City managers generally hate to admit that they don’t know everything there is to know about city finances. I am guilty of this hubris and will proudly tell you that during my career the cities I have worked for have enjoyed good financial health during my tenure as city manager. Life has a way of getting even, however, when pride overshadows humility.
Current international economic trends are catching up with the City of Albany, and we are starting to see declining revenue in a number of places. Our Building Division is no longer receiving sufficient money from permits to support current operating levels. The Community Development Department is developing a plan to sustain the division through fiscal years 2009 and 2010; but if there is no increase in building activity in the next year, greater cuts in expenses will be required.
I have told the City Council that our Building Division may be the canary in the coal mine for the City as a whole. Earlier this week, the Governor announced that one approach to reducing the state’s budget shortfall may be to suspend payments to local government. Like nearly every city in the state, Albany depends on its share of state liquor and cigarette taxes to help support essential services. The second largest single revenue source for our transit service, for example, is state-shared money.
Previous years’ trends may no longer be a reliable guide to the future. Property tax collections, our largest single revenue source in the General Fund, have steadily increased in recent years; and collections this year are slightly ahead of last year’s pace. I do not expect this trend to continue next year and have asked directors to build their budgets accordingly.
We are about to enter our annual budget process, and the preliminary message I will be giving to our Budget Committee on Monday is that while there is great uncertainty about how much money the City will receive next year, we can be very certain that our rate of growth will be lower. We also know that the cost of providing existing services will be higher. Obviously, this is not a sustainable trend.
As with all of life, there are many things that can happen to us that we can’t control. We can, however, control how we respond to these events. Albany is in a reasonably good financial position as we approach the year ahead. We have a Strategic Plan that will help guide decisions and fulfill the obligation of our mission statement to provide the best possible service to our citizens. I think the greatest danger of uncertainty and concern about potential challenges is a tendency to try to avoid them. Our response should be, and I believe will be, to recognize our financial threats and address them in our budget process. I am confident we can build a budget that will sustain services through the coming fiscal year and provide a foundation for continued financial health.