UG budget process starts with better revenue picture

The UG staff has involved the commission in early meetings to provide guidelines for budget decisions, officials said at a UG Commission meeting March 7. Plus, the revenue picture for the UG appears better than originally expected, the UG treasurer reported.

Budget meetings are tentatively set to begin in early May at the committee level, then the first public hearing on the budget tentatively will be 7 p.m. May 16, UG officials said. After several more meetings and a second public hearing July 29, the budget is tentatively scheduled for adoption at 7 p.m. Aug. 1.

The UG’s guidelines on the 2012-2013 budget have included an emphasis on reducing property tax rates or maintaining the current property tax rate; restoring the fund balances that had fallen in previous years so that the UG’s credit rating could be maintained; reducing debt through a pay-as-you-go basis on annual projects; raises for employees; maintaining core services; shifting resources to match commission priorities; conservatively budgeting casino revenues until revenue trends emerge; implementing the Commission Neighborhood Infrastructure Program; restoring environmental and health insurance reserve funds; and analyzing funding for outside agencies.

In an analysis of the goals of the last budget and how they worked in reality, UG Administrator Dennis Hays stated that the property tax rate for 2013 did not change from 2012; the UG maintained its credit rating and increased the fund balance 5.8 percent in 2012, with an eventual goal of 10 percent; made limited progress on pay-as-you-go projects; gave a 3 percent cost-of-living increase to employee groups that had experienced at least three years of a wage freeze; maintained public safety staffing levels and increased them where grant support was available, added staff to the county treasurer’s office to offset state programming problems and the shift of state duties to local governments; increased staffing for code enforcement and employee safety officers, provided government funds for an after-school program, a healthy kids program, a weed program and neighborhood sidewalks; established the process for casino charitable contributions and approved an agreement for the nonhost school district to receive casino funds; funded the CNIP program that will start in the spring of 2013; made a modest restoration of the environmental and health insurance reserve funds; and maintained prior funding levels for outside agencies.

Mayor Joe Reardon said the UG experienced a significant increase in the amount of revenues it brought in, compared to the amount it estimated earlier. "We got $10 million?" Commissioner Mike Kane asked.

There was support from Lew Levin, UG chief financial officer, for using some of the funds for reserves. Hays said the pre-recession level of the fund balance, in 2007-2008, was $30 million. In 2010 it was about $1.8 million. The UG is currently trying to rebuild its fund balance. For example, a 10 percent fund balance would be $18 million, according to Levin.

“Moody’s kept us at the same level (AA) but moved us to a negative outlook,” Reardon said. The UG is currently working with the ratings agency to try to get the level changed to stable, he added.

A different agency, Standard and Poor, has rated the UG as stable, UG officials said.

If ratings agencies downgrade the UG’s rating, the cost of borrowing money will increase.  For example, with the UG’s AA rating, the cost of borrowing money may be 2.6 percent, and with an A rating, it could be 3 percent, according to Levin. That could mean a quarter of a million dollars more in some cases. It’s unlikely that the UG will reach an AAA rating because of many factors, including the difficulty of reaching a total of about $30 million in reserves, but it would like to eliminate the negative outlook rating – a rating that the U.S. government also received.

“We’ve got our act together way better than the U.S. Congress does, give us a break,” Reardon quipped.

Pack told the commission that revenues were up, and she also pointed out some higher expenditures this year due to the weather and other factors. For the winter of 2011-2012, there was little spent on snow removal, but that has now changed with the February 2013 snowstorms. The UG had some extra income last year from a SAFER stimulus grant for the Fire Department, which has now expired, according to officials.

Commissioner Nathan Barnes said he had just recently learned the cadet program at the Fire Department had been eliminated, and he was concerned that this budget cut was not brought up specifically before the commission for consideration. He also said he couldn’t get answers to his questions on it.

Reardon agreed there were policy implications in the elimination of this program and said he would like to have more information.

Hays said there were many cuts made to get the budget to where it was, cuts across the board, and if the staff failed to keep the commission informed, the commission has his apology.  Reardon asked the staff to look into it and make a report on it.

Commissioner Ann Murguia said that while she didn’t want to micromanage the department, when there is a cut made that affects the general public, it affects the commission, also. She did not care if departments cut their supply expenses without consulting the commission, but she felt the commission should be consulted if a cut affects a program that the public participates in.

Hays agreed that the information should be in the budget for the commission to see.

As far as the budget process itself is concerned, Reardon said this year is much better than former years. The UG administration has started meeting early, with policy guidelines from the commission on its priorities.

Still, there will be at least three new faces on the UG Commission after the election that will not have participated in the earlier discussion.

“It is absolutely a great report card,” said Commissioner Tom Cooley, “but we put the process into motion. We’re not coming in, in the ninth inning.”