2010-2011 BUDGET $1.2 MILLION SHORT, (AGAIN)!
Preliminary figures and forecasts submitted to the City Council by City Manager O’Reilly and Administration Director Dan Carpenter indicate that operations costs for 2010-2011, (based on this year), will be around $10 million and projected revenues from all sources will be about $8.8 million.
This year’s revenue shortfall is primarily due to a projected 10-12% further decline in assessed valuation, level or declining revenues from the state and county and declining investment income. Assessed valuation of taxable property in Gulfport has fallen from just over $1 billion in 2007-2008 to just over $700 million in 2010-2011. If our mill rate remains unchanged at 3.4742 mills, taxes collected in the upcoming fiscal year will be about $308,000 less than this year which was a similar amount short the year before. Total ad valorem property tax collections are forecasted to be $1.2 million lower than the amount collected in FY 2007 according to the Manager’s report.
While the City Manager is responsible for proposing an annual budget to the City Council in July, it is done only after extensive input from the City Council as to the direction the Council wants the City to take. Then the Council can amend the proposed budget before giving it their final approval. In other words, the City Council determines policy through the budget process and the Manager carries it out over the course of the year.
In the initial report on the budget the Council was provided with the following options in meeting the projected $1.2 million shortfall:
- Increase property taxes;
- Increase fees and rates for city services;
- Reduce service levels by eliminating programs;
- Dip into General and Enterprise Funds;
- Increase current 10% charge to enterprise funds to cover administrative overhead;
- Dip into General Employee Pension Reserve Funds;
- Reduce employee compensation and benefits.
Please note these are not recommendations, but are simply options for consideration. Since no guidelines have been formally provided by this year’s City Council, the Manager and staff have used some of last year’s guidelines and some that they have inferred from actions taken during the year. The guidelines used are:
- The City’s tax rate will remain at 3.472 mills per $1000 of assessed valuation, (which will result in $308,000 of the $1.2 million deficit);
- There will be no noticeable reduction in services;
- By resolution, the General Fund Reserve Balance will not go below 25% of the annual budget, (it is presently over 44% of the proposed budget);
- There will be no forced reduction in employees, (where warranted, attrition will be used);
- There will be a hiring freeze and no new programs will be implemented.
The preliminary guidelines appear to be as much based on politics as they are on fiscal responsibility. Therefore, they don’t give the Manager much help in preparing a balanced budget. In fact, he appears to be driven toward tapping into our Revenue Fund Surplus for most of the shortfall if he doesn’t get better guidance. Lets look at the preliminary guidelines one by one.
The tax rate must remain the same. To keep the tax rate the same, the city will collect about $308,000 less than the prior year. Same rate=lower taxes in a time when valuations are going down and assessment exemptions are going up. By using this dated guideline, we will repeat the same $300,000 loss of revenue we created last year. Tax collections went down by about $300,000. A continuation of this policy of holding the rate in a declining market will result in a city that can no longer meet its obligations. In other words, it will be bankrupt. Because we have a healthy surplus, it will take a while, but it will happen.
There will be no noticeable reduction in services. Really? There are no services that no longer make sense? When was the last time we did utilization studies on all city services? When was the last time we polled the electorate to see if they would be willing to do without some things while times are tough? City subsidies for downtown business promotions, doggie park operations, annual subsidy of the casino and the like might be subject to review. (These are not recommendations, just examples to prove the point.)
The General Fund Reserve Balance will not go below 25% of the annual budget. At the present level of spending, our General Fund Reserve Balance is about 44% of revenues. Does that mean that our $4.4 million surplus is too high? Does that mean that the Manager should abandon all other efforts and spend the approximate $1.9 million that’s in excess of the 25% figure? Probably not. The 25% figure is a minimum recommended surplus, on average, all across the state. Gulfport is somewhat unique in that we are quite small and yet a full service community. We have a lot more infrastructure to maintain per capita than many cities. Gulfport is a waterfront community, more subject to extensive storm damage than many other cities. In 2003, our General fund Surplus was $7,199,037 and has been drawn down even in the years of high revenues to its present level of $4.4 million. That’s about a 40% reduction in 9 years. While the 2003 surplus may have been too high, we are certainly going in the wrong direction.
There will be no forced reduction in city employees. Since employee payroll makes up about 70% of our operating budget, one wonders if the Council is serious about cutting expenses when it proposes this guideline. In any organization of 150+ employees there is certainly room to make a few strategic cuts. Needs change. Technology changes. Productivity changes. The reshuffling of the Leisure Services personnel resulted in an annual saving of about $70,000. Surely there are other areas such as the IT Department and the Community Development Department where similar changes to job descriptions and numbers might be made to achieve substantial annual savings to the taxpayer. (Again, these are not recommendations, just examples.) The City Council may need to be reminded that their constituency is the voting taxpayer not the city employees.
There will be a hiring freeze and no new programs will be implemented. A hiring freeze and the attrition policy that has been implemented over the past two or three years appears to have resulted in the reduction of 1.75 full-time equivalent employees between 2008 and now. (There were 156.75 full-time equivalent employees in 2008, 157.5 in 2009 and 155 were budgeted in 2009.) The no new programs prohibition seems OKexcept if a program were to be break-even or revenue positive program. Are we going to stop thinking and creating until the money situation improves?
Clearly, the Manager will need better guidelines from the Council if he is to come up with a comprehensive, effective and balanced budget in this upcoming, difficult year. Hopefully, the Council will be able to address policy matters and create overall guidelines in upcoming Workshops before they become mired in the minutiae of line item numbers. Funding decisions are policy decisions and should be treated accordingly. The Council needs to look at the big picture, provide a policy base and leave the nitty gritty to the capable group of professionals in our administration.
Creativity and practical ideas will be needed from the Council and Administration over the many meetings to come between now and October. Given the unprecedented losses in revenue caused by the enhanced Homestead Program, plummeting assessments, level or less state and county resources and losses in investment income, outside the box ideas, perhaps involving some draconian cuts are necessary this year. Long term planning for near future years of continued austerity will need to be implemented. As a “kick start” to the process, we will throw out some ideas for discussion in the hope that you the readers will throw in some of your own through the COMMENTS box below.
- Forget a fixed mill rate as a guideline. Building a budget to “fit” a predetermined target mill rate is just bad governance. The goal should be, under current circumstances, to build a responsible budget that will produce the lowest mill rate possible.
- Under no circumstances should the tax levy exceed the levy of the prior year. It is the tax levy that should be discussed, not the mill rate. The levy is the total amount of ad valorem tax revenue collected by the city from the taxpayers. In the present and foreseeable future it would be unconscionable for the city to ask taxpayers to pay more. The goal should be to ask them to pay less.
- All city programs and services must be subject to utilization review, for this budget and for future planning. In the private sector, this is called “cost-benefit analysis,” and it should be conducted on a regular basis. Those programs and services whose benefits to all the citizens may not justify the cost should be eliminated in this time of austerity. Business has already done this. Government should do the same. With proper communication of data upon which the cuts are based, citizens will bear up under any losses of service.
- Personnel and management studies already bought and paid for a few years ago should be resurrected and updated using the excellent work done by last year’s citizen’s committee. If a new study is needed, we should do it for the long term. Present studies should help us, in the short term to make some immediate, cost saving moves perhaps involving departmental consolidation, cross training of line employees and layoffs. A goal to reduce payroll by a reasonable percentage must be set by the Council for the Manager to implement. Payroll is about 70% of our budget. Without significant cuts here, there is no hope of a truly balanced budget.
- Until a reasonable estimate is provided as to what the minimum “safe” level of our General Fund Surplus should be, further raids on this fund should be halted. Achieving a so-called balanced budget through the use of surplus funds as we have done for years is to not have a “balanced” budget at all. In a truly balanced budget revenues=expenditures, period!
- Every possible revenue enhancing program should be explored and, where practicable, implemented. Use of citizen-volunteers and ad hoc consultants can keep costs to a minimum. Expansion of the profitable marina services and grant writing are just two easy examples of such programs.
These are just a few potential budget guidelines designed to get the idea juices flowing. We hope as many readers as possible will chime in by criticizing the ideas we have proposed and by submitting their own ideas as well. Who knows, maybe a few gems will be the result of your input. Maybe the Council will even deign to read some of your comments.
Across the country are many small towns such as Gulfport that enjoy a great financial boost to their budgets due to hosting one or two successful two-day festivals a year. And believe me, a lot of those towns would be thrilled to have the waterfront venue that we have here.
I’ve been discussing this very idea with a few people around town and here is what I am told:
1.) “The city will NEVER allow a two-day festival.”
I don’t buy this at all, even if it is true today. With some planning I have no doubts this could be worked out.
2.) “We do not have the parking for that many people.”
Again, with some logical planning this could be worked out. Towns with seemingly less available parking figure out how to do it and even make money from it.
3.) “The city will never allow beer sales on the street.”
Kind of silly to me as this is one of the most profitable ways for a city to make a nice chunk of cash.
4.) “The restaurants would be upset that the city is selling beer on the street taking away their business.”
If the city packed the streets with out-of-town visitors for two days, it would be the best weekend of the year for all of our restaurants and nobody would be complaing about losing business. In fact, our local businesses would look forward to it happening again.
5.) “The police would not be able to keep people from camping on the beach if there was a two-day festival.”
I don’t think the police would have much trouble preventing that from happening. And if they did, fines and tickets are always a good revenue source for a city.
6.) “We don’t have the lodging for a mass of people.”
This would be a great opportunity for the beach hotels and resorts to be involved and participate in promoting a festival.
7.) “Some locals would fight the idea of a large festival in Gulfport.”
Yes there would be some, but there are always some people who will fight any idea, regardless of of the benefits.
And so on…
Realistically Gulfport could become a town known for great festivals, and we already have a growing reputation for small ones and we all do love our current festivals. The difference is the scale. Now we do them on a shoestring without major sponsors or outside help.
If the city was open to a large two-day festival, I know for a fact that we would have available outside help with a lot of experience. Maybe a Bluegrass Festival? We would definitely have access to big name bands and great resources to help make it happen. It has been suggested to me by a promoter of large successful festivals in small towns across the country that Gulfport would be perfect venue. He came to visit and fell in love with our town. His words to me when he left was that if the city was open to the idea, he’d eagerly help put it together.
I tell you, I think it is a fantastic idea. Would Gulfport lose its cool small town charm? I know Telluride has not lost one iota of its small town charm and has several large festivals every summer. For one or two weekends a year Gulfport might be packed full of people spending a lot of money, but then afterwards we could enjoy the same lifestyle we love now with a little less worry about the budget.
Property values would increase too.
Rob,
I think this is a great idea! St. Pete has first friday and the public is allowed to enjoy alcohol in the streets of downdown in certain areas. Now there are always problems when people overindulge in alcohol and act stupid, but incidents like that are few. Why can’t we make every art walk like first friday? It could draw more people (a plus for the businesses) and the city could open up the casino and sell food, alcohol or whatever.
Also, if the beach businesses get bent out of shape over the city selling booze, why can’t the city sell permits to beach business for sidewalk vending of alcohol on a by event basis. The city would then make a little money off of the permitting. ($100 an artwalk, times 2 a month, times 12 months is 2$400 per business per year. I think a business would make more than that in sales during the events for the year)
I think the hardest thing would be to get sponsors who would be willing to spend a little money on this.
Seafood Festival? ( I think Gport actual had one when I was a kid in the 80′s. I remember lots of folks attended)
Bike Fest? (May be noisey but would definately draw a crowd.)
It’s a challenging idea Rob, but overcoming the objections will take some doing. Upscale festivities would be recommended, though Watchman’s suggestion of a Bike Rally would most likely be the most profitable, and not just in the DUI department.
We lack the hospitality industry for large-scale events, and the stores really don’t have the products that would interest a Motorcycle enthusiast, though you could park more bikes in our small parking spaces.
Something water oriented perhaps, kites, sail-kites, water planes, parasailing, model speed boat races or a fashion show. Car shows really don’t bring in any money, from my experience, but maybe something High-tech—smart phone convention or contest sponsored by AT&T T-Mobile and Verizon, HTC, Blackberry, Apple, create a controversy with WiFi phones that won’t reach the shoreline. No-Bars on the beach…my Samsung is better than your Sony-Ericsson. Wine Tasting, Home Made Beer (Micro Brewery) Bash.
Robots that pick up oil ball convention, green tea drink-a-thon.
I think we could use a Citywide WiFi network to attract many people. High-Tech game weekends. Book Signings on the beach.
Best bar tender blowout, with a sponsored prize.
Watchman: “I think the hardest thing would be to get sponsors who would be willing to spend a little money on this.”
My understanding, from just a few conversations, is that there are promoters with sources to deep pockets looking for good venues. Of course, when done properly, everybody makes a ton of money. They’re not looking to donate a bunch of money to a town like Gulfport as a charity out of kindness, they see big potential themselves. So it becomes a win-win for all involved. That’s why I worded it as “hosting” a large festival.
The guy I talked with said even they stopped doing the Seafood Festival in Everglades City, 70 thousand people would still show up that weekend. If I remember correctly, he also said that festival puts close to a quarter million in the city’s bank account every year.
If the city is open to the idea, there is help available to put something together. It is an opportunity that may or may not come by again.
How about, “Gulfport Bluegrass Festival” to start?
The problem as always is that Gulfport wants “progress” as long as it doesn’t have to change anything. It’s like an alcoholic who wants to be sober as long as he doesn’t have to stop drinking.
Gulfport has one thing to sell: the water. It’s currently being enjoyed by people who drive up in station wagons, unload stuff they brought from home, and then leave us with the garbage having spent not a dollar in this town. Why does this happen? Because our “old” city fathers (age and sex not limiting) either have never been to a living beach town, or don’t like them. They want Gulfport to be exactly what it is: quiet and poor, but mostly quiet so they can go look at it through the window of their car. That needs to change.
Festivals schmestivals. And to that I would add “upscale schmupscale”. Who ever heard of a beach town that doesn’t have a hot dog stand and cotton candy? Who ever heard of a beach town where you can’t rent a jetski, a Hobie, or other water oriented activities? Jetskis and Hobies are actually pretty upscale, you don’t see a lot of crackheads with a 40oz on a Hobie.
But seriously, stop the feast or famine mentality and go for things which are proven winners: concessions. Concessions generate steady revenue to the city while placing the real risk where it belongs: on the entrepreneur. But you have to have places to rent to collect the rents.
@David Hearne….VERY GOOD points!! How do we go about getting some of these ideas put into place?
David is on to something. My question would be who is the target audience? Where are the people coming from? The design of this City, post WW2 was focused at a retirement age population and a service sector was established to satisfy that group. The housing stock was small units on small lots until Town Shores came along to continue that demographic trend. Today the small houses are being sold off as the retirement community depart and the affordable housing is being filled by low to moderate income residents or Section 8 renters with little expendable income even in good times.
The beach is empty, comparatively speaking, to most beaches in the surrounding area. The only demographic that would come to the beach to spend money is a younger crowd with cars which leaves you with all the problems associated with that segment of the population.
Gulfport does not have the property to operate a concession business beach similar to Salisbury, Hampton or Myrtle Beach, nor do they have the parking space or the desire for that matter.
The occasional “Event Driven” attractions is all our parking space can accommodate. The bimonthly parking intrusion into the residential neighborhoods and the overtime for our city employees is all that we can handle.
Which brings us to projects like the Mooring Field, which extends our parking and attracts a demographic that has their own living space. They also have money to spend without requiring the noise level to exceed 100 decibels. Perfect! Except when they designed the plan they placed it off the beach head instead of where the boat belong, where the boat are now.
I’m sure they had their reason for moving it from the east side of Gulfport to the Casino, but in doing so, they intruded into the only attraction the David Hearne has point too.
The future doesn’t look good for power boating or the need for mooring fields, so I suspect that idea will need to be revisited, which leaves us with “Event Driven activities for now.
I thought you could appreciate this and engage your imagination.
Could a similar design work in salt water? Could coastal cities extend their footprint and attract a new demographic with an eco-friendly aqua project? Expanding populations or the need for capital infusion might require us to think like Jules Verne.
“Physalia is half-boat, half-building, and all green. This mammoth aluminum concept by Belgian architect Vincent Callebaut is meant to travel Europe’s rivers, making filthy water drinkable. At the same time, the ship generates more energy than it uses.
A coat of titanium dioxide paint brushed onto the silvery shell will neutralize pollution by absorbing ultraviolet rays, enabling a chemical reaction that decomposes organic and inorganic toxins. (It’s the same technology used in certain high-tech concrete that breaks down airborne particulates.) As the vessel whips along, purifying waterways, it can draw on both solar and hydro power. Turbines under the hull transform water movement into electricity, and rooftop photovoltaic cells harness energy from the sun. The roof doubles as a nursery, whose carefully selected plants help filter river gunk, whether from the Thames, Rhine or Euphrates. “
http://www.popsci.com/node/46262/?cmpid=enews062410
I had coffee at the marina this morning. I looked out at all the boats in slips that pay rent to the City and at a guest dock which, at a higher per foot rate, appeared full.
Several boats came to the fuel dock and spent quite a bit of money.
A young fellow came in to pay the launch fee for his small boat so he could take his kid fishing. As he left it occured to me that the five dollars he spent to launch his boat was more revenue than the city gets from the dog park in a year. Five bucks might even exceed the positive cash flow from the Casino.
Was it in the budget and how did the City benefit would be my questions?
Gulfport Pays Kipps Colony $22,500 for FEMA Efforts
GULFPORT- The city will reimburse the Kipps Colony I and II homeowner’s associations for the money spent getting FEMA to revise the flood zones in that area. The city benefited from the efforts of the associations, who spent $22,500 to get FEMA to remap the flood zone.
http://www.thegabber.com/Stories_July_December_2010/072210/kipps.html