Gaining fiscal health
One of the sad realities of surviving the Great Recession is that all of the belt-tightening that took place during the lean years simply created a backlog of deferred maintenance costs that are coming due just when revenue projections for local government entities are beginning to take on a rosier hue.
Any “extra” money is effectively spent before it hits local coffers as elected officials perform triage on budget line items that have been neglected due to shortages of discretionary funds.
It’s like getting a nice raise right around the time your oldest child gets accepted to college. Before, you couldn’t afford to put money into a college fund and now that you have a little extra, it’s paying for college instead of fattening your retirement account.
If sales tax receipts continue tracking upward, the first order of business for the county or city will be restoring funding for departments and services that have taken a hit over the last decade and shoring up reserves.
Effectively, that’s not much different than the various questions on the ballot asking property owners to spend more on public safety and education. We’re trying to make up for the spending that should have occurred but didn’t under austere conditions.
The city of Grand Junction’s draft budget reflects the brighter outlook of an improving economy. A conservative assumption of 1 percent growth in sales taxes adds $18 million to the budget and a surplus of nearly $900,0000.
There’s plenty of good news — more public safety personnel hires, more spending on street improvements, more money for economic development, a new substation for paramedics and improvements to Two Rivers Convention Center.
But just a week earlier, the city was openly contemplating whether to renege on a promise to city workers. Faced with a funding shortfall that could soar into millions in the coming decades, the city has to decide whether to keep its 20-year-old health plan for retirees. The decision will affect more than 600 city workers and retirees paying into the plan.
A recent study projected the fund to be shy $525,000 this year a total of $10 million over the next 30 years — because the city didn’t increase health care costs during the recession when it should have, the city’s director of financial operations recently told the Sentinel’s Amy Hamilton. Bear in mind that the retiree health plan has been totally funded by employee contributions.
To its credit, the city is dealing with the conundrum in a forthright manner. It hasn’t said it’s going to kill the program — just that it has to decide how to proceed. A first step should be to ask plan enrollees what they’re willing to pay to preserve what is essentially gap coverage. The plan bridges retirees from their employer-sponsored plans until they reach Medicare eligibility.
The city has been very creative at solving funding dilemmas under City Manager Greg Caton. Maybe there’s a way for the city and employees to share the pain on this issue. But it’ll be hard for city workers not to view the projected budget surplus as an option for the city to make good on its commitment.
The issue illustrates the challenge of getting municipal budgets right-side up after years of scrimping and getting by. There’s always a deferred maintenance issue waiting to blow up any impulse to save for a rainy day.
Still, as far as problems go, it’s better to contemplate how to divvy up a surplus than to make cuts due to gloomy budget projections. Every rose has its thorns and it takes a lot of them to make a bouquet.