It’s official—the Long Beach financial security threat meter has been ratcheted up one notch to “red alert.”
You could almost imagine the klaxons going off at City Hall last week as Police Chief Batts publicly warned the citizenry of Long Beach that the city faces a “significant deficit” in the upcoming 2010 budget year.
Personally, I thought we were already facing a significant deficit, but perhaps prior to this week’s official word it had only been a “serious” deficit and my financial security threat radar is slightly out of kilter. Given the astounding rise in the cost of radar maintenance and how I, like many, have had to address some of my personal “budget shortfalls,” this is entirely possible. I tried to explain to the radar maintenance firm that I was confident in my recently adopted personal three-year deficit reduction plan, but the firm still refused to do the work for bupkis. Fancy that.
Now in addition to an occasionally faulty financial security threat radar, most reporters also have what I like to call the “Magic Ear.”
Put a journalist in a crowded room full of conversation and they will be able to filter out all the noise save for the voices talking about some important news tip. It’s not infallible, but it is a commonly developed journalistic skill.
So while I was waiting to hear back from the radar maintenance firm recently—I had complained to customer service that the whole federal bank rescue plan never elicited a blip—my “Magic Ear” picked up an interesting conversation about the city’s budget situation at the local coffee house.
The two nearby conversationalists were quite simply attempting to solve the city budget problem over a grande latte and a venti decaf caramel macchiato, skim milk, extra hot.
One of their suggestions got me thinking—”Why not,” said the macchiato man, “look back at the old city budgets until the expenses from that year match this year’s projected revenues? Then just adopt the old budget and leave it to the department heads to cut what they have to.”
Clever, clever, clever.
His companion had concerns though. “Wouldn’t adopting a three- or four-year old budget result in massive cuts to city services?” he asked over his latte. “Wouldn’t such a plan result in less fire and police protection?” And, finally after a sip of coffee, “At the very least wouldn’t the city have to slash hundreds of jobs?”
Well, as I was to find out, not actually.
Taking the Wayback Machine (that’s WABAC machine to those animation purist out there), Sherman and Mr. Peabody tell us that in fiscal year 2004 the city adopted a $1.66 billion budget with a total equivalent full-time staff of 5,850 employees.
Fast forward to fiscal year 2008 and we find the City Council approved a $2.344 billion budget with a total equivalent full-time staff of 5,896 employees.
We find that in those intervening 1,460 days, the city budget swelled $684 million and added only 46 full-time employees.
Convinced that the city must have squandered the money on hiring some of the same radar technicians I mentioned earlier, I decided to do some of my own research and found that the city was kind enough to break out each year’s numbers in a mystical tome it calls “The Budget.” They even place these tomes on the city website for all to peruse.
According to these city documents, between 2004 and 2008, nearly all of the increase came from two categories. One was the cost of what the city calls “materials, supplies, and services.” This category jumped from $505 million in the adopted 2004 budget to $777 million in the adopted 2008 budget.
Given that the price of everything has risen dramatically, this nearly 54 percent increase, while not fully understandable, can certainly be explained.
The second category that made up the majority of the four-year increase—in fact a 38.5 percent increase—was in a category called “wages, salaries, and benefits.”
Did I mention that the city staff now has only 46 full-time positions more than in the 2004 budget?
But, let’s not dwell on the rising cost of employing our city workers and get back to the questions of our coffee shop devil’s advocate.
If you simply adopted the 2004 budget again, would it address the deficit facing the city?
Well, as we see above, “ wages, salaries, and benefits” have increased as has the cost of “materials, supplies and services.”
For the moment, let us just assume these would not be reverted to the 2004 levels. We wouldn’t want the dozens of $100,000-a-year-plus city employees to go hungry, would we.
This leaves essentially three categories that could possibly be reverted to 2004 levels: “capital purchases,” “debt service” and “transfer from other funds.”
These three categories accounted for $488 million in the adopted 2004 budget. Looking at the adopted 2008 budget, we find that the three have grown to $593 million.
Since the city, like most of us, has to pay back what it has borrowed, debt service is not something that can wisely be scaled back—it is what it is. It would also be difficult to scale back the “transfer from other funds” category as it is dependent on other sources not necessarily under the control of the city.
That leaves us with “capital purchases.” If the city were compared to your personal household budget, a capital purchase would be a new refrigerator, a new flat-screen TV, or even a new car—basically all the things you and I put off buying when we have less income.
However, since 2004, the city has increased capital purchase spending from $248 million to $296 million. Reverting this category back to the 2004 budget level would remove nearly $50 million from the city budget.
But, hold on. Right now, someone in City Hall just read that last couple of paragraphs and said “Wait, wait, wait. You don’t understand the complexity of the budget. It’s not that easy.”
Well, actually, it is that easy.
When you don’t have money, you don’t spend money. You and I cut back by not buying what we want. The city can easily do the same.
If in the space of an hour, I could sit down and identify $50 million from the city budget that could possibly be scaled back—albeit slightly tongue-in-cheek—it seems that the super powers at City Hall could easily find more than that and in a serious fashion.
Of course, City Hall will always tell you that it really needs to spend this added amount on this thing, or that thing, or some other thing…everything is a necessity. Anarchy looms around the next corner if we don’t spend this, or Armageddon looms if we cut this.
Well, all I can say in rebuttal is that I, like the city, really want things too. I want that new car for my wife, or that new flat-screen TV in my living room. But until I can save up enough money…they ain’t happening.
Maybe the city needs to think of budget matters in the same simple budget terms we all face for a while.