Budget wrap-up
I am disappointed about how the budget turned out this year. I guess I'm glad for the debate. At least there now is a broad consensus that we will be right back in this same situation a year from now. I really hate that Metro is choosing to not fix a known, identified problem even though the delay squeezes employees on pay and constituents on services.
I want to thank everyone who has written or called this week with kind words and support. Please know that I consider it a privilege to be one of the voices carrying your message.
Looking forward to next year...If you follow my posts, you know that I predicted the size of this year's budget to within a few million dollars. I predicted $2.335 billion, and it came in at $2.332 billion. That wasn't luck. The size of a budget is pretty predictable when it is playing defense -- you pay what you must and not more. Despite some of the packaging and spin, this year's budget was another status quo defensive exercise.
Using the same principles that I used this year, we can look forward to get a glimpse at what next year will bring. As you look at this, keep in mind that new Metro revenue (aside from the one-time sales) for this year was about $100 million. Here's the minimum new spending that will be required in FY21:
Make up for relying on one-time non-recurring revenue, $41.5 million
Pay known existing new bond debt payments, $14.5 million
Pay for new bond 2020 bond issuance the Finance Dept. has told us about, about $25 million
3% cost of living adjustment and a step increase for Metro employees, $25 million
Increase for MNPS that is the same as this year (i.e <3% cost of living adjustment and no step), $28 million
That's $134 million of new spending required in FY21 before getting into any expansion of the government at all. This amount wouldn't allow for the already-announced increase in Barnes Fund funding, or get WeGo Transit back to full funding, or help employees gain ground on what they've lost in the last several years, or expand any government service at all, or even cover inflation.On the Council floor on Tuesday night, I argued that allowing the administration's budget to go in effect would lay the groundwork for another tough budget season next year.In my projections, the Finance Dept. had me assume that revenue will grow by $85 million in the upcoming year. Let's assume they are conservative and the new revenue will be $100 million again. That would mean FY21 would have $100 million in new revenue and at least the $134 million in the basic new expenses listed above. The budget would again be looking at a shortfall of at least $34 million. Like the last few years, the only ways to fix this will be some combination of one-time non-recurring revenue (i.e., selling off more assets), cuts, and new property taxes.
Multiple district council members told me that in the days and hours before the vote the Mayor and his office told them that he would raise the tax rate next year. He's denied that to the press. I guess you all can draw your own conclusions about what to make of that.I continue to view this budget problem as a three-headed monster. There's revenue, expenses, and determining the impact of economic incentives.
On revenue -- that's talking about property taxes. I think everyone knows where I stand on that issue.
On expenses -- the Finance Dept. has been aggressive on that since before Mayor Briley took office. With the new budget in place, Metro will have cut at least $36 million in expenses over about two and a half years. Many departments have gotten rid of whatever fat there was and are now cutting into constituent services. I trust the Finance will continue to be aggressive about this.
On the impact of economic incentives -- I will continue to work hard on tax increment financing reform. Beyond that, there continues to be a lot of information and misinformation the convention center. If I am re-elected, I think that topic will need more attention.I'll keep working on all three of these. Thanks again to everyone who helped trying to get a better budget passed this year. I genuinely appreciate the support.