by Karen Brune Mathis
Managing Editor
Opening with the warning that the City “is facing an unprecedented financial crisis,” Mayor Alvin Brown’s Budget Transition Committee recommended staffing cuts, including in public safety, and pension reform among its strongest suggestions.
“While there are priorities, there are no sacred cows that cannot be touched,” said the report among its seven major guidelines to Brown.
“We cannot effectively balance the budget solely on the backs of non-public safety departments,” it said.
“There is simply not enough ability to absorb that level of cuts without severely curtailing the provision of City services.”
The committee cited five factors constituting a “perfect storm” creating the financial situation.
• The “Great Recession,” nationally December 2007-June 2009, significantly reduced the assessed value of real property that makes up about 50 percent of the City’s tax revenue and it reduced the sales tax revenue passed through from the state.
• “Unsustainable” growth in the public safety budget, which the report said has increased 64 percent since fiscal year 2002-03. The study attributed the growth to rising crime rates and the “possible inappropriate use of urban statistics justifying increase in head count for the largest geographic ‘City’ in the continental U.S.”
It also cited “unrealistic investment return assumptions” and the inability or failure to address all of those issues.
• Planned and obligated capital expenditure requirements based on growth that was expected, but did not take place, of both the tax base and infrastructure needs. Also, while funding was identified for the capital expenses, funding sources were not identified to staff, operate or maintain the facilities.
• Continued growth in “certain aspects” of City government.
• Failure to achieve or maintain “prudent financial reserves” for economic downturns.
The report said Brown states the long-term solution to the City’s financial crisis is job creation and economic growth that increases the tax base.
“However, he has also required that the City of Jacksonville must first put its fiscal house in order” by shrinking the size of government to operate within its available resources without raising taxes or fees.
Budgets for 2012 and beyond must reflect Brown’s priorities of job creation, economic growth, public safety and education, according to the report.
The committee reviewed the budget process of former Mayor John Peyton regarding the preliminary 2012 budget and it also reviewed the results of budget workshops during the Peyton administration.
“However, much work remains to be done in an extraordinarily short time frame,” said the report. The 2011-12 budget takes effect Oct. 1 after City Council approves it.
The committee’s guidelines include:
• “Business as usual” is a “prescription for failure.” Creative thinking “is the order of the day.”
• Structural budget issues must be resolved by working with Council. “The can cannot be kicked further down the road.”
• Recurring expenses can be paid only with recurring revenue. Reserves and one-time revenue or temporary grant funding cannot be used for expenses without identifying future funding sources.
• The overall size of City government must be reduced. Within that guideline, the committee said that all departments, including functions mandated by constitutional officers, must share “in the sacrifices necessary to balance the budget.”
“This is particularly true of public safety budgets since they presently comprise 50 percent of general fund expenditures yet have not participated materially in prior budget reductions,” it said.
• A balanced budget can only be achieved through significant reductions in full-time head count, according to the report.
The committee did not specify any numbers, but said that reductions needed to be focused initially on middle management and administrative overhead. It said that technological advances no longer require or allow staffing “based on a 20th century model.”
The committee said that only after cuts and technology are taken into account “should services or programs be considered for elimination/reduction.”
It continued that “this concept is particularly applicable to public safety operations — cuts historically are presented as reductions in officers on the street or number of fire stations.”
“Middle management and administrative overhead savings must occur first before front-line positions are eliminated,” it said.
• Current and future pension obligations are “unsustainable and must be addressed immediately to insure the fiscal health” of the City of Jacksonville, states the report.
The guideline said the City’s CFO has estimated that the City’s contribution to the Police and Fire Pension Fund could rise from 49 percent of payroll, “unsustainable even at that level,” to as high as 65-70 percent of payroll in just two budget cycles.
“This is a significant drive of forecasted deficits of $200 million by fiscal 2016,” it said.
The guideline continues that current proposals for pension reform do nothing “to resolve the $1.6 billion unfunded pension liability — perhaps our City’s greatest financial challenge in many decades.” It said the unfunded liability was $200 million 10 years ago.
• The City must improve efficiency in delivering required public services.
Within the guidelines, the report said the lack of funding to invest in new technology and systems results in lost cost-saving opportunities.
It also said that when such funding exists, “the risks of attempting to learn and apply new technologies and methods” fall on the taxpayer.
Calling on public-private partnerships, dubbed P3s in the report, the committee said the private-sector should be used to improve efficiencies and reduce costs.
“P3s can work when conventional local government practices do not,” it said.
The study said that “public co-investment” with private investment “can work when conventional local government practices do not.”
“The decision to privatize is inherently the function of the administration,” the study said
A large-scale privatization should be an effort between the Council and mayor’s office, but the procurement process would be a function of the mayor’s office, it said.
356-2466