Cape Coral City Council held this week what is likely to be its lone comprehensive workshop on the budget for the fiscal year starting Oct. 1.
The board agreed the proposal by former city manager, now assistant city manager, Carl Schwing was a good effort. It balanced the need to maintain essential services while adhering to a council directive that the property tax rate not be raised although property values continued their decline.
We agree that Mr. Schwing did a good job given Lee County's economic reality.
Taxable property valuation - the value on which tax levies are based - has declined 55 percent in just three years. Cape Coral is looking at a near 16 percent decline this year alone, a figure that's "good" compared to the crash we've seen the past few years.
The city is looking at an operating budget of about $138 million and a property tax levy of 7.97 mills, or $7.97 for every $1,000 of taxable property value.
Cape council avoided going to the "rollback rate," which in these upside down times of declining values would actually require an increase in rates to keep revenue levels the same.
To maintain core services while holding the tax rate, the city proposes to supplement the revenue side of the budget with approximately $6.2 million in reserve funds, most of which the city's administration saved from this year's budget to help offset the shortfall everyone saw coming.
This makes sense. It's appropriate to use money specifically set aside for future expenses. Although it may drop reserves levels a little lower than some would like it should come as no surprise that the city may have to tap this rainy day fund when revenue thunder boomers are also washing away reserves at the county level.
We do agree, however, with council members who point out that reliance on reserves is not a long-term plan.
To that end the city's administration is still looking at cuts and ways to save money, if not for the 2011 budget year then for the 2012 budget. The city also is looking at ways to generate new revenue to help offset the stream that has been lost.
We suggest a couple of things.
Continue cost reductions
We agree staff should continue to look for savings that can be put toward the 2012 budget. As staff successfully demonstrated this year, money budgeted does not have to be money spent.
We also agree that the city administration should continue its fiscally prudent policies related to personnel costs, which equate to about 63 percent of the operational budget.
Wage freezes and furloughs are, unfortunately, workforce reality for both public and private sector employees. The city also has laid the ground work for contract re-negotiations this year by hiring a union negotiator. There may be some additional savings to come as benefit and "legacy" costs are addressed.
Meanwhile, although the city will not fund outside help for its Lean Government initiative next year, staff will continue to look at savings within operations. We agree, this, too, is key but council has some responsibility here.
City Manager Gary King has announced the hiring of two temporary consultants and already has hand-picked one of like-minded political philosophy at about $40 an hour to look at the city's fleet management operations.
Council must vet this process very carefully, scrutinizing the results for quantifiable improvement and significant savings as the concept certainly is not new.
The city has used outside consultants to aid in finding in-house efficiencies at least since August of 2007 when it hired LeanBreakthru Consulting Company to train employees to analyze specific processes and obtain improvements. Using nationally accepted principles, that Lean Government program has resulted in objectively proven efficiencies across 16 initiatives resulting in $2 million in savings.
It will be council's responsibility to examine bang-for-the-buck and make sure the city is spending its limited resources where it can get the greatest results.
Vet revenue proposals properly
On the revenue-producing side, council faces a sticky challenge and needs to tread carefully in its attempts to raise more money. Two proposals already tendered - a plan to assess property owners for services to which they have no access and a plan to implement a "road use" tax - are legally questionable.
The city does not want to go there.
Nor does it want to embark on revenue initiatives that may not actually result in more bottom line cash. Remember the water park upgrades?
Research revenue proposals closely, making sure they make good business sense. It's not enough that they be politically palatable.
The bottom line is although the Cape may have dodged the budget bullet this year - thanks largely to prudent fiscal planning by the past administration - Cape Coral City Council still has some difficult decisions ahead.
We urge the board to apply strict business accountability to administrative proposals - and to council's own as well.
Council's budget-related responsibilities are far from over.
- Breeze editorial