Now that he city has agreed on a budget, and emotions and personal agenda can be put aside, the city should start, TODAY, looking at what has to be done to address the financial issues the city is facing.
While the international and national situation aspects are out of our control, there are many things that we here in Bristol can control, do control, and should do something about ASAP.
No matter how and when the economy improves, and it will, the city has dug themselves into a financial hole. Working to freeze local taxes is a nice goal, and certainly influenced by local election cycles, but sometimes it is not realistic. Since it was done, we must go from where we are and bite the bullet.
This year the city opted to draw 2.5 million (actually the budget in the paper said (2.895 million) down from the fund balance, to balance the budget. While it may not all be used during the coming year, it is being “encumbered”, and therefore not available. What hasn’t been mentioned is that the fund balance at the end of 2007 was $17,319,000, and at the end of 2008 it was $15, 435,000, a reduction of 10.9%. Calculating the now draw down of $2,500,000, the Fund Balance will have been reduced at least over 25% since 2007. I say at least 25%, because if there is a deficit this year, that will probably be made up from the fund balance. These numbers are based on the assumption that nothing has been drawn down already for the current years budget. It would be nice to know where we really stand in that account.
The question now is, how and will this continued use of Fund Balance affect out bond rating, even if we don’t draw down more in the near future?
A recent article in the media indicated that our neighbor, Southington, who will be bonding 15 million in the near future, estimates that they will be saving $750,000 in interest payment because they opted not to tap their fund balance. With the likelihood of bonding for schools, how much might our use of the fund balance cost us over the years? At the same time, any reduction in the Fund Balance reduces our opportunity for investment income, one of our Revenue sources (which has already dropped considerably)
Other steps taken this time to reach a zero tax increase may not be available next year. How long can wages be frozen? Or clothing allowance not awarded? How long can the city do half a job with road maintenance by keeping the budget low? What happens if the State does close the Court House ($140,000 as revenue in the city budget)?
With fewer new cars being bought, that area of property tax will probably shrink more than it has already. Another reduction in Revenue.
The use of Fund Balance money in the recently approved budget, which will be hard to do next year, will have to be made up somehow. Police cars will have to be replaced, as will other equipment. It appears that many accounts that have been used to balance expenses year by year, were tapped, again to reach a zero tax increase. If so, they won’t be available next year, thereby compounding the problem. One also has to question just how conservative some of the revenue projections really were.
Real reductions will have to be made. The Board of Finance says that they will start in August working on next years budget, which is good to hear.
But, WHY WAIT to start effecting changes? Also, the role of the Board of Finance is limited, outside the budget process. It really is up to the Mayor and the City Council to change the way the city operates. With the next council having at least two new members, we should maximize and utilize the many years of experience of the departing councilmen. The Mayor and Council should start now, soliciting ideas, BIG and SMALL, and implement them as soon as possible. These ideas can come from staff, bargaining units, the public. All ideas should be welcome; all should be carefully reviewed and if workable, implemented as soon as possible. One quick suggestion is that budget activity and status be made more transparent, on a monthly basis.
If significant changes aren’t made to address the hole that has been dug, and to address the impact of new and increasing costs, the impact on the taxpayer next year will be huge. Use of one time gimmickry should be avoided for that only makes things painful longer, as we all know. We must insist on real, ongoing savings to keep Bristol financially stable.
The city was given a heads up at the beginning of the fiscal downturn back in September/October 2007and apparently did very little about it. I don’t think we can wait any longer without seriously impacting the city and its people.
Bristol is a great city, it has wonderful people, and I am sure that they are willing to help, and would understand if some tough decisions have to be made. It is too late to go back, we can and must go forward.
Copyright 2009. All rights reserved.
Contact Steve Collins at email@example.com