81, 14.97, 18.32″ minaxis=”8.5″]
The expenditures clearly are eating up a growing proportion of the revenues. In FY2004, the proportion was not quite 58% and for FY2013 it was 85%. During the Great Recession this trend was a necessary part of economizing. That it has continued and in fact accelerated during the past year is quite alarming and belies city officials’ statements about the sustainability of our annual budget.
You who are new to these budget and CAFR analyses might be asking yourselves, “How then has the City of DeKalb managed to turn out balanced budgets and even budget surpluses the last three years?” The answer involves a combination of calculated and fortuitous events. Off the top of my head, these events have included a voluntary separation program, debt refinancing, a year of government grants that were more generous than usual, steps taken to rein in Workers Comp expenses, the start of the TIF “surplus” funds plan and larger transfers from the Water and TIF funds.
Accomplishing savings is laudable. However, unlike natural growth of the stable revenue categories the savings, transfers and windfalls are only temporary fixes in the face of hiring sprees, overly generous raises, pension bumps and rising health care costs that nobody seems particularly determined to address. Unless the new city manager can get a handle on the basic problem, in a couple of years we’ll once again replay that scene where expenditures outrun revenues, reminiscent of Wile E. Coyote running off a cliff.
And remember: Crashes cost us even more in the long run.