City budgeting: Isn't it strange?
Seattle thought maybe it was too smart to suffer a recession. Now, political leaders bring their own agendas to deciding how to respond to a real loss of revenue.
Courtesy of Mike McGinn for Mayor
The world recession, as it turns out, is as much about political philosophy as it is about money. A near-rebellion in Greece and, now, one in France feature populations who don’t want to give up government support. Opposition in these nations question the core values of politicians in power. France and Spain admit they have borrowed heavily to build all the new transportation infrastructure, high speed trains, subways, long tunnels, and, of course, extensive social services along with generous retirement packages for its citizens.
Here in Seattle, many thought we were so smart that we would be immune to a recession. Our current budget crisis, however, may have reached a point that is sending warning signals to those who have never before taken cumulative debt or finance seriously.
With the prospect of anticipated debt for a series of bridge replacements, a tunnel, a seawall, and mass transit, even progressives are beginning to question if we are digging a debt hole so deep we can't climb out. Add to that a city with a several decades of not being able to say "no" to city amenities and generous labor contracts for its employees. A financial day of reckoning is now looming over us like a dark cloud.
Referring to generous pay for city workers, former council member Peter Steinbrueck, after being given an overview of Seattle's public employee pay scale, commented at a neighborhood meeting, "Council members never see that kind of data." Fiscal responsibility are words the typical Seattleite seldom hears.
Maybe we haven't been as smart as we thought.
Why the realities of debt and fiscal responsibility haven’t been high on the radar of Seattleites may be related to a factoid released by the The Puget Sound Business Journal. They report that there are an estimated 90,000 millionaires in and around Seattle. So many, in fact, that the wealth management industry has become one of the region's biggest businesses, managing $315 billion in the assets of local billionaires. Maybe they can afford the higher cost of living here and just don’t raise a fuss by calling the mayor or city council.
Concerning the proposed new city budget, the mayor supposedly made his budget decisions through the lens of three overarching priorities. He would:
- Emphasize sustainable changes over one-time cuts.
- Seek internal savings in order to preserve direct services.
- Identify opportunities to streamline management functions.
The mayor at his budget press conference claimed his budget proposals protect core city services related to public safety and essential human services — certainly what many wanted to hear.
One floor down in City Hall, the city council last August developed a list of four priorities, where budget cuts should and should not be made. First on their list was to protect the health and safety of all Seattleites, while providing help to the city's most needy. They emphasized that police and fire protection should not be reduced, especially in neighborhoods, but that no new programs should be started to accomplish this. The council recommends the mayor reduce costs and re-evaluate the size and scope of city government. And last, they tell the mayor it's okay to raise revenue when and where appropriate. In this recommendation they suggest raising the rates for commercial parking lots may be okay, but to not unduly burden local businesses with excessive parking fees.
As you might expect, no one is happy. Evaluating the mayor's budget pits one person's idea of an essential priority against another's very different opinion.
McGinn's entry into public office has been criticized. Accused of brash decisions and rookie mistakes, McGinn has been more politically savvy than expected. Notable in his response to the budget crisis McGinn has made decisions that suggest he has done what all politicians do best, demonstrate allegiance to his political base. Ever aware of the membership lists of the Sierra Club and Cascade Bicycle Club, whose support got him elected, McGinn has defended and defined their political agendas at every turn.
The mayor's three overarching priorities are so vague as to be meaningless in making definitive line-by-line cuts. The realities of the mayor's cuts make the agenda of his supporters much clearer. While the mayor has imposed a hiring freeze and eliminated some 200-plus positions in city government he has fired only 214 of the city’s 11,200 workers. But, he has hired parking enforcement personnel to enforce one of his notions that eliminating or reducing parking will get rid of cars.
Meanwhile, small businesses and restaurateurs argue that raising revenue by increasing parking fees will damage their business and further reduce the tax revenue the city depends on. The mayor was proud that he has reached an agreement with 17 of the cities 24 public service unions to reduce pay.
McGinn's press conference announcement claimed he saved $6 million. His negotiations, however, while real for next year, are nothing more than a raise city workers were expecting to get. There was no "basic pay" reduction in any of the public employee contracts. Yes, several unions agreed to furloughs without pay, but the majority didn't give an inch in their existing pay scales. Seven of the city's unions didn't budge at all. Notable among them are two of the city's most political powerful unions, the firefighters' union and the police guild. Both escaped without having made any concessions, yet their pay and benefit contracts with the city represent a sizable part of Seattle's expenses. McGinn is no dummy, he knows who holds the power at election times and it isn't the librarians or gardeners for city parks (whose budgets he hammered).
The city council priority list to the mayor suggested they didn't want policing reduced. One can speculate they didn't want the police who patrol the streets, or firemen who enter burning buildings, to be part of cost-cutting. The sad part is that 179 upper level personnel in these two departments make over $100,000 a year each. This doesn't count overtime, health care, or retirement benefits. The high pay jobs give up nothing to help meet the city's budget deficit while the patrolmen or firemen who risk their lives in the line of duty aren’t in that pay bracket.
The council's request that the mayor reduce costs and re-evaluate the size and scope of city government is a laudable request. The mayor, who has the basic responsibility of administering the city may, unfortunately, have very different ideas on how to go about the task. While the city council has a small staff to provide analysis of city operations the advice they give isn't as comprehensive as one might hope, partly because they get the bulk of their information from the city departments asking for money. As a result, the city council members seldom know exactly how much a specific project, decision, or policy costs. Do they know an average stop light costs between $50,000 and $200,000, according to national data surveys? Or, do they know how much a cosmetic median on Greenwood Ave N. actually costs?
Lots of luck to get any reliable data on the exact cost of traffic revisions citywide to support the mayor's bicycle program. Planners at the Seattle Department of Transportation and workers have been busy installing new bike-actuated traffic signals, as well as lane revisions and signage that support his allegiance to the Cascade Bicycle Club.
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Comments:
Posted Fri, Oct 29, 7:59 a.m. Inappropriate
Too bad that the author's first target in balancing the city budget is the livable wage jobs of city employees. Is it really in the best interests of the city to have Walmart wage-level city employees? Why should Seattle's 90,000 millionaires be off the hook when it comes to paying decent wages to the street sweepers and police officers who work for them? I'm sure the author doesn't intend to come off sounding like a tea partier, but the attack against decent wages for city employees sounds like it's straight from Tea Party talking points.
What sets Seattle apart from the suburbs is that we appreciate government services while recognizing someone has to pay for them. It's not "shameful" to raise utility fees on behalf of vital government services and livable wage jobs for city workers -- it's sound financial stewardship.
Posted Fri, Oct 29, 9:14 a.m. Inappropriate
Excellent article, Kent.
Joe Quintana
Posted Fri, Oct 29, 9:33 a.m. Inappropriate
Thank you for this article, which is very informative. I was heavily involved in the 2009 municipal elections, and it was quite clear to me how influential public sector unions are in the process. The police and firefighters are especially influential because few people are willing to challenge public safety. And their physical presence at a public forum can be intimidating.
Posted Fri, Oct 29, 9:35 a.m. Inappropriate
Where can we citizens find out how much city employees earn? I am especially concerned about mid- and upper management. Thank you for a thought provoking article!
Posted Fri, Oct 29, 10:04 a.m. Inappropriate
Cambio: http://lbloom.net/
Posted Fri, Oct 29, 10:48 a.m. Inappropriate
90,000 millionaires? come on, 90,000? thats a ridiculous number.
Posted Fri, Oct 29, 11:26 a.m. Inappropriate
I agree with beaky about that suspiciously high number. (If true, I-1098 doesn't stand a chance.)
Posted Fri, Oct 29, 12:49 p.m. Inappropriate
Kent makes an excellent point, especially in regards to the police guild and fire fighters union and their influence on labor costs. However, he misses the boat about the Council knowledge about labor agreements. The City has a labor policy committee that includes councilmembers and the mayor. The LPC makes decisions about labor contracts, especially when it comes to wages and benefits. The elected officials are the accountable ones, and if you think public employees are paid too much - I think some are and most aren't - then you know who to talk to. Also, if a council member says that he or she doesn't know how much city employees make, then they are not paying attention. The City Budget includes a list of all positions; individual employees pay rates are easily attainable by council members and their staff.
Posted Fri, Oct 29, 1:50 p.m. Inappropriate
Home equity, investments, portfolios, trusts, ownership of business and property, and earned income can all be included in the net worth of a millionaire. If Seattle 'Metroplex' of 3.8 million people has 90,000 millionaires, it begs the question: How many of them got there by way of public sector, government job employment as part of the package? In other words, are mayors, councilmembers, police, fire, City Light, and all other high profile public employees
Posted Fri, Oct 29, 1:52 p.m. Inappropriate
(cont. from above) included in the 90,000? Let's itemize the 90,000.
Posted Fri, Oct 29, 2:48 p.m. Inappropriate
For my family, we pay over $600 / month for health insurance that isn't nearly as good as the choices or coverage the City of Seattle employees have. They pay about 10% to 20% of what I pay. We the taxpayers pay the rest. 11,000 employees x $500 / month x 12 months = $60,000,000.00
$60,000.000.00 Yikes.
I don't like what health insurance costs, but that's what it costs right now and I'd like to think government is doing what the private sector has had to do and that is hold benefit costs level. I'm not working my ass off and paying my taxes so 11,000 city employees can essentially get a raise every year to pay for health insurance increases while my increases comes out of my check.
The theory is that the public employee benefits are supreme so they can attract the best and brightest. I'm not sure that is true.
Posted Fri, Oct 29, 3:57 p.m. Inappropriate
I'm not all that impressed with this piece... I see plenty of whining, without much evidence to back up the complaints. More importantly, I don't see enough of a call for political involvement on the part of citizens.
If you don't like the Mayor's policies, that's fine; but he was elected by voters. As you point out, he's pushing policies that many of those voters asked for. That's not a failure on the part of the Mayor. If there is a majority of folks who disagree with those policies, then he should not get re-elected.
Same goes for some of the budget issues. Voters supported levies to build new community centers and buy new parks and make grants to neighborhood projects and the like. The City Council didn't just drop these projects on our heads, and they can't just stop building things that have dedicated funding revenues. If we don't like it, then we need to stop voting for bad tax increases and levies.
And we certainly shouldn't get distracted by proposals for latte taxes or bag fees or bans of animal traps. Instead, more voters should be turning up at the budget hearings that the City hosted to make their interests heard.
Posted Fri, Oct 29, 5:26 p.m. Inappropriate
In the metro Seattle area, 90,000 millionaires? Sure, but 90,000 millionaires does NOT mean annual income of one million or more but assets of one million or more; total value of IRAs. 401Ks, house, business, other investments. Before you Seattle Liberals salivate over the potential tax revenue you could extract from these undeserving "rich", realize most of these assets are not readily converted to cash and are there to provide income now and in retirement probably for two or more family members.
Posted Fri, Oct 29, 5:31 p.m. Inappropriate
One way to stop using City Light as a budget ATM would be, and I apologize for suggesting this idea again, to sell the utility and use the money to endow parks thus removing a major part of the city budget forever. See
http://soundpolitics.com/archives/013965.html
Posted Fri, Oct 29, 5:33 p.m. Inappropriate
" Neither City Light or SPU were ever intended to become a taxing vehicle to support ever growing city government. Yet, that's exactly what the mayor and council appear to have in mind." KK
No less than Jean Godden responded to a question on this very issue last night that "you should not believe what you read in the paper!" Reporters confused the utilities budgets with their rationally derived rates with the General Fund budget issued at the same time as a package. At least that is what I thought I heard Godden and the Central Staff person-in-charge to say. Could we get some clarity on this please?!
Posted Fri, Oct 29, 8:43 p.m. Inappropriate
Mr. Kammerer, linking to an article that you must subscribe to in order to read it isn't very cool.
Posted Sat, Oct 30, 8:11 a.m. Inappropriate
Saving $6 million is a drop in the bucket compared to the lavish waste exemplified by blowing $300,000,000 to improve the visual appearance of 6 blocks of Mercer Street and $45,000,000 on a fish hatchery on the Cedar River. I doubt Seattle government will seriously focus on basic necessities like public health and safety, helping the needy and fixing potholes.
Posted Sun, Oct 31, 1:42 p.m. Inappropriate
The problem for Seattle and all of Washington is that people here demand premium Government services, yet pay on 25 percent the property tax of states that offer same.
This is the same situation for California and its Prop 13. Here in Washington there are 4 covenants that prevent properties from being fairly assessed. With all the growth in population in the last 20 years, many properties are assessed at hilariously low values...not to mention the overall tax rate on assets is laughably low.
The typical irrational Washington State response (or maybe not so irrational, since it taxes the new comer at the expense of the Long Timer) is to constantly harass the Productive People with taxes, while the Old Timers sit on their assets.
Now that Pandora's Box has had the lid ripped off -- let's talk real Fairness in Taxation.
Let's get rid of all the special deals, and unfair assessments and get back to principles of "fair use" as a means of valuing property.
If we did that, most of the tax deficit problems would suddenly evaporate...although a few scofflaws and deadbeats would have their oxes gored.
Posted Mon, Nov 8, 9:55 p.m. Inappropriate
I noticed that none of the mayor's lenses included addressing personnel policies, i.e. pay, pay raise, retirement policies. That's the city's biggest expense (personnel). While it's important for city council members to know about projects, the public should also have a clue, as they're the ones footing the bill. The same goes for compensation package information and major project budget vs. actual expense information. That might motivate more to care and to demand changes rather than be caught off guard when the problem can't be put off any longer.
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