2010 ALTERNATIVE BUDGET

2010 TOWN OF BETHLEHEM BUDGET – AN ALTERNATIVE

Prepared by Sam Messina, Bethlehem Town Board Member, October 16, 2009

SUMMARY:

• Past Budget Strategies are not enough for today’s economic climate. Taxpayers expect and deserve more rigorous budget analysis.
• 2010 Budget development process did not include a complete and in-depth look at department budgets. Zero-based budgeting is an essential tool that should have been used; identification of essential expenses could be used to establish essential budgets.
• The stronger 2010 budget proposal presented here sets forth a reasonable way to trim costs, without negatively impacting services, and resulting in zero tax increase for 2010.

I. The Proposed 2010 Budget

On September 23, 2009 Bethlehem residents were presented with a 2010 Budget that increased by 2% over 2009; also included is a bonding of $2 million.

II. Alternative 2010 Budget Presented by Sam Messina

A. Background

Budgets are much more than numbers. They reflect a government’s vision, ability to plan, make difficult choices and balance services, costs and competing priorities.

Most of all, budgets, particularly at the municipal level, should be sensitive to the needs of our residents and the business community. The Town Board needs to demonstrate that it will go to extraordinary efforts – since these are extraordinary financially painful times for many- to show that we, as municipal leaders, feel their pain and that we are willing to do our part to ease that financial pain.

The public is very attuned, and their Town Board should be also, that at least for the foreseeable future, the economic climate may not be very promising.

The Comptroller is projecting a $4.1 Billion New York State deficit for 2010. The recently released Albany County Budget, from which Bethlehem depends on a significant stream of sales tax revenues is dismal. The County budget calls for a 5.9% tax hike, includes layoffs of 109 people, and zero salary increased for staff. Compared to 2009, Albany County revenue reductions are projected to be $21 Million, including sales tax decreases. Our municipal budgets will be adversely affected by the State and County fiscal crises.

B. The Proposal

Zero tax increase for 2010.

This is the time for the Bethlehem Town Board, on behalf of the entire Town, to show courage and clarity of purpose. We need to send a strong signal to our Town that we feel their pain and especially our seniors, who may be on a fixed income, people who have lost jobs or had their salaries cut and young adults that are struggling more than in any recent generation to build a financial foundation that they can live on and raise a family.

C. Implementation Plan

1. Leadership and Guidance

Skilled professionals staff Bethlehem’s Financial Office and all Departments. The Budget created for 2010, technically, is an excellent document. And there is no doubt that department heads and their staffs have done a good job controlling costs.

The point that needs to be made is that a good job is not enough. It takes leadership from the Town Board, and particularly the Supervisor, to set forth a clear strategy and goals to tighten our belts a bit more than we have, just as taxpayers have been required to do.

2. An Action Plan

Governmental organizations, including Bethlehem, with its budget of  $39.8 Million, can find ways of reducing costs in small amounts, while at the same time improving efficiency and maintaining or even improving services. And it has been demonstrated that fiscal and department staff charged with such a mission, and working as a team with the Town Board, can and will be positively inspired by this type of leadership. Professionals know that the envelope can and often should be pushed more, and it simply takes leadership to set the tone.

3. Goals and Options

Goal: To reduce the tax rate from a 2% increase to no tax increase, savings of $197,000 is required.

Options: There are no doubt a number of ways that savings could be achieved to address the increased expenses and to erase the 2% tax hike. Listed here are several actions that could do that, and more.

a. Targeted Savings

For all major programs, the department heads and their respective staffs should be asked to reduce equipment and contractual services (which includes such expenditures as supplies, materials, travel and membership dues) categories by 4%. The smaller programs should target a 2% decrease, because in smaller programs, there is less flexibility and fewer opportunities to reduce costs. Of course there may be reasons why some programs will not be able to hit the target, but some others may be able to exceed the target while not negatively impacting service levels. The bottom line of savings through such efficiencies would be $154,000. It is noted that the Bethlehem 2020 Committee, which submitted it final report to the Town Board on June 24,2009, raised the importance of identifying essential and non-essential services. Similarly, the Interdepartmental Management Advisory Committee, chaired by former Bethlehem Town Supervisor Egan described the need to seek out efficiencies and identifying essential services. While not integrating either of these concepts entirely, the targeted savings approach described here at least moves forward in the direction of stronger fiscal management, more rigorous budget analyses and appropriate actions to deal with fiscal realities.

b. Leadership and Boards Should Set the Example

Salaries would be reduced for the Supervisor, Town Board, Planning Board, Zoning Board of Appeals and Town Justices. The full time Supervisor’s salary would be decreased by 5 % and all of the other part-time board and assigned attorney positions would be reduced by 10%. In such times as we find ourselves, leadership must be by example, and this example will result in savings of $40,000.

We should consider streamlining and where possible, consolidating boards. For example, with the benefit of additional legal and policy review, it may be possible to combine the Zoning Board of Appeals functions into the Planning Board, and the Board has also previously considered streamlining the Planning Board from 7 to 5 members. This action would save at least $30,000 a year.  Such streamlining may require changes to the Town code, but certainly could be implemented by the next budget cycle. Careful selection of qualified individuals would ensure that this streamlining would maintain quality performance of Board responsibilities.

III. Summary

As a result of these actions, total savings of  $225,000 would be achieved. Since savings of $197,000 is necessary to reduce expenditures sufficiently to go from a 2 % tax increase to a zero tax increase, that leaves a potential savings balance of $ 28,000.  If that Town Board so selected, that could be converted into a small town-wide tax reduction, or these savings could be restored to programs. Another approach that the Town Board could use is to retain the savings for unplanned, urgent necessities, or, thinking more creatively, use them as an incentive fund to invest in innovative program initiatives that would result in additional cost reductions or program service improvEMENTS.

IV. Final Comments

A. Bonding Activities

The bonding actions proposed in the 2010 Budget are appropriate and cost-effective ways to invest in longer-term resource needs, and to do so at low interest rates. The advantage is that equipment and other needed items can be acquired now, rather than putting off the expenditures to a later date, when costs will be higher. The caution is that while these bonded items are off the operational budget they are still costs incurred. Therefore, the Town should keep a watchful eye on the cumulative effect of these bonded items, because over time, with one year compounded on another the annualized cost of principle and interest could be significant.

The only exception this report would take with the bonding recommendations in the 2010 Budget would be to not include the $780,000 for paving at this time. While this is a legitimate expenditure for bonding, it may not be an essential expense at this time. The Superintendent of Highways is currently doing a pilot project on lower cost pavement maintenance techniques that may provide a reasonable alternative to some of the budgeted paving. And, the Interdepartmental Management Advisory Committee Study prepared during the previous Supervisor’s administration also advanced several recommendations that might result in savings in this area. If we did not have to expend the $780,000 for paving, or at least save a significant part of it, there could be a benefit to the Highway Special Revenue Fund Account.

B. The Remainder of the Budget

All other aspects of the 2010 Budget, as proposed to the Town Board on September 23, 2009 would remain the same.