As promised here is the rest of the story on the city council workshops held on March 18, 2014. The morning session was devoted to money – the budget, the medical benefits plan and an increase in fire staffing.
The General Fund budget discussion yielded some important gems of information. Staff, for the first time ever, used zero-based budgeting. It is a methodology for which I advocated for years. It’s about time. There will be $15.5 million in expenditure reductions and revenue enhancements. Most of the reductions are of the smoke and mirror variety and reflect internal movement of monies. The only exception is that all departments will make cuts totaling $4.75 million. The lion’s share of those departmental cuts is the result of eliminating unfilled, vacant positions. This is a strategy that has been used before reluctantly.
When council got to departmental budget cuts Councilmembers Martinez and Knaack again asked the rest of council to return a portion of their council budgets to the General Fund as a signal that they were willing to absorb some of the same pain other departments were enduring. Vice Mayor Knaack again expressed her concern and displeasure about Councilmembers Alvarez’ and Hugh’s practice of giving the lion’s share of their council budgets to non-profits. Once again, Alvarez dug in her tiny toes and said she would give up nothing.
The big budget take away is this: Glendale residents will experience a 2% increase in their property tax rates and the temporary sales tax increase will now become permanent. For one reason only. As Tom Duensing, Executive Director of Finance said, “The level of contractual obligations (Jobing.com Arena and Camelback Ranch Ballpark) is unique to Glendale.” If not for these two major debt burdens, “Glendale’s financial picture would look very different.” He went on to say according to the major rating agencies a city’s debt burden should be under 10% and most are in the 8% range. Glendale’s debt service burden is in the 25% to 28% range. Translating it means that the reason your taxes are increasing or in the case of the temporary sales tax increase remaining, is because of the debt created by Jobing.com Arena and Camelback Ranch Ballpark. That has been the elephant in the room that no one wanted to acknowledge. Glendale staff finally has done so. When will your councilmembers finally admit that these two city-owned properties are the reason?
How did the council fall on this issue? Councilmembers Martinez, Knaack, Chavira and Sherwood (a majority) gave approval and direction to remove the sunset provision from the temporary sales tax increase thereby making it permanent and to increase Glendale’s portion of your property taxes by 2%. Councilmembers Alvarez and Hugh wanted the sales tax issue to go before Glendale voters and silently gave approval to the property tax increase. Mayor Weiers wanted an additional week to confer with major stakeholders in Glendale. He didn’t get it but we can presume that he supports the majority council action taken. The next budget workshops are scheduled for April 8 and April 10, 2014.
One perplexing comment made by Mr. Duensing was that WITHOUT the temporary sales tax increase the ending fund balance is ONLY a positive 10% in 2017. If this is correct, One would think a positive fund balance of 10% seems to negate the need to make the temporary sales tax permanent.
Another issue taken up was the medical benefits plan. Retirees can expect another substantial increase to their monthly medical insurance payments while current employees will see no increase. Jim Brown, Executive Director of Human Resources (weren’t they getting rid of “Executive Director” titles??), said there would be no increase to current employees but retirees are an unfunded liability causing the increase in their premiums.
The last issue was an increase in fire staffing of 15 fire fighters as a result of a SAFER grant. As with a COPS grant there is a sliding scale and the SAFER grant will cover the first two years of fire fighter salaries. After that, the city will absorb the costs. Chief Burdick said that with the addition of 15 fire fighter positions there should be a savings of an estimated $400,000 in overtime pay. Let’s hold him to his word.
Lesson learned is that taxes are remaining or increasing because of the debt burden created by the city-owned Jobing.com Arena and Camelback Ranch Ballpark. Are they worth it to Glendale residents?
© Joyce Clark, 2014
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I think they are . BUT, I moved here from a hick small town in the Midwest where all we had was high school basketball, melon festivals, and 4-H fairs where people sat around for hours watching farm animals defecate in the middle of a ring .
One of the great things about living in a moving big city is the excitement and entertainment.
However,not everyone shares those values. I remember some people saying that all they wanted Glendale to be was a sleepy bedroom town….astonishingly .
Unless everyone is aboard or at least the majority of folks on issues such as this, then taxpayers should not be responsible to incur this cost .
Plenty other cities would be perfectly willing to take on a professional sports team or a symphony orchestra or anything that differentiates us from ” Hicksville”
Well, the two elephants ( Jobing.com and Camelback Ranch) begin to make an appearance at a council workshop. Taxes are assured to go up, but they don’t balance the budget — or do they?
You are correct that Mr. Duensing’s comment about a 10% surplus is surprising considering the workshop a few weeks ago showed negative numbers for the 5 year period and growing even larger if the sales tax is not extended. That is a long way from a surplus!
As far as the firefighters, will they ever agree to take a serious look at changing the way they perform fire services (which are now primarily emergency medical services) ???? The model they are using (4 man crews for everything) needs a good look to find improvements in service delivery and efficiency. Of course the fire union will object to ANY change in the current model. Who will come along and challenge the fire department and fire union to make changes?
Lots of things to consider I did not catch the meeting I will have to make time to look at it but your summary give me a few things to worry about.
1. The staff recommendation to break the city promise to the retired employees by constantly increasing the insurance premium is troubling. And to make matters worst they are also saying the current employees would not see any increase in premiums just the retires. This seem so easy for them to recommend it unbelievable maybe that’s why some people can say with a high level of confidence that social security will not be available in twenty years. Question, did the city take this out for to bid, and how did they ask for such a discriminatory policy in the market place?
Being self insured the city needs to make an adjustment to the coverage they offer the employees. To start with last year they had a policy the did not differentiate between a family of three and a family of four or more. That is an area where the city could realize some significant savings, another option to consider is maybe paying an employee a stipend if they can prove they have coverage on a spouse plan elsewhere. I know a lot of employees who takes the city plan because they spouses plan pays them to go elsewhere. Anyway this insurance issue is not over with, watch for the unions to be asking next year for a fixed amount from the city to provide coverage for its members.
2. The addition of 15 new firefighters to the staff on a grant that will expire in two years is not a good idea, unless the chief can show how the city will be able to support then after the grant runs out. I know this is a hard call politically but one that should be discussed. We do not need another 15 firefighter to reduce the OT budget by $400k. The city could save more than that by cutting out some of the speciality pay each firefighter received every pay check. Fifteen more to serve the cities of Phoenix and Peoria, Glendale is one of the communities that puts in more into the joint aid program than they receives more than 25% of all calls is for service outside the city.
3. If staff is using a zero base budget and can only cut $4.75m in expenses then something is wrong the needs assessment they are using to justify this budget.
4. Public safety will add about 30 new position between this year and next year or $3m in additional cost in two years then we will be told that is why we cannot reduce the sales tax as promised. I will predict that in two years the PS budget will be about $10m more than it is today.
Pushed submit too soon.
Here are the ways that I heard Mr. Duensing will generate $15 MM in savings
1. Don’t pay Phoenix the money they owe for some of the Camelback Ranch land
2. The contingency “goal” is 10%, but the budget fore case shows only 5%. Generate “savings” by REDUCING the contingency even more — to 3%.
3. More cuts to departments by eliminating current vacancies.