(April 6, 2007) -- LBReport.com has learned that late last week [late March], senior city management asked several city Departments to provide options for possible budget cuts or reductions in the FY 08 budget...which management tells us are routinely readied to respond to Councilmembers who may wish to add new spending items (from additional police to a City Hall seismic retrofit).
Public discussion of the proposed FY 08 budget is expected to begin in late May or early June 07. That's after the May 1 special LB election in which 6th district residents will choose a new Councilmember and voters citywide will decide on measures including Prop B that would increase Council pay (at add'l taxpayer expense) to full time levels without requiring full time work.
Over the past week, LBReport.com received information about senior management's request from several sources. We decided to ask City Management directly what had taken place.
On April 5, City Hall Financial Management Director Mike Killebrew told us [substance paraphrased] that the current FY 07 budget is "structurally balanced" but is "tight" with no surplus to spare, consumed in large part by PD pay raises and new officers filling budgeted but previously unfilled positions.
That's consistent with city management's recently submitted 1st Quarter Budget Performance report, which was part of the Council's March 6 consent calendar (non-discussion items) and was referred to the Budget Oversight Committee" (chair DeLong, Vice Chair O'Donnell, member Suja Lowenthal).
The 1st Quarter Budget report generally indicated that most FY 07 budget expenses and revenues were on target...but material in some footnotes disclosed some spending beyond levels that City Management and (then newly elected) Mayor Bob Foster proposed and the Council approved (in September 2006). At that time, management said the budget was balanced, in part because the Council approved raising multiple city fees. However a footnote in management's 1st Quarter Budget Performance report included the following:
The Police Department is at 26.1 percent of budget [at the end of the 1st quarter]. The successful effort to fill vacant police officer positions by conducting additional academies is reducing vacancy savings historically available to pay for overtime associated with covering shifts . As part of the First Quarter Budget Adjustment in January, the Department received an appropriation increase of $2.35 million to cover the longevity incentive for FY 07.
And another footnote stated:
Police overtime is 27.4 percent higher than last year at this time in dollars expended, and 11 percent higher when comparing actual expense to budget year-on-year (Q1 FY 06 to Q1 FY 07): The extensive overtime costs associated with the late-December response to the police officers shot in the line of duty did not post until after the books were closed for the quarter and therefore are not included in the accounts shown above.
At the March 20 Budget Oversight Committee hearing, Budget and Performance Management Bureau Manager Dave Wodynski told the Committee:
[O]verall expenditures and revenues are on target. With 25% of the fiscal year complete, approximately 20% of anticipated General Fund revenue has been collected...In general, all General Fund revenues are trending at or above budget. However, property tax is trending a little bit below, likely due to delinquencies, about 2.5% below. VLF is a little above budget, abnout a million above. Sales tax is a bit below budget and prior year secured property tax is above about $1.5 million due to supplement receipts. And lastly, Transient Occupancy Tax is looking very positive in terms of room rates and occupancy rates.
For General Fund Expenditures, overall year to date, General Fund spending is...25.3% of budget...[W]e've been looking at the Police Department's use of overtime and that is again , which has been the case for the past couple of years, tracking significantly above budget. So we'll be working with the Department to make sure that they end the year within appropriations.
Councilmembers on the Budget Oversight Committee didn't ask, and city management didn't tell, how that would be accomplished.
Or how 100 additional officers [urged by Mayor Foster in his Jan. 2007 State of the City message] would be delivered...if the FY 07 budget was (in Mr. Killebrew's words) already "tight" (with no fiscal surplus).
Instead, the Committee referred the report back to the Council, which received and filed it without discussion on April 3.
By this time, if our timeline is correct (and we believe it is), city management was already asking Department heads for options to reduce spending in FY 08 (or perhaps sooner; that's still unclear to us).
In his April 5 discussion with LBReport.com, Mr. Killebrew acknowledged that management's request for budget reduction options in FY 08 carries a sense of urgency, but said senior management's request to Departments for options is a routine part of preparation of the coming year's (FY 08) proposed budget.
Asked for a copy of senior management's memo to Department heads on the matter, Mr. Killebrew he'd try to provide it...but didn't promise. [We'll be glad to post it when we get a copy.]
Management's bottom line as we understand it: if Councilmembers want additional service enhancements (items ranging from more police officers to a City Hall seismic retrofit), the Council will have to confront making spending cuts elsewhere presuming no significant new revenue.