I thought growth was good…..I even saw the bumper sticker: Growth is Good.
Instead, it turns out that having to deal with a lot more people in a low desnity city without a corresponding and large increase in the number and quality of jobs really hurts local government. (Which is you and me, as a reminder.) Yeah, growth is good…. for some financially, but for most of us, it’s a total loser…..Now we get a choice of less services, meaning a lower quality and standard of life here, or higher taxes. And that aint happening.
Yeah growth was good….
Now watch for the pro-growth lobby to crank into high gear and say that the solution to our problems is……wait for it….more growth!
I would bet that is what Bernie Madoff told his clients – “give me more and I’ll make it all back.”
Mayor Gray does make a very interesting statement: “We have to re-size government to fit the revenue stream,” Gray said.
That’s a very business-like comment. And it’s technically right.
But what if?
What if we can’t re-size the city at the same time? What if the city keeps on “growing?” What does government do then? We are in uncharted territory.
Here’s a brain teaser just for fun: What if someone were to say, “We have to re-size the city to fit the amount of government we are able to provide.” What would that mean?
Absent an unlikely huge influx of high paying jobs in the next year, this is just going to get worse. This is what the peak oil times look like.
Officials: Layoffs in Lexington government ‘highly likely’
By Beverly Fortune — firstname.lastname@example.org
- While city officials struggle to put together the budget for next fiscal year, the unfinished business of balancing the current-year’s budget remains.
The budget for fiscal 2011, which ends June 30, has a $9.2 million shortfall.
In a budget briefing on Wednesday, Division of Revenue director Bill O’Mara said the city has taken several steps to halt spending and save money. As a result, the shortfall is projected to drop by $6.9 million.
Among the main sources of those savings:
A “tight” hiring freeze has been imposed. The freeze is expected to save $2 million. Only the chief administrative officer, Richard Moloney, can grant an exception to the freeze.
All discretionary spending has been cut, including travel, training and office supplies, to save $2.25 million.
“Only things needed for direct services like gasoline for police cars and firetrucks will be allowed,” O’Mara said. “Everything’s on the table, to pinch every penny we can.”
Another $1.1 million will come from matching money allocated for grants that won’t happen.
Building maintenance and all capital projects are being reviewed for a possible $750,000 savings.
This still leaves a $2.3 million gap between revenue and spending.
The city has approximately $14 million in its rainy-day fund, which could be tapped as a last resort, budget director Ryan Barrow said.
As Gray’s staff and the Urban County Council began working in earnest this week on a new budget, a first round of economic projections showed expenses outpacing revenue by $25 million in fiscal year 2012.
“We have to re-size government to fit the revenue stream,” Gray said Monday at a budget workshop for top staffers and the council.
“We do have a crisis. As much as someone like myself would like to think that it’s not there. It’s here,” said Gray, who will make a formal budget proposal to the council on April 12. “It is going to be hard. It is going to be painful.”
The city’s General Fund revenues are projected to remain flat at $271 million next year, increasing a meager $21,000 from what is expected this year.
Meanwhile, Gray’s administration says spending will need to increase from an expected $280 million this year to $296 million next year, thanks in large part to increasing personnel-related costs, which make up about 65 percent of the city’s total budget.
For example, the city’s collective bargaining agreement guarantees pay raises for many police and fire, health care costs have historically gone up 10 percent a year and the state legislature increased the amount of money the city must contribute to the state pension fund, said Division of Revenue Director Bill O’Mara.
The resulting gap between revenues and expenses is too large to fill with one-time money transfers and temporary spending cuts, said Geoff Reed, senior adviser to Gray.
“So many times the budget, in the past, has been reduced primarily through operating cuts,” Reed said. “This budget is now down to the bone. The only way we are going to get the budget balanced is to make reductions in personnel costs.”
Although Reed say layoffs are “highly likely,” he said timing and number of them “are still to be determined.”
Officials also dismissed the idea of a quick economic recovery.
Total employment in Fayette County stood at 141,984 in June 2010, the latest data available, down nearly 6,000 from June 2007, according to the U.S. Bureau of Labor Statistics.
With about 56 percent of city revenue generated by an occupational tax on individual wages, and 11 percent from net profit tax on businesses, job losses have a big impact on how much money the city has to spend, said Kenneth Troske, director for the Center for business and Economic Research at the University of Kentucky.
Troske, who spoke at Monday’s budget workshop, said it is particularly troubling that a majority of the jobs lost in Lexington were in higher-paying professions like accounting, legal services, management and real estate.
There is not a “good, clear answer” why this segment of the job market has taken such a hit, he said.
There’s also concern going forward about two of Lexington’s strongest employment categories — health care and education, which are largely paid for with state and federal funds.
Health care spending has been driven lately by changes in Medicaid, Troske said. The city’s tax revenues will be impacted if the state significantly cuts Medicaid expenditures, as Gov. Steve Beshear has threatened to do if lawmakers can’t agree on how to cover a shortfall in the Medicaid budget, or the federal government is able to rein in the cost of health care, he said.
The same goes for education spending. When the state legislature talks about cuts to higher education, that feeds into the city’s revenue picture because that means UK and other schools don’t hire “or even start laying people off, potentially,” he said.
“So the ongoing debate in Frankfort will have a very real impact on our revenue,” Troske said.
Given the city’s job losses and uncertainty about education and health care spending, “wow, I’m concerned,” he said.