Confronting Reality at Last? We’ll See

From the Daily Chronicle today comes “DeKalb aldermen confront budgeting issues.”

During their Monday discussion of the budget for the fiscal year that starts July 1, DeKalb aldermen were told the city will need to cut services or boost revenue in order to maintain operations in the coming years.

Beginning July 1, alderman were told, the city should shift its structure and look at the way the general fund is used.

“The main thing is the current structure of how everything is put together is not sustainable,” City Manager Anne Marie Gaura said. “Something has to change and that will require policy decisions in the coming months and coming years on how to address this long-term.”

Gee, where have I heard this before?

Here’s where:

December 2012: DeKalb’s Budgetary Reserves Do Not Mean What You Think They Mean. In this post we examined the contributions to DeKalb’s General Fund reserves and how they’ve tended to mask structural budget issues.

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May 2013: DeKalb’s Hiring Spree. Here we followed the growth of the city’s workforce despite flat core revenues.

Within a few years, large TIF transfers to the General Fund (currently $942,600) will be a thing of the past, and TIF “surplus” revenues ($533,000) will go away, too. Growth will not just have to cover rising wage and pension expenses, it will have to make up for future known, significant revenue losses as well.

My crystal ball says it won’t be long before we find ourselves in financial straits again and the administrators must know this because EPI is here.

That was a joke. I haven’t needed a crystal ball since the Voluntary Separation Program of 2011 when they sounded the financial “all clear” and returned to business as usual.

May 2013: EPI and City of DeKalb Operations. Here’s a quote from the EPI financial consultant who analyzed city operations:

If you’ve got to fund all your capital requirements, all your replacement funds, AND fully fund your pension plans, you’ve got a hole that is HUGE. You need to know what that hole is, even if you can’t solve it right now. Because you’re making short-term decisions, and maybe — we talked earlier about the half-million savings, or the million dollars, how can we use it? — you may need that to do just what you’re doing today, three years from now. And if you don’t have that visibility, you’re gonna get yourself in a box where you spend it now and you don’t have it in three years.

Some of the news was apparently so bad, the city has never allowed the public to read the final EPI report in its entirety.

June 2013: Zombie TIF and Other Notes from Last Night.

Key to change, said the consultants, is strategy. Laying off people when you get into financial trouble is not strategic, it’s tactical. Strategic means planning for fulfilling needs 3-5 years out. Tactical is doing whatever it takes to get through the next year. One way is sustainable, the other a grubby little bandage giving temporary relief.

Grubby indeed, and now falling off.

January 2014: The Biernacki Regime: A Cautionary Tale.

The expenditures clearly are eating up a growing proportion of [core] 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.

One of the dangers of complacency with finances is the temptation to indulge. Calendar year 2013 oversaw a spending spree when it came to building construction and equipment purchases. Part of this landed on FY2013, part of it on the current fiscal year ending in June. Check out the estimated fund deficits in the FY2015 draft budget packet.

March 2014: Painting a Picture of DeKalb’s Pensions.

City of DeKalb is quick to tout its balanced budgets and its growing “reserves.” But if DeKalb is doing so well, why isn’t it making up the pension-funding ground it lost during the past two recessions?

I think the main reason is annual pension expenses have been rising so fast — faster than inflation, often in double digits — that we can barely stay abreast of current necessity.

The above posts — and many others — have been offered as counter-arguments to the pervasive narrative of the last several years that “DeKalb has General Fund reserves so we must be doing fine.”

Now we all, finally, seem to be on the same page when it comes to acknowledging threats to the long-term sustainability of our city’s finances.

However, I’d counsel continued skepticism for now. Just because there seems to be less denial in city hall when it comes to our problems, there’s no guarantee the adult view will prevail for long or that proposed solutions will make sense.

Also, “sustainability” is a fashionable term just as “transparency” is. As many well know, DeKalb’s track record in transparency doesn’t impress me much. As it is with so many buzzwords, the people who talk them up the most are often doing the least.

Call me agnostic.