We will be voting on the Mayor’s proposed budget at this Monday’s special Council meeting, to take place at 10AM. I have several important questions I’d like to get your feedback on. I’m still determining what amendments I’m going to propose and how I’m going to vote on what has currently been proposed, as unfortunately much of the needed information has gotten to us late, leaving us little time to determine our actions moving forward.
Here are my questions for you regarding our budget:
Should we allow your taxes to go up by 3%, or cut revenue with the economic fallout from COVID-19?
If we take no action this budget will result in a 3% increase to your taxes. While we are NOT increasing the tax rate, your property values have gone up, which increases the taxes you pay. This is known as a “constant rate”, versus a ‘constant yield” where we change the tax rate to yield the same amount of money (i.e. revenue) each year. Bottom line is, is this the time for us to allow your taxes to go up, or to the contrary to reduce taxes/revenue given the COVID impacts? Granted, the tax increase would not be a huge amount, only around $100-$200 a year depending on if you pay $3,000-$7,000 per year in total taxes. My other concern is that such a reduction in your taxes may impact our ability to support those most in need in the City, make City layoffs next year even more likely (assuming COVID re-emerges in the fall and our revenue falls even more than it did this current fiscal year), and would risk compounding our structural deficit (more on that below). All of this is related to the next item…
Should we give employees raises next fiscal year?
The unions are demanding a full year’s worth of Cost Of Living Allowances (COLA) totaling $1.7 million. On top of that, they want their annual step increases totaling $1.1 million. And to top it off they also want hazard pay related to COVID-19 totaling $600k. While I can agree with hazard pay (we have COVID funds to pay for this), is this really the appropriate time to be giving two raises to our employees, paid for with a tax increase, when so many of you are unemployed, and when it will increase the likelihood of City layoffs next year? Additionally, County non-represented employees are having to endure no COLA and no step increase next year, but they are getting a $1,500 payment. So if the City were to grant full raises next year we would certainly be an outlier as far as what other governments are doing. The catch is, the COLA, and possibly step increase, are part of the union contracts. So, while the City can attempt to ignore the union contract, that opens us up to a lawsuit. We could either just focus on freezing the non-represented employee pay, or to be fair we can explore doing furloughs for all employees without risking a breach-of-contract lawsuit.
Should we furlough employees if the unions refuse to agree to no raises?
At this point I am inclined to do this and pursue furloughs. I just find it inappropriate to grant three raises to employees when so many of you are out of work. If we pursue the furlough plan, it could roughly result in 1 week of furlough days for those making under 100k a year and 2 weeks for those making over 100k. This would result in roughly $1mllion in savings (maybe $600k in savings if we limit it to 1 week for all employees). However, my concern with this is that it doesn’t seem like a good time to be reducing pay for our employees, given that many of their spouses may be out of work. Yet if the unions refuse to work with us there may be no alternative.
We have received ~$6 million in COVID relief
However, that money is restricted and cannot necessarily be used to balance our budget or address all of the staff costs above (except for the hazard pay). I’m awaiting information from our Finance Department as I don’t yet fully understand how this money will impact our budget, as we only received this information late last week. Plus, if we fund new programs with this one-time shot of money, it will only compound our structural deficit (more on that below…).
Should we take steps to address our structural deficit/shortfall of $3.9 million?
I’m not entirely sure yet how/if the COVID money will change this, but it’s my impression thus far that it will not change this deficit given that the COVID funds are dedicated for other COVID purposes. We have had such a deficit for the past few years and is largely the result of escalating staff costs. As an example, our tax revenues only grew by 3.5% between FY20 & FY21, yet our employee compensation costs have gone up 9.8%. We have general fund revenue totaling $83 million yet our expenses are $86 million. The original proposal for this budget was to use one of our contingency/savings funds to make up this deficit. This deficit will likely get worse in the future, depending on how COVID continues to impact our economy and local revenue. There still has been no plan to address this underlying deficit, which is why I am considering making some of the amendments I’m listing here.
Other amendments I’m considering to reduce expenses
Alderman Paone has proposed a hiring freeze, yet it exempts all public safety positions and any essential positions. This is not acceptable to me. Our public safety departments are the two largest expenses faced by the City, making up 50% of our total expenses (roughly 25% each). They have been treated as sacred cows year after year and are the primary contributors to our structural deficit mentioned above. In light of everything happening nationally, I do not think throwing more money at our Police Department and putting more officers on the street is necessarily the right answer for these times. I would be in favor of reducing both of these Departments (for Fire, do we need such a huge Department when we share services with the Navy and County Fire Departments?) and sending that money to build community services. Other Cities have done this successfully and we need to start thinking larger.
Elimination of vacant positions (Should we reduce size of Police and Transit Departments?)
Related to the previous point, we have 13 vacancies in our Police Department, including 9 officer positions. As you could probably guess, we have never been able to fill all of those positions. As I alluded to above, do we necessarily need them? Especially if we cannot fill them? As I mentioned above, are additional officers really what we need to reduce crime, or should we be exploring using these funds for other community service positions? I am contemplating proposing we eliminate 6 of those vacant positions, including positions in Public Works and Transportation. We have 4 vacant bus driver positions. When our busses are not being utilized and our current drivers are having reduced hours, should we really be hiring 4 new positions, simply because we may have the COVID funds that can be spent on transportation? I would argue not. In my mind we need to shift to a transit system that has smaller vehicles (electric) as opposed to all these large buses that go empty most of the time. I would go after a few Fire Department positions, but unfortunately they don’t have any vacant positions. If you recall with Fire, the previous Council agreed to a Federal grant allowing us to hire around a dozen new firefighters for a ladder truck (SAFR grant), yet that grant was set to reduce every year and now we are stuck with the personnel bill with no way to pay for them. Additionally, do we really need a staffed ladder truck when we have the Navy and County with ladder trucks? I think it at least warrants more of a discussion over the course of the next year. I’d also like to look at merging our fire Department with the County’s.
Should we deny Fire Departments request for new breathing masks?
The Fire Department is asking for nearly $1million to upgrade their breathing masks. While I can certainly appreciate their need to upgrade these masks that have reached the end of their life, I’m not sure during a pandemic and associated economic crisis is the time to do this. Would you prefer a tax decrease or these masks? Those are the kind of questions I’m wrestling with. I’m inclined to go for more cuts as I really want to get this structural deficit in order before we greenlight anything new, especially with a looming economic downturn next fall.
Should we take steps to de-militarize our Police force? - Elimination of our Armored truck/personnel carrier
I’m currently planning on pushing for us to sell off our armored truck. To my understanding, this was obtained for free over a decade ago by a previous Mayor, utilizing a federal program to provide surplus military equipment to local Police Departments. I am opposed to the militarization of our police as I feel it has contributed to what we see going on nationally, with Police murdering African Americans, attacking reporters, and harassing peaceful protesters. While I’m not saying our local Police Department would do or condone this, all it takes is one bad apple, and until we create a Police Department oriented around Community Policing our risks of something like this are even greater. We can’t pretend like this couldn’t happen in Annapolis. While there may very well be a legitimate use of this vehicle during hostage or shooter situations, I’m not sure it’s worth it, as it strikes me as being the antithesis to our move to community policing, and could better serve as an expression of our commitment to that philosophy of policing. What are your thoughts?
Assuming I could get all of the reductions I’ve listed above agreed to (5 votes!), that would amount to either $4.5 million in savings without the furloughs (if the Unions agreed to no raises) or $4 million with furloughs (with raises given to unions only). Half of that could be spent on reducing taxes ($1.5million less in revenue), though again I’m hesitant to do that unless we take steps to address our structural deficit as I don’t want to shoot ourselves in the foot for next year’s budget and increase the likelihood of layoffs. Here is a breakdown:
- Full year COLA freeze = $1,671,200 (800k if only non-reps)
- Full year step freeze = $1,096,028 (360k if only non-reps)
- Elimination of select vacant positions = $600k in general fund, 330k in transportation fund ($900k total)
- Furloughs (1 week for those making under 100K, 2 for those making over 100k) = ~$1,000,000
- No new oxygen masks for Fire - ~$1 million
Total potential savings = ~$4 to $4.5 million
Remember, our structural deficit is $3.9 million, so these savings could offset some or all of that at least in the short term.
Take care everyone, and stay well,
Next Council meeting - 6/8/20 (agenda)
This Council meeting is starting at 10am and will be televised on local cable, Facebook, and the City website (www.annapolis.gov). Due to COVID-19, our meetings are now being held virtually. http://www.youtube.com/CityofAnnapolis http://www.facebook.com/CityofAnnapolis
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