As the city ponders a property tax hike of 37% as well as water rate and fee “adjustments,” you may wonder how DeKalb has got itself mired in financial straits.
It’s actually nothing new. DeKalb’s budget issues are — and have been since at least 2005 — the result of snatching nearly every penny of revenue growth and putting them into more staff and higher salaries, to the detriment of other areas such as street maintenance.
Worse yet, DeKalb has to come up with, at minimum, a half-million new dollars in revenue each budget cycle just to stay abreast of annual personnel cost increases. It’s rendered the financial gurus unable to look ahead more than 12 months at a time because they continually need to chase the next rabbit for the proverbial hat.
Want proof? The stated Number One strategic priority of the City of DeKalb is “Infrastructure,” yet capital improvements are precisely the area that’s been starved in the current budget. That’s pretty messed up.
And a proposed 37% hike in property taxes bespeaks the latest shortage of bunnies for the hat trick.
In my last budget-related post, I showed you that the hiring spree continues against revenue growth that is, overall, a bit less than robust. For that I used the Comprehensive Annual Financial Reports (CAFRs) to get the actual data. This time, I’m looking at budgeted figures so we can trace the systemic abuses into the current fiscal year.
[easychart type=”horizbar” width=”420″ title=”Comparison Personnel to Revenue in Millions” groupnames=”Personnel Costs, Revenues” valuenames=”FY13, FY14, FY15, FY16″ group1values=”24.1, 25.1, 26.4, 26.91″ group2values=”30.36, 31.46, 35.28, 34.85″ minaxis=”24″]
“Revenues” equal General Fund revenue projections minus planned transfers from other funds.
Yes, this is scary if FY2016 plays out the way it’s projected in the General Fund budget. After a couple of decent years, tax revenues have once again begun to stagnate. This is because the growth in sales tax revenues during this time, about $3 million, is slowing a bit and being offset by losses — for example, utility tax revenues are down $1 million from three years ago.
You can see why some Financial Advisory Committee members were quite vocal in calling for a hiring freeze earlier this year.
But while average annual increases of 4% in regular wages are already unacceptable under current revenue conditions, there are even steeper rises elsewhere. Let’s eyeball the fastest-growing General Fund expense category and line items.
[easychart type=”horizbar” width=”420″ title=”High Growth Expenses in Millions” groupnames=”PT Temp, Police and Fire Pensions, Contractual Services” valuenames=”FY13, FY14, FY15, FY16″ group1values=”.41, .56, .76, .82″ group2values=”2.94, 3.46, 3.53, 3.82″ group3values=”1.32, 1.38, 1.63, 2.39″ minaxis=”.4″]
Salaries for part-time and temporary employees has doubled in three years. Police and fire pensions have averaged 9% growth per year during this time period. And the contractual services category saw a one-year jump of $760,000 — a 45% increase.
How’d the city cover this year’s spending explosion? Besides devouring organic revenue growth, they stopped making transfers out of the General Fund. In past years the city transferred about $2 million into the General Fund and about $2.5 million outward, actually an average of $470,000 that was typically distributed to the airport and the capital, fleet and equipment funds (the GF is the primary revenue source for the latter three). This year they’ve reversed gears to engineer a small net gain for the GF by failing to fund capital and equipment needs, and are simply leaving, and/or planning to leave, deficits in these funds.
Now, you might ask yourself which planet allows administrators to claim a balanced budget with projected surplus if deficits are left in other funds. The answer is City of DeKalb. As long as the General Fund looks balanced, everything is OK.
Except that “Sustainable Operations” is the Number Three stated strategic priority for the city, and this state of affairs is anything but.
So it’s come down to an ultimatum. “Nice streets you got there. Be a shame if somethin’ happened to ’em. Say, is that a rabbit?”
If only DeKalb had a city council to rein in this passel of extortionist-bureaucrats.