On Preliminary Budgets

The Cedar Hills city council recently passed a resolution that "mocks the state legislature for forcing the city to pass a preliminary budget and challenges legislators to spend more time attending city meetings so they can better understand how they force municipal government to function." The editorial staff of the Daily Herald endorsed the council's point of view by issuing a buffalo chip to the state legislature for requiring "pointless preliminary budgets." (See Caleb Warnock's article here and the Herald's editorial here.)

Council members based their complaint on the fact that the tentative budget must be adopted by the first council meeting in May, a good four weeks before June 8, when the county is required to issue the certified tax rate. This, they say, leaves cities guessing at what their revenue will be for the coming year. Plus it feels to them like micromanagement.

I disagree with this point of view for two reasons.

First, it is the legislature's right and duty to regulate the basic functions of city government. A city government's authority derives from the enabling acts of the state legislature. Given that the budget is the city's single most influential document -- it authorizes all spending and taxation -- the legislature is wise to prescribe how it will be drafted. The legislature's "micromanagement" protects the people from the inexperience of citizen council members like myself. In the best democratic spirit, city council members are lay leaders elected more for their ability to interpret the public will than for their financial, legal, or managerial acumen. Municipal councils rely on the state's guidance in much the same way as the local PTA relies on the state and national PTA for operation and policy manuals. They rightly submit to processes established by better and more experienced planners.

Second, with or without the certified tax rate, preparing a preliminary budget is good planning. There's nothing magical about that certified tax rate -- it doesn't guarantee the coming year's revenue. But a good financial officer can ballpark a good estimate, and this estimate is enough to give a fairly final form to the budget. Doing this in May gives council members meaningful time to grapple with the tactical realities of the budget and make any necessary adjustments before final adoption. It also gives department heads time to plan for the coming year.

Here's how the budget time line works under Utah state law:

• First council meeting in May. By this date, the chief financial officer of the city must present a balanced budget to the City Council together with a memo detailing the highlights of the budget. The city council adopts this tentative budget on this same date.
• June 8. The county must provide the coming year's certified tax rate to the city. (This is a provision of Utah's Truth in Taxation law, about which see here.)
• June 22. By this date, the final budget and the certified tax rate must be adopted by the city council unless there is to be a tax increase. If a tax increase is proposed, the deadline for adoption shifts to August 17. This gives the city council time to complete the extensive process of public notice required by Truth in Taxation.
• July 1. The fiscal year begins. (If a tax increase is proposed, the tentative budget governs between July 1 and August 17.)

A realistic draft. Time to consider, haggle, and proof-read. Advance notice to department heads. This is just plain good planning.

I confess to scratching my head a little more when Cedar Hills said their process begins in April. Perhaps this works in a small town with few services. In American Fork, on the other hand, the process begins in January. In January, council members begin meeting with department heads and advisory committees to look at needs and priorities. In March, the mayor schedules an all-day retreat where department heads present formal budget requests to the city council, both orally and in writing. Between March and May, at least a couple more retreats are held, and council members visit individually with department heads and the chief financial officer.

Essentially, we use the first half of the fiscal year, from July to January, to evaluate the current budget, and the second half, from January to July, to plan for the coming budget. This is a thorough process that enables careful stewardship of public dollars.

Cedar Hills set out to mock the legislature. Mockery is intended to provoke laughter. I hope the legislature will see the resolution in this spirit and laugh it off.

In accordance with statute, the American Fork city council heard the financial officer's budget memo and adopted the preliminary budget on May 7. I share the text of the memo below.

Preliminary Budget 2010

AMERICAN FORK CITY
BUDGET DISCUSSION ITEMS
WORK SESSION
MAY 7, 2009


The following adjustments have been made in the operating budget for the 2009-10 operating budget for the City:

Attrition. Current employee positions have not been eliminated. However, if a position is vacated, that position has not been replaced; cost reduction has been obtained through attrition.

Overtime. Most overtime throughout the City has been eliminated. However some overtime has been added back to allow for safety issues. Specifically, some overtime has been added back to police, streets (winter), and water (secondary irrigation). For the coming budget year, the City would like to emphasize compensation time and management intervention to manage employee schedules.

Social events. Social events such as Christmas parties, Halloween contribution, secretaries’ day, etc. have been eliminated. This is not to say the City does not want to recognize the hard work of the City employees, boards etc., but in these economic times the City would like to encourage recognition and camaraderie through pot luck activities, creative planning and recognition, etc.

Training/education. While the City recognizes the terrific contribution that training gives to the employees, during these times, the City is only going to pay for training or education for those individuals that need continuing professional education to stay in compliance with licenses or certifications.

Regularly scheduled pay period. A regularly scheduled pay period for employees of American Fork City has been set at 80 hours. This includes schedules for public safety and ambulance personnel.

Pay rates. No pay increases have been included in the budget. There has been an accrual for the year end pay period that crosses fiscal years, for which we need to recognize 10 out of 14 pay days in the budget. This has the affect of making the payroll line-items appear higher than the current fiscal year.

Operations. Most departmental budgets closely mirror the adjusted 08-09 operational budgets. With few exceptions, departments have been given what they have requested in their operational budgets.
Public Relations. The public relations contract has been eliminated.

Video arraignments. The City is still seeking approval from the Administrative Courts to use video arraignments. It is anticipated this will reduce police overtime in transportation of prisoners to and from court.

Traffic School. The City is looking into the possibility of doing a trial run of on-line traffic school, concurrently with the in-class traffic school, to see if citizens would be more likely to pay a premium rate to attend on-line traffic school, and perhaps reduce City overhead in the administration of that program. This on-line program is operating successfully in surrounding Cities.

Water. An adjustment in the water department budget has been made to allow for the anticipated $20,000 fee for the Highland aquifer study.

Sewer. It is anticipated that the base rate for sewer will be raised 4% to reflect the increased charges for the Timpanogos Sewer Special Service District fees. This resolution will be brought forward to the Council.
Dispatch Fees. We are anticipating increased charges in dispatch fees for police, fire and ambulance.

Revenues. For the most part, we are anticipating revenues similar to what we have received in the current 08-09 fiscal year. One exception is a small adjustment to sales tax, because we anticipate increased competition for our Wal- Mart tax dollars due to the opening of two new Wal-Marts in surrounding communities.

Celebration. The Celebration committee has scaled down the Steel Days celebration.

Building Authority. A Building authority fund has been added with a minimal transfer from the general fund to pay for publications etc. for administration of that fund.

Capital Improvements and equipment. Capital equipment purchases have been limited to current lease obligations, bond obligations and previously agreed contractual obligations. Library computer purchases are contingent upon the City receiving a library grant from the State.

Building-related revenues. The City does not anticipate any increases in building-related revenues including impact fees.

Broadband. Broadband has a very tight operational budget. The City is in hopes that we can come to some resolution of the broadband deficit. Currently, the general fund is covering the major portion of the broadband bond.

Fund balance. Fund balance is being used to balance the general fund operational budget. If revenues come in higher than anticipated, this will reduce the need to rely on fund balance.

Possible events that could affect the budget, not currently recognized

Equipment failure. Police vehicles, ambulance etc.
Significant emergencies.
Unexpected requests. Tri-City operational support, safety issues.

Is it American Fork or American Fark?

It's American Fork, people.

A Call to Civility and Community

Last Fall, Mayor Thompson attended an event sponsored by the Utah Coalition for Civic, Character and Service Training. There he was given a document which so positively impressed him that he asked the City Council to adopt it as part of the City code for conducting public meetings. The City Council so acted at its November 18 meeting. In May, Mayor Thompson distributed the document to City employees asking them to "please make these principles part of your daily relationships with the public."

For your interest, I reproduce the document herebelow.

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Ground Rules for Respectful Public Discourse and Behavior

"Freqent recurrence to fundamental principles is essential to the security of individual rights and perpetuity of free government." Constitution of Utah, Article I Section 27

Being concerned about growing incivility in our civic and public settings we call upon the people of Utah to return to fundamental principles that will lead to greater civility and a new spirit of community. Among our "inherent and inalienable" Constitutional rights is the fundamental right "to communicate freely about our thoughts and opinions", and yet we are also "responsible for the abuse of that right" (Constitution of Utah, Article I Section 1.) In that context we believe that there must be a renewal of respectful discourse and behavior in civic and public settings in Utah.

This is not an appeal for us all simply to get along. We recognize that there are profound differences among us and that spirited debate is a vital part of American democracy. Participation in American civic and public life does not require us to sacrifice our deepest convictions; rather we best protect our own rights by protecting the rights of others and adhering to high ethical standards.

With that in mind we propose the following ground rules of civic and public engagement that recognize the important place of the rights, responsibilities and respect inherent in our civic and constitutional compact.

1. Remember the Importance of Rights and the Dignity of Each Individual. Our society is founded upon the proposition that all people are born free and equal in dignity and rights, and that freedom of conscience and expression are at the foundation of our rights.

2. Responsibly Exercise your Rights While Protecting the Rights of Others. Each of us should be responsible both in the exercise of our rights and in protecting the rights of others. Especially on matters of personal faith, claims of conscience, and human rights, public policy should seek solutions that are fair to all.

3. Respect Others. All people -- especially our leaders and the media -- should demonstrate a commitment to be respectful in discourse and behavior, particularly in civic and public forums. Respect should also be shown by being honest and as inclusive as possible, by mindfully listening to and attempting to understand the concerns of others, by valuing their opinions even when there is disagreement, and by addressing their concerns when possible.

4. Refrain from Incivility. Public discourse can be passionate while maintaining mutual respect that reaches beyond differing opinions. Intimidation, ridicule, personal attacks, mean spiritedness, reprisals against those who disagree, and other disrespectful or unethical behaviors destroy the fabric of our society and can no longer be tolerated. Those who engage in such behavior should be brought to light, held accountable and should no longer enjoy the public's trust.

5. Rekindle Building Community. Our social compact "of the people" and "by the people" is "for the people." Each one of us has a responsibility to build community. On divisive issues, areas of common ground should first be explored. Effort should be given to building broad-based agreement, giving due regard to the concerns of minority points of view.

We invite all Utahns to join us in affirming these ground rules and putting them into action.

The time has come for us to work together.

Adopted by the American Fork City Council this 18 day of November 2008.

Questions about Pressurized Irrigation

Now I am fashionable. My street has a gravel stripe down the middle just like everybody else's.

With pressurized irrigation coming to my block, I have been fielding many questions from my neighbors.

Q. Would it really have been cost prohibitive to build a water treatment plant instead?

A. Yes. The treatment plant itself would have equalled the cost of the pressurized system. However, the delivery system (the underground pipes) was not sized to serve the City's growing population, and would still have needed an upgrade. So we could have built a treatment plant, but we'd still be digging up streets and installing new pipes. This would have doubled the price of the current project, which uses a new pressurized system to deliver untreated water.

Q. Why wasn't the delivery system originally sized for growth?

A. Originally, American Fork built itself a culinary system for indoor water use, but relied on irrigation ditches for outdoor needs. Over the course of the 20th century, families pulled away from their agricultural roots and developers built subdivisions without irrigation ditches. Over time, the majority of American Fork's households shifted to the use of culinary water via hose hook-ups for outdoor irrigation. But the culinary system was never designed for this, and never anticipated the day when it would need to support 7,000 suburban yards.

Q. Why not dig more ditches?

A. Engineers estimate that 30 percent of the water delivered in ditches is lost due to evaporation and seepage. The pressurized system of underground pipes makes more efficient use of a scarce resource.

Q. If American Fork continues to develop at the rates of the last two decades, how long will it take for the City to outgrow the new system?

A. One reason the present system is so costly is that the City sized it for growth. In hearing after hearing, the City's longest and most knowledgable water users begged us to create something bigger than a band-aid for the problem. We listened and directed engineers to propose a project that would last for fifty years. They accomplished this through two means: First, by designing a structural backbone that will support the City's needs to build-out. Second, by calculating the costs of depreciation and maintenance and incorporating these into the rate structure. If present and future City Councils will hold to the rate structure that was approved, they will accrue the necessary funds to upgrade the system when the time comes. Hopefully, American Fork will never again see a 2006, when the City was out of water and had no money to solve the problem.

Q. Does this mean that today's residents are subsidizing tomorrow's developers?

A. No. Fortunately, Utah law allows a City to oversize an amenity to accommodate future growth, then to be reimbursed by future developers through impact fees. This is called "equity buy-in." (We treated our parks the same way when we passed the parks bond, which will be retired through present and future impact fees.) So the present irrigation bonds are building an oversized backbone which future developers will buy into. At that time, developers will themselves bear the expense of extending the system from the backbone to their individual properties.

Thought for the Day

Click on image to enlarge.
From the book, Powers and Duties: A Handbook for Utah's Municipal Officials, Utah League of Cities and Towns.