Numbers to Consider During the Budget Process

The data for the following charts come from Comprehensive Annual Financial Reports (CAFRs).

In view of DeKalb staff’s continually stated desire to hire, I’ve begun with a look at the numbers of full-time equivalent employees. The city is using a figure of 220 city employees during its budget process instead of the most recently available CAFR number of 230. I’ve arbitrarily split the difference for the chart.*

[easychart type=”line” width=”420″ title=”Full Time Equivalent Employees by Fiscal Year” groupnames=”FTEs” valuenames=”01, 02, 03, 04, 05, 06, 07, 08, 09, 10, 11, 12, 13, 14″ group1values=”224, 231, 240, 237, 250, 254, 261, 262, 249, 241, 211, 209, 217, 225″ minaxis=”208″]

No matter whose number you use for the past year, DeKalb’s been hiring at a brisk pace following the Great Recession crash-and-burn. However, some council and Financial Advisory Committee members would like to start putting the brakes on hiring. Let’s look at why.

[easychart type=”vertbar” width=”420″ title=”DeKalb’s Taxable Sales by Fiscal Year in Millions” groupnames=”Locally Taxable, State Taxable” valuenames=”01, 02, 03, 04, 05, 06, 07, 08, 09, 10, 11, 12, 13″ group1values=”279, 303, 324, 356, 377, 405, 415, 407, 367, 385, 384, 379, 381″ group2values=”562, 525, 478, 514, 540, 582, 594, 590, 528, 542, 535, 529, 523″ minaxis=”278″]

DeKalb’s core revenues have recovered somewhat from their ’09 lows — often with the help of tax hikes — but the underlying values that they are based on have been, for all intents and purposes, reset at lower levels than they were before. In other words, city government is grabbing a larger piece of a smaller pie. Unlike the rapid recovery and growth coming out of the recession of the early Aughts, sales following the Great Recession have only reached FY2004-5 levels and stayed there. The trends for property values and water sales are even worse, as they have not stopped falling yet. Losses of industry and residential/student population since the Great Recession have not yet been made up, which contribute to the struggle in attracting and retaining a robust commercial base.

We are living in the Flatline Era as it pertains to revenues and it calls for a different approach from what we did 10 years ago.

The big question is how to continue to cover the costs of city services, which are now much more expensive than in 2004, without increasing the tax burden to the point where more people and companies leave for a lower cost of living/doing business. The Flatline isn’t just a city government problem; many residents’ incomes are stagnant, too.

Unfortunately, the budget for operations has not remained stagnant. For FY2016, total General Fund expenditures are expected to be $34.6 million, a $4.5 million increase over FY2013 that reflects more than twice the rates of inflation across the three-year period. About $2.5 million of the increases are due to net increases in personnel costs, primarily in regular wages (+$1.5 million), pensions (+$1 million) and part-time wages (+$400,000).

Up to now the city has covered these increased costs with highly variable revenues (fines, fees), temporary revenues (transfers from soon-to-be expiring TIF funds) and what I’ve come to think of as “pirated” revenues (transfers from the Water fund, which leaves Water unable to paint towers and replace mains). This year they’re also planning to reduce or just plain zero out allocations to capital funds, which means they’ve just about reached the end of their means. Naturally, they are proposing a trio of tax hikes to compensate.

Well, if you say you need to again raise taxes in this community of generally modest means, should you be creating additional positions? Should you be giving raises? City staff and their domesticated council members think so — and evidently so strongly that they’re willing to play dirty tricks to silence the voices of those who dare question this view.

But don’t be fooled. If the city succeeds in raising taxes for infrastructure, they’ll need that infrastructure money for personnel in a couple years. Because nothing else has changed.

The Financial Advisory Committee plans to meet tomorrow, June 2, at 5 p.m.to finalize its budget recommendations for the city council.

Related:

City Barbs: Post-Recessionary Trends & Responses

*Comparing earlier CAFRs with later ones, I find that sometimes the most recent figures in the year-over-year data get corrected in following years. The numbers are unaudited and may sometimes be what was budgeted (but didn’t actually turn out that way) or are simply estimates. If you go into the CAFRs you may find numbers somewhat different from what I’ve pulled from them, is what I’m saying. Also I round them for the charts.