Reality
check: The 2008 Galesburg city budget
analysis
by Mike Kroll
Former Galesburg city manager Gary Goddard was always
fond of saying that Òbudgets were merely plans measured in dollars.Ó That was
Goddard's approach to budgeting during his long Galesburg tenure and that is
the approach he instilled in the city council members who served during that
time. Goddard took a Òbusiness-likeÓ approach to municipal budgeting where
operational and personnel costs were seen as something to minimize and there
was a focus on highly visible projects that were easily identifiable by
citizens and created monuments to the tenure of both Goddard himself and the
city councils who served during that period.
Meanwhile, there were hidden costs to this approach.
City services were quietly reduced and the costly but largely invisible
maintenance of city infrastructure was neglected as the number of city staff
was reduced. When an early retirement program was proposed as a cost-savings a
significant number of city staff took advantage of the opportunity. Normally in
such early retirement programs the cost savings reflects the lower employment
costs of younger, less experienced replacement workers but in Galesburg's case
many of those positions were never refilled to ÒmaximizeÓ the savings.
Throughout Goddard's time he preached savings through
reduced personnel and claimed that use of new technology more than made up for
the smaller number of city employees. This was true for many clerical jobs
where computers could enable managers and professionals to accomplish tasks
alone that once required the support of secretaries and clerks. But technology
alone could not replace the loss of skilled personnel in the public works areas
and many of those who retired came from public works and were not replaced.
Computers can do many things but they don't fix streets and sewers or water
mains where the lack of maintenance ultimately carries a cost too.
When Goddard retired at the end of 2006 and was
replaced by Dane Bragg at the start of 2007 the new city manager inherited a
budget mess and a city with decaying infrastructure, declining population and a
city council ill-equipped to address these and other pressing issues. Bragg's
first task was to rework the 2007 budget, a task that was made possible by
Goddard's habit of squirreling away tax dollars for Òrainy daysÓ that Goddard
must have defined as the the flood of ages. Bragg was able to properly address
unmet pension and bond obligations largely through this ÒfoundÓ money after the
city council refused to pass all the tax increases Goddard had requested.
The 2008 city budget process and the proposed budget
itself is Bragg's first opportunity to demonstrate his philosophy of government
and his view of the budget process. While the infrastructure crises in the
water system leave few options it is more telling to examine the other choices
Bragg has made in this budget. A close look at the proposed 2008 Galesburg city
budget shows some key differences between Bragg and Goddard and will pose a
huge challenge to the Galesburg city council. Bragg seems to recognize that a
budget is measured in more than just dollars and that a true assessment of the
success of a budget can only be made years later as a function of its longterm
impact on the city.
Some of the changes proposed in the 2008 budget are a
recognition that infrastructure does
matter, that significant population decline (particularly the loss of
middle-class families) is Galesburg's biggest crisis, and that quality of life
issues are necessary precursors to economic development. Not only will more tax
and fee dollars need to be raised in the coming years but they will need to be
spent wisely rather than squirreled away. Galesburg's infrastructure problems
go far beyond just the water system and include streets, sidewalks, storm
sewers, poorly maintained parks and a piss-poor approach to customer service by
many city staff as per city policy.
The Galesburg economy has been hit hard by job losses
but we tend to forget that those job losses didn't begin with the closure of
Maytag or Butler as both of those companies and others reduced local employment
by thousands of jobs well before the Maytag closure announcement. The economic
decline of Galesburg has been a longterm process in which the ultimate loss of
Maytag and Butler were but highly visible milestones. The flight of
middle-class families began years ago with the downsizing (and ultimate
closure) of OMC and the Galesburg Mental Health Center and continues unabated
today. To a very large extent this is why all of the area schools are in
trouble including Galesburg District 205.
When there were lots of good-paying jobs available in
this area local quality of life was frankly much less of an issue but that is
no longer the case. While there is no indication that we can expect substantial
growth in middle-class jobs in the near future Galesburg must find a way to
preserve population. The local tax base is almost entirely dependent upon non-industrial sources today and for
the foreseeable future. That means that the continuation of local services will
depend almost entirely on taxes and fees paid by residents and those who can be
attracted to shop in Galesburg. It is a given that whatever economic
development success we do experience will not result in any direct property tax
benefits as incentive-based economic development minimizes the tax burden on
incoming corporations.
Addressing the multitude of problems facing
Galesburg's aging and deteriorating water system is the universal first
priority of the 2008 budget and that emphasis is likely to continue for a
number of years. This will necessitate both the sale of bonds to finance tens
of millions of dollars in repair and replacement of water system infrastructure
and substantial fee increases to pay for both these bonds and continued
operation and maintenance of the water system.
The city has undertaken a curious method of dividing
these costs in the way water bills are calculated. Each water customer pays a
bill that includes two component parts: a facilities charge and a consumption
charge. As water rates are being adjusted the facilities charge is being
identified as the portion of water revenues that will be earmarked to repay the
bonds and maintain a future capital improvement fund while the consumption
charge is designated to pay for operational costs.
I say this is curious because this approach places the
bulk of the responsibility upon residential water users for the capital
improvements of the water system rather than proportioning that cost to match
water usage. Each water customer pays essentially the same facilities charge
per billing cycle regardless of water usage so the greater one's water usage
the less significant a portion of your bill is devoted to the systems capital
improvement costs. This permits the city to raise water rates at a
disproportionately higher rate on small users than large users by building more
of the rate increase into the facilities charge than the consumption rate. In
effect, the less water you use the higher your rate increase. While most
homeowners will see a 15 percent water rate increase the effective rate
increase for very large users is less than five percent!
There is no question that Galesburg must raise water
rates and we must repair and commit to property maintain the water system but
there is an obvious issue of fairness in the approach taken. This approach is
necessitated by the incorporation an ill-advised five percent cap on annual
water rate increases into the 2002 contract with Knoxville plus a commitment in
each of the much earlier contracts with Abingdon (1989) and East Galesburg
(1979) not to sell water to any other outside customers at a lower rate. The
unwillingness of City officials to approach Knoxville officials and renegotiate
this single aspect of the contract has essentially forced us into a rate
structure that a number of city council members correctly see as inequitable
yet fail to understand that it needn't be that way. The rate increases should
be proportional to water usage and it is only fair that the same effective
percentage increases apply to all water customers.
Beyond the water rate increase the 2008 Galesburg
budget requires additional revenue to help fund necessary improvements in city
parks and streets as well as revitalizing the downtown business district and
restoring services at the Galesburg Public Library. Each of these appear to be
necessary and reasonable expenses toward improving the local quality of life.
Bragg also proposed reorganizing the city's various inspection departments and
changing the way park and recreation services are overseen through the proposed
creation of a new city commission to oversee parks and recreation.
Bragg wants to identify specific funding sources for
parks and recreation and create a new funding source for capital park projects.
The proposed 2008 budget includes $750,000 in new tax dollars to begin funding
this park and recreation capital improvement fund. A 0.25 percent increase in
the Galesburg sales tax was proposed to raise this money but was met with near
universal disapproval by city council members. Alternative possibilities to
raise this money include tripling the tax on telephone service from 2 percent
to 6 percent or increasing property taxes.
There is no escaping the need for tax and fee
increases if Galesburg is to begin addressing the many issues that confront it
but there will be some necessarily hard decisions that must be made by the city
council in the coming weeks. Lack of vision, poor financial planning and
political gutlessness on the part of past city councils have landed Galesburg
where we are today. It remains to be seen if this city council is equipped and
prepared to make the necessary hard choices in the best long term interest of
this community.
10/18/07