Is South Ogden budget crisis over.

The Standard Examiner's Gentry Reinhart, South Ogden City Reporter, filed an article regarding the on going South Ogden budget crisis this weekend. (See Here) Finally this one had some good news attached to it. Due to the hard work of the council, department heads and City Manager Matt Dixon, South Ogden now currently has a projected surplus of $5,000.

According to the article, Matt Dixon said:

"Again I want to emphasize that this is preliminary and we're still going to be working on this as we go," City Manager Matt Dixon said. "Right now based on the numbers we put in, we have a balanced budget with a very small $5,000 surplus."

This is great news, the budget is finally balanced.  However according to Mr. Reinhart, Dixon and the council are already asking for people to submit budget requests for capital and one-time money projects.  No, we are not bringing back the all expenses paid Christmas dinner to the Timbermine just yet. However we are asking for people's wish list. This is like opening the flood gates during a tsunami.

With only a projected surplus of $5,000, if revenues actually materialize, I think we are jumping the gun in asking for projects.  Not to mention this was the same team that budget for a 2% sales tax increase in the middle of a recession because CNN said it was over. (See Here)  I wouldn't start looking at projects yet, you can hold surplus for awhile longer until we know we are out of the clear.  

Comments welcome.

What goals should South Ogden City Council set in 2011?

This weekend is the annual city council retreat.  This is where the City Council, Mayor and other Department Heads really hash out a strategic plan for the year.  This year’s agenda can be found via the South Ogden City Facebook page: http://fb.me/QSo4q2Qh

You can see from the agenda a lot of time will be spent on revising South Ogden’s mission and values, then setting goals based on these items.  I have been impressed with City Manager Matt Dixon’s efforts to focus the council on real specifics of how to improve our city.   Will the retreat produce the kind of goals and energy we need?  Who knows, but I feel we are headed in a good direction.

Do you have things you would like to see the city focus on?  What kind of strategic goals should they set?

Now a lot of us can jump and say…I want a swimming pool!  But a swimming pool isn’t what is going to make South Ogden truly better.  (But it would be nice)

Here are three topics I would recommend to the council:

·  Economic Development:  We have tons of retail and potential retail space available to some real great companies.  It just needs to be sold.  I have written a number of blog posts about this and it will be crucial to our success.

·   Increase Fiscal Responsibility:  It appears there has been a lot of freedom when it comes to spending and poor planning when it comes to budgets.    Our current deficit spending is unacceptable and in some case I feel could have been avoidable.

·   Curb the increase in Rental Properties: I am deeply concerned at the growing trend for South Ogden homes to turn into rentals.  As housing prices continue to drop, investors will begin purchasing homes and turning them into rental properties.  Many of our current landlords are absentee landlords and the properties often go un kept and decline even more in ascetics and value.   In my six years in South Ogden I have seen this happen a lot.  Something needs to happen immediately to stop this trend.  Better economic development, good landlord programs and enforcement of ordinances can make a difference here.

I am eager to hear your thoughts.

Standard Examiner Follow Up on South Ogden Budget Crisis

The Standard Examiner today had a long awaited follow up to their searing editorial of South Ogden City finances. Reporter Gentry Reinhart reported on an email sent by City Manager Matt Dixon and the December 7th City Council Meeting (even though he came late and left early from the meeting). Mr. Reinhart rehashed information my blog has already brought to light, but since not everyone in the world reads my blog this is good to hear from the Standard. Some of the highlights are the city is really not $700,000 in the hole, but really just over $300,000; also the city has cut its budget dramatically to bring the deficit to $83,000. Read the full article here.


What Reinhart failed to report on, because he left before the conversation was even over, was South Ogden City’s plan for a Sales Tax Increase in 2010-2011. South Ogden has the world’s most optimistic crystal ball. Also interesting to note is the dramatic cut in fleet services; essentially saying South Ogden will stop taking care of their vehicles. This in reality will be like mortgaging our future and will more than likely facilitate a need to buy new cars sooner rather than maintain them over the next few years.

Matt Dixon, city manager, is doing a great job trying to communicate the problems we are facing. This article is direct results of that and those who do not read my blog will have this great information. Even if Mr. Reinhart missed some great opportunities to really report the news.

Hopefully we see some sales tax increases in the coming months or will be likely having this same meeting again.

See Previous Posts:

http://www.fromwhereisitblog.com/2010/12/south-ogden-city-council-meeting-12-7.html
http://www.fromwhereisitblog.com/2010/11/standard-examiner-south-ogden-needs.html


I welcome your comments.

South Ogden City Council Meeting 12-7-2010 - "Recession is Over???"

Tonight's meeting covered the major issues surround the 2010-2011 budget and brought to light even more issues of concern.  What we have learned is South Ogden has been planning this years budget under the assumption the recession and its ill effects are behind us.  In doing so they planned for a 2% sales tax revenue increase for this years budget.  However the exact opposite has occurred causing our city to plunge into a distressed situation.

Most of the issues regarding the $700,000 deficit were cleared up and I have posted Matt Dixon's response in the download section or it can be found here.  He shows we are not as bad as we have been hearing; yet being in debt is still not great.  Mr. Dixon's explanation and proposed cuts help us to see South Ogden really is doing a lot to balance its budget.  Interestingly some of the proposed cuts are to things like $12,500 in 401k matches, changes to insurance benefits, and reduction in staff.  Also of interest is the fact that if we didn't have a $23,000 bill for the gym facility, we could have saved some of those items.  Sorry employee benefits...the gym has priority. Big cuts are coming to our fleet services as well, which I think will hurt is in the long term; but a quick solution for now.

However the question remains, why are we so off?  I asked the city council and Steve Liebersbach, the city Finance Director, how South Ogden calculates its sales tax projections to help get a better understanding of how we became so off this year.  Steve went on to explain he uses historical data from the past five to seven years, he also takes into consideration trend analysis, monthly reports from the state tax commission, and of course he also looks at the local, state and national economic situations. So what has the past years data shown us and what did we estimate? Here is the answer:

The 2008-2009 budgeted sales tax revenues were down 4%. The 2009-2010 revenues were down 5.7%.  Based on this information, how would you budget? Would you project sales tax revenues to be up or down. Well Steve suggested because reports showed the recession had ended in 2009, South Ogden should project a 2% increase in sales tax revenue. Yes, you heard me right, South Ogden City projected for a 2% sales tax increase while during a recession (or in the aftermath of one).

Since we had a delay in the effects from the recession, it would only be safe to say we would have a delay in the recovery, don't you think? But we didn't plan that way, we decided to defy all expectations and expect increased revenue. 

The Result?

The following cuts and then some:

1. Early retirement offers in early 2010
2. Reductions in force
3. Replacing one full-time position with a part-time position
4. Elimination of the employee 401k match program
5. Moving to a HDHP/HSA medical insurance plan
6. Delaying certain capital equipment purchases
7. Cuts in training and travel
8. Reduction in overtime allocations
9. Amending building cleaning contracts to 2 days and 3 days instead of 5 days per week
10. Scaling back community and employee special events - no more Timbermine :(

My last question was how South Ogden would survive with revenues going down every year and not being able to cover expenditures. Remember revenue has gone done $360,000 in the past two years and expenditures have gone down only $160,000 in the same time frame.  I used the analogy, if my household failed to bring in enough revenue to cover expenditures I would lose my home.  Steve replied, 

"We can't make the comparison between a household budget and city budget.  A city has savings it can utilize to cover it's losses. The city doesn't operate like a household checkbook, and that is a good thing. Like all of the funds that come in and out of the city there are multiple checkbooks and it doesn't work like a house." 

Well I am sorry he sees it that way, but I disagree. The profit function is the same for everyone, Profit = Revenue - Cost. Tonights cuts are only a band-aid if sales tax revenue continues in a free fall.  But no worries...South Ogden has savings.

South Ogden's Budget Meeting Tonight

As a reminder, tonight's city council meeting will include a public hearing regarding South Ogden's budget and potential cuts. Our city manager, Matt Dixon, appears to have been working around the clock to put together comprehensive plan to help South Ogden emerge from our current situation. At the same time there appears to be some shock and confusion from our local officials at my concern to our budget crisis. I would ask them to remember my blog is titled "From Where I Sit" and so I am posting my opinion based on the limited information I receive regarding the issues, this includes newspapers, minutes, agendas and (when possible) attendance to city council meetings.   At the same time, the resident's of South Ogden can only do the same.   Therefore I am glad tonight we are having a public meeting to help set the record straight and help us all more fully understand the situation at hand.

Some points of interest that will be brought up:

1. Our 2008-2009, 2009-2010 and 2010-2011 budgets have all be challenged with a city deficit. However each year we have made attempts to balance this but cutting back and using our general fund. 2008-2009 we had too much in our general fund and needed to use that money, however would have either way so you can't really use that as an excuse. We have used general funds to balance each year but not as much as we may have heard. In total it appears to be $148,147 has been used of general funds in the past two years.
2. General Funds revenues have dropped nearly $360,000 and Expenditures have dropped $168,488 over the past two years. (Interesting expenditures have only dropped half of what our revenues are. If I did that in my home, I would lose my home!)
3. Our current budget deficit is really $377,535 not as high as $700,000 as has been previously mentioned. The cuts planned should bring us down to $83,491. The city has a plan to help make this happen by some reductions in work force, elimination of the 401k match, cutting back in travel, etc.

This is not an easy job and I am sorry we have to go through this. Though it is next to impossible to compare us to other cities (since all have different revenue streams and structures). I am seeing a lot of cities who are not dealing with these same issues, for example like Plain City and Farr West who both made early adjustments to prepare for the drop in sales tax revenue.

In the end, I would really like our city to stop spending more than it has. I am glad we have an emergency fund and can cover our deficits. But for three years straight we have been in the hole, it appears (from where I sit) we've just kept spending and hoped it would all work. This is hard because we are counting on sales tax revenue to help us and the money hasn't come.

What I want to know is how do we estimate how much sales tax we will receive and how do we adjust the estimate for the current economy?

What do you want to know?

Standard Examiner - South Ogden Needs a Trim

A nice editorial in the Standard Examiner today is eerily similar to what I mentioned in my blog post last week: See Here.  South Ogden is in desperate need of some financial counseling.  It is the classic tale of spending way more money than you have coming in.  Obviously we are in a tough economy but South Ogden at some point has forgotten this.  What is interesting, is this has been problem for some time and we are now just taking notice...or are we?

In 2008 we were headed in the same direction.  The Standard Examiner reported on December 8, 2008 that South Ogden was in the hole.  See Blog Post and Article here. Our former city manager, was even quoted as saying, "if sales taxes drop we will be in a lot of trouble."  However South Ogden just kept spending like sales taxes were still coming in.  I brought this to our attention also in November 2008 showing we were headed for a negative year to the tune of $300,000 (See Here).  Yet we were then all told that we are back on budget, which was due to using the "Rainy Day Fund." (See Here).  In 2009, once again Mr. Darrington cautioned we were going to maybe break even on the budget, but only if sale tax revenue held strong.  (See Line 322 Here).  But at this time were currently negative and hoping we would balance out.  Don't worry even if we were, South Ogden City balanced their budget with their "Rainy Day Fund."

In June of this year this South Ogden City Finance Manager, Steve Liebersbach, predicted we were headed for a $225,000 deficit, but our budget was balanced due to our so called "Rainy Day Fund".  Yet the city kept spending. (See Minutes Here) Council members called out for cuts and concerns to new hires and promotions; yet the spending continued until now we are headed for a number more like $700,000.

Where do we go from here?  First, I feel sorry Matt Dixon, our new city manager, has start his South Ogden career dealing with this problem; but serious cuts do need to take place.  More than just cutting back on the annual Christmas Dinner, but some serious cuts.  I am saddened by the constant lack of fiscal irresponsibility we have seen for nearly three years now.  Every year we have been negative and then balanced it with emergency funds.  When will we wake up?  If I ran my business or my house this way, I would be living on the streets.

I am eager to hear your feelings on this subject.