Budget Message FY 2012-2013

I think most city managers would agree with Mark Twain’s observation that, “The lack of money is the root of all evil.”  Constrained resources mean fewer people to deliver services which leads to more complaints and demands for service.  This unvirtuous cycle typically produces conflict, instability, and a tendency to place blame on the city manager.

Fortunately, the City of Albany’s financial condition remains relatively strong in 2012, despite the need to reduce personnel and continue austerity measures that have been in place for the past four years.  The City has placed a high priority on reducing personnel costs that represent the greatest inflationary factor in the budget, yet are the hardest expenses to control. 

Albany has reduced the number of budgeted positions from more than 428 in 2009 to less than 383 in the proposed budget; a decline of more than 10.5 percent in four years.  During this period, Albany’s population increased by 3.5 percent.  Last year’s budget funded 398.5 employees.  The cuts have been distributed throughout the organization and include a director’s position, supervisors, and line employees. 

The price of these reductions is a gradual decline in the scope and quality of some services.  Fire safety inspections, for example, have fallen well behind recommended schedules; and traffic enforcement is substantially lower than it was just a few years ago.  Some services, such as building inspection, have seen reduced demand that corresponds to staff reductions; so there has been little visible impact on the public.

Oregon Revised Statute 294.403 requires a budget message to:

(1) Explain the budget document;

(2) Contain a brief description of the proposed financial policies of the municipal corporation for the ensuing year or ensuing budget period;

(3) Describe in connection with the financial policies of the municipal corporation, the important features of the budget document;

(4) Set forth the reason for salient changes from the previous year or budget period in appropriation and revenue items;

(5) Explain the major changes in financial policy; and

(6) Set forth any change contemplated in the municipal corporation’s basis of accounting and explain the reasons for the change and the effect of the change on the operations of the municipal corporation.

Albany’s budget document is prepared in accordance with standards established by the Government Finance Officers Association (GFOA) to receive their Distinguished Budget Presentation Award.  Last year’s product contained 464 pages of summary, explanation, tables, graphs, and pictures.  The 2013 document is of similar length and quality.  The strength of Albany’s budget document is the comprehensive information it provides about the City’s finances; however, that is also its greatest weakness.  The document contains so much information it is difficult for most citizens to access and understand.  The Executive Summary and User’s Guide are perhaps the best places to start to understand the document and the information it contains.  City staff welcomes the opportunity to answer questions about the budget, and the City’s website also contains comprehensive financial information.

More than 16 pages of the City’s financial policies are included in the budget, and most require no further explanation in the Budget Message.  The most important policy, in my opinion, requires the City to recognize the balance between revenue and expenses by maintaining reserves, conservatively estimating revenues, controlling expenses, and doing both internal and external audits of financial records.  The proposed budget maintains this commitment, although it becomes increasingly difficult to balance the budget as revenues decline and expenses increase.

Any salient changes from the previous budget year can be explained as responses to reductions in revenue and increases in expenses or attempts to gain efficiencies by reorganizing personnel.  The latter is particularly true in the Public Works Department where substantial savings will be realized by eliminating several supervisory positions.  Eliminating funding for the Community Development Department Director is an example of an extraordinary measure to avoid layoffs of line employees.

There are no changes proposed in the City’s financial policies or basis of accounting for FY 2013.  The City strongly supports best practices that include an award-winning website that features detailed financial information, an annual independent audit reviewed by an audit committee composed of policy makers, strong internal controls, and conformance with GFOA reporting standards.

“For the love of money is the root of all evil,” according to 1st Timothy 6:10 in the New Testament; and whether one subscribes to the admonition of Paul or the wit of Mark Twain, cities require resources to deliver services.  The proposed FY 2013 City of Albany Budget will maintain something close to existing service levels in most departments; but if additional cuts are necessary in the future, service reductions will follow.