Budget report a call to action
City officials were told this week that while Cape Coral’s immediate financial picture is good, the prospect for the next several years will be challenging with continuing financial declines.
While some elected officials thought the forecast depicted was overly pessimistic, we see it as both a wake up call and a call to action.
For make no mistake – the decline discussed has already begun. The city is in technical default on bonds issued for utility expansion, cuts in programs and services are outlined in the Comprehensive Annual Financial Report and two departments, building and Sun Splash Family Waterpark, are losing so much money that they can no longer be considered as enterprise, or self-funding, operations.
Meanwhile, as revenues received by the city of Cape Coral continue to decline due to decreasing property values, the cost of government has continued to go up, substantially, in fact, in the last reporting year.
Some examples?
– Public Safety Police expenses reported in governmental activities increased $6.5 million, or 18.2 percent, in comparison to prior year due to an increase in salaries, wages and pension contributions, accrued leave payout for retirees, increases in health insurance costs, other post employment benefits (OPEB) obligation, depreciation, and fuel costs.
– Public Safety Fire expenses reported in governmental activities increased $3 million, or 11.5 percent, in comparison to prior year due to an increase in salaries, wages and pension contributions due to overtime compensation and additional staff for fire station #10, accrued leave payout for retirees, increases in health insurance costs, other post employment benefits (OPEB) obligation, depreciation, and fuel costs.
– Parks and Recreation expenses reported in governmental activities increased $1.5 million, or 9.7 percent, in comparison to the prior year due to an increase in salaries and wages as a result of implementing the pay grade step plan for employees under the union contracts, accrued leave payout for retirees, increases in health insurance costs, other post employment benefits (OPEB) obligation, depreciation, professional services for landscaping, and fuel costs.
– Transportation expenses reported in governmental activities increased $4.4 million, or 26.7 percent, in comparison to the prior year due to an increase in salaries and wages as a result of implementing the pay grade step plan for employees under the union contracts, accrued leave payout for retirees, increases in health insurance costs, other post employment benefits (OPEB) obligation, and depreciation expense.
– Water and sewer expenses reported in business-type activities increased $15.4 million, or 29.8 percent, in comparison to the prior year. This increase was primarily due to an increase of $9.3 million in interest expense related to the water and sewer revenue bonds, series 2006, and commercial paper, an increase of $4 million in salaries and wages as a result of implementing the pay grade step plan for employees under the union contracts, and a $1.9 million increase in the other post employment benefits (OPEB) obligation.
– Stormwater expenses reported in business-type activities increased $.9 million, or 10.7 percent, in comparison to the prior year. This increase was primarily due to an increase in salaries and wages as a result of implementing the pay grade step plan for employees under the union contracts, an increase in the other post employment benefits (OPEB) obligation, and fuel expenses increased 30 percent.
The statements above are quoted directly from the financial report for the last fiscal year, which ended Sept. 30.
While the city has little control over things like fuel costs and interest rates, the primary pattern is clear: Contracts with wage and benefits increases, step-in-grade raises, and burgeoning retirement benefits – including some $2.8 million more per year due now to early retirement buyouts – continued to add to the cost of city operations even as the Cape faced serious revenue declines, even as the city made cuts to its staffing levels.
Personnel costs are the ticking time bomb, and the city is going to have to devote much of its budget workshop time this summer to defusing the bigger-better-more approach to salary, wages and benefits that got us in this predicament.
Better – much better – overtime controls also will be key.
In addition to personnel costs, Council needs to address its two former enterprise departments and decide if the Cape can afford to subsidize its 27-person building division by contributing $1.6 million in tax money, with another $781,082 earmarked for Sun Splash Family Waterpark, despite numerous capital improvements and rate specials designed to boost attendance.
Merging building division operations with the county department warrants at least some discussion as does the possible privatization of the water park. If fact, the identification of all duplicate services offered by the city with a careful eye to cost-benefit is essential to this year’s budget process as is a look at all city-run “enterprise” operations such as Sun Splash.
Finally, council needs to scrutinize proposed cuts to programs and services and make sure both the cuts and any related reduction in force – position cuts – make sense for the city and its residents.
For example, according to the CAFR released this week, the elimination of 25 certified firefighter positions means the Fire Department is unable to staff a tanker, two rescue units and a fire truck. The elimination of 29 sworn police officers means to maintain field operations, programs such as the District Resource Officer Program, Marine Patrol, the Youth Crime Intervention Program, Traffic enforcement, School Resource Officer Program, and Personnel and Training Units are reduced.
Reductions in Parks and Recreation and Public Works also will impact a large number of residents, the report states.
The CAFR says there will be no expansion of the parks system and limited maintenance funds – the save-now, pay-later approach – have been allocated. The report also states there will be fewer recreational opportunities such as reduced operating days and hours at the Yacht Club pool.
Crew reductions will be made in the areas of median maintenance, canal dredging, and sidewalk installation, there are no planned median improvement projects and the General Fund will no longer be able to provide support to the local road resurfacing program, according to the report.
Dim prospects – but still all in council’s control.
The board has its work cut out for it:
– Address personnel costs. That includes compensation for salaried employees, all employee and union contracts, benefits packages and overtime policies and controls.
– Address money-losing departments that were expected to pay for themselves. Explore all options.
– Look at the program and services reductions suggested by staff. These are policy decisions for council – and such cuts must make sense, must be justified.
It’s going to take cooperation and leadership to get the city through this task. May council show both in the days ahead.
– Breeze editorial