Things could get much worse for the city of Sarasota. Soon.
It appears that however bad the financial crisis of the last few years, the city’s most recent planning documents rely on overly optimistic revenue projections combined with avoiding the paring of employee costs. The results, if the plans are enacted as proposed, will assure a financial crisis for the city of Sarasota as soon as 2013.
The crisis can be avoided. But it will take the courage to face a reality not common among politicians, but desperately needed now.
City Manager Bob Bartolotta proposed a $174 million budget that uses two-thirds of the city’s rainy-day reserves in 2012, proposes tax increases and expects revenue increases in many areas because of a rebounding economy and unwarranted hope in financial generosity from the state.
There is always a stronger urge among government managers to go with tax increases over tax cuts; it is easier in their daily workings. They have to deal with fewer headaches by getting more money. It’s understandable this would be a tendency, but elected officials must resist the same bias.
In a list of possible further cuts for the 2012 budget requested by the commission, staff has included tax increases and fund transfers totaling 25% of the “cuts.”
Here is a truism too often manifested once someone has been an elected member at the state or local level for a long time: They start seeing government employees as “their” employees and subjugate the needs of the public to the needs of the public employees.
This will come into play strongly when the city faces the urge to increase taxes next year. In fact, Bartolotta’s budget depends on a tax increase for 2013. But such a move avoids dealing with the structural problems that will remain.
The base of the city’s problems can be shown in personnel costs from 2007 through the proposed budget in 2013. Personnel expenses increased 5.5% in that time, even though the city has cut 183 employees. The city has done a respectable job cutting positions to balance the budget in recent years, avoiding the tax-increase option, but it just cannot get ahead of the wave of increasing benefit and pension costs.
The problem at this point is not necessarily too many employees. It is employees who are paid too much or, more importantly, provided health and retirement benefits that are too generous. This charge understandably raises objections among city workers who do not feel as though they are living in luxury — and they are not. But the facts are indisputable in the city’s own documents.
In 2007, personnel expenses took up 72% of city revenues. In the proposed 2012 budget, after 183 positions have been cut, personnel expenses now take up 83% of city revenues.
It is painfully obvious that Sarasota cannot afford the contracts it has negotiated with its two unions.
Unfortunately, the city just locked itself into a three-year contract with the Teamsters union that continues to guarantee all current employees full pensions backed by tax dollars — expensive pension plans long unavailable in most of the private sector. The union gave up some on how benefits are calculated, but then got employees vested after five years, instead of 10 years.
The deal was painted as both sides giving up a lot. But given the economic environment in which we live in, the union came out with an unexpectedly strong contract for its employees. It was too generous and for too long. In this climate, one-year contracts should be the norm. More important, the city needs to get out of the pension business.
Commissioners missed that opportunity to fix part of the foundational cost problem. Now all city taxpayers, many struggling with their own budgets, must fund that contract and the ongoing, expensive pensions.
The city, like all governments in Florida, has complete authority to implement a contract with union members. It is currently in negotiations with the police union on its contract and is going through the “impasse” process. That involves a special magistrate who attempts a Solomon-like solution when two sides cannot come to agreement. But if either side objects to that recommendation, then it goes to the City Commission, which makes the final choice.
The city must make the right decision for residents of the city, not just employees, and impose a contract that is affordable for the future, not one that just gets through another year or two and pushes off the hard decisions. Everyone deserves that.
Three choices, two really
So the city of Sarasota has a structural spending problem. Due in large part to union contracts that were far too generous, the city has essentially four methods for avoiding municipal bankruptcy:
• Raise taxes;
• Cut employees;
• Cut salaries/benefits;
• All or some of the above.
Raising taxes should be a non-starter. But that is on the table for this year and more for next year. There are a few big problems with it.
First and foremost, raising taxes to keep employee pay and benefits generous is sacrificing the many to the few. It’s just wrong.
A close second is that it will not fix anything, just delay what inevitably needs to occur. We’ve all seen the damage that comes from postponing the tough decisions. See Washington, D.C.
Third, the Sarasota County School District has already signaled its intention to go for a tax increase next year to avoid more cutbacks, and the Sarasota County Commission may do the same thing. So city taxpayers could get a triple tax whammy — and that is not right.
Taking tax hikes off the table leaves cutting employees or cutting salaries and benefits. The city’s employee count now stands where it was in 1987. While that sounds terrible, let’s not forget: The city’s population is about the same size as it was 15 years ago, meaning employee numbers may not be out of line.
If the city does not fix the pension and benefit costs with the police union in this negotiation — and plan to do the same with the Teamsters — it will be left with no alternative but to cut more employees. Probably next year and the year after that.
It really is that stark.
Here are some of the assumptions in the proposed city budget, all of which rely on a healthy rebounding economy next year.
• State revenue sharing will increase 9.64%.
• Sales tax receipts will go up 3.6%.
• Building permits will increase 24.1%.
• Red-light citations will go up 62.5%.
• Parking meters will generate $847,000.
• The proposed budget also calls for an 18.6% increase in property taxes between 2012 and 2013, from a small property-value increase and a large millage-rate increase.
Although it is still government at the margins and does not tackle the structural expenses related to personnel costs, here are some suggestions for immediate spending cuts.
• The $463,241 budgeted for television/audio visual services is up 14.8%, or $59,600 from this year. That is a lot of money to record and transmit City Commission and planning commission meetings. It probably cannot be eliminated, but it can be trimmed and certainly not increased.
• Connected with that one, eliminate closed captioning for commission meetings to save $40,000. No one else in the county offers that service.
• Suspend the take-home car policy for police and non-police employees, and suspend the reimbursement for fuel on those take-home vehicles to save $241,250.
• Suspend step-pay increases to all employees, union and non-union, to save $145,000.
• Eliminate the divisive and unproductive police panel to save $120,000.
• Eliminate funding for SCOPE to save $29,000.
• Eliminate funding for Sarasota County Economic Development to save $55,645.
• Eliminate funding for a city lobbyist in Washington to save $42,800. Every city in the United States does not need its own lobbyist.
• Cut the environmental sustainability specialist to save $27,787.
• Eliminate the citizen survey. Save $22,000.
• Eliminate the sister cities program funding to save $10,000.