Thought-starters re long-term Royal Oak Budget

Part One: Do it all at once.

§ Think in extremes, to distinguish between essential and nonessential services:

Essential = health and safety needs
Nonessential = quality-of-life wishes

User fees = signal to privatize.
Any nonessential function or department which cannot justifiably be funded by taxes should be outsourced or privatized.

§ Who should do the thinking?

The City Commission, the City Manager, and a selected group of citizens, no more than eight. And all new faces. New blood is needed for this work. It would be a mistake to again use well-known, long-time activists or veteran city hall observers.

§ Brainstorm

Create a list of specific first-thoughts, no matter how outlandish, without discussing, accepting, or rejecting any of them. Keep in mind that some decisions will make an  immediate financial impact, while others will take two or three years to have a measurable effect. [During some recent spontaneous brainstorming and random conversations with residents and business owners, ideas like the following emerged:)

• Spin off the Library. Find some way to make it independent, with elected trustees, like the school board.
• Fold Human Resources into the City Attorney's Office.
• Privatize Human Resources.
• Privatize the City Attorney's Office.
• Terminate the Parks & Rec part of the DPS (separating quality-of-life wishes from health & safety needs).
• Sell some parks.
• Sell both golf courses.
• Downsize the Downtown Development Authority. Reconsider how TIFA funds are allocated.
• Sell off the M&M Senior Community Center.
• Renegotiate all collective bargaining agreements, and reduce the fringe benefit package.
• Regionalize dispatching, fire departments, police departments, selected services, everything. [Breaking the rule of not judging brainstorming ideas, each of several times regionalization was suggested it was immediately followed by concern for loss of local control.]
• Lease city employees.
• We have a Motor Pool. Why not a secretarial pool? (expanded clerk's office? no departmental secretaries?)
• How many departments really need a second-in-command (Deputy)?

That starter-list contains several mutually conflicting approaches, but substantive dialogue can begin with such a list in hand. 

Next week:
Specific suggestions about tax increases, selling off assets, restructuring.

FJV 07 July 2005

Part Two: Specific Suggestions
12 July 2005

Increase Taxes Point One After at least two years of dodging the bullet by raiding other funds, there is no alternative to seeking a temporary tax increase. Part of the problem is historical, caused by incompetent or devious practices of past administrations, practices which resulted in discoveries of unknown or unfamiliar funds and debts. Point Two Royal Oak voters should reject any proposed tax/millage increase unless city officials have made substantial progress in selling off some assets and in restructuring administrative functions. Action Items Any tax/millage increase, of whatever sort,  must be enforceably temporary. Seek a 4-year increase. Include an irrevocable sunset clause. The sunset language must prohibit voters from either extending the tax or from approving any tax increase until at least three years after the temporary tax has expired. What's the hurry? Even after wisely speaking of the need for "big picture" long-range planning, the commissioners and city manager slipped back into short-term thinking by rushing to place a millage proposal on the November ballot. No way that a couple of town hall meetings are going to do justice to informed public input. The option: Schedule a millage vote for May or June 2006. Use that time to supplement town hall meetings with visits to service clubs, church groups, the broad civic/volunteer community. Such public dialogue will enhance, not impede, next year's budget deliberations. The few tens of thousands of dollars a special election will cost would be a wise investment..

Sell off Assets Point One When a 4th generation resident of Royal Oak suggests selling off several of the city's 50-some parks, city officials and voters cannot responsibly write off that suggestion, because the suggestion was made quietly and reasonably, rather than vigorously and emotionally as some who would save golf courses and animal shelters make their pleas. It's a copout to insist that selling off assets is a "panic" decision. Point Two The city and the DDA have a performed badly as landowners (think 696). News reports keep appearing about cities around the country disposing of unneeded land and structures. (Even Detroit's mayor's residence is in the line-of-sight of reformers.) Think positively: Convert costly or non-productive assets into tax generators  -- a-h-h, into "revenue enhancers." Action Items List every piece of property that Royal Oak owns. Have each city commissioner, the city manager, and each of a small group of citizens (no more than 8) rate each item and department, using the 1-to-5 scale: 1 = get rid of it 2 = nice to have but no real need for it 3 = offers a measurable benefit 4 = sell it only in desperation 5 = must keep Tabulate the results. The numerical scores will not be used as the only factor when reaching a decision, but the tabulations will help resolve ambiguous or contentious evaluations. Normandy Oaks Golf Course Place an advisory vote on the November ballot. To judge by Public Comment, letters to the editor, telephone calls to VersagiVoice, the proposed sale is a hot-button item, for both those who agree and those who disagree. Some of the points made: The North End would be deprived of a major green space. 99.5% of Royal Oakers don't golf, don't even know where Normandy Oaks is. The county is willing to buy it and convert it to county green space. The city is starving and they're arguing about recreation?!

Restructure Point One Payroll, especially fringe benefits, accounts for most of the city's expenses. Point Two Citizens -- and commissioners -- continue to be confused when trying to understand Royal Oak's budget, with its general fund, enterprise funds, several less-than-clear line items, block grants. Action Items To provide historical context, create a tabulation for 1960, 1970, 1980, 1990, 2000, and current budget year showing: Population, Number of City Employees, Total Budget. The reasoning that a drop in population doesn't necessarily justify a drop in the number of city employees may or may not be valid. Private sector groups often find that historical tabulations call attention to meaningful causes and effects.  Create a hybrid pro-forma budget which -- for study purposes -- consolidates all income and all expenses into a single operating statement (profit-and-loss statement) Split that hybrid budget into two segments: essential services and nonessential services. The hybrid approach makes it easy to show the overall effect of increasing or decreasing any single item or group of items. Create a textual chart-of-accounts which explains briefly what is included in each line-item. List line-items by department. Have each city commissioner, the city manager, and each of a small group of citizens (no more than 8) rate each item and department, using the 1-to-5 scale: 1 = unimportant 2 = slightly important 3 = important 4 = very important 5 = critically important Tabulate the results. The numerical scores will not be used as the only factor when reaching a decision, but the tabulations will help resolve ambiguous or contentious evaluations. Downsize the Administration. Short-term, there is no responsible alternative to some combination of terminating, consolidating, outsourcing, privatizing. Mid-term, the city can adjust to a new mix of essential/nonessential services. Long-term, when the economy picks up and the budget has been balanced for several years, slowly begin to re-institute some of the discontinued services -- which remains possible if wise decisions have been made about selling off assets and about restructuring. Commissioners remain uneasy, ambivalent, about addressing true downsizing. See Impressions of the 11 July 2005 meeting.

 FJV 12 July 2005

unsigned comment:
Frank, your plan for Royal Oak is not defensible.
14 July 2005

Part Three: The Human Dimension
21 July 2005

City of Royal Oak workers are understandably uneasy.
All this talk of restructuring and privatizing must lead to some mixture of fear and resentment.

If every city obligation could be met by robots, the city commission and city residents would find it much easier to make budget decisions. But when one visualizes department heads and subordinates as individuals and recognizes the upsetting cascade-effect of, say, deciding to prohibit all deputy department heads or to privatize Department A or to combine Departments X, Y, and Z . . . 

The reluctance to adversely impact loyal workers is common to leaders in both the public and private sectors. Except for one or two group vice presidents, each in charge of half a dozen division presidents in a multinational firm, I have encountered no business owner who is emotionally disengaged from the human impact of downsizing, whatever form it takes. For a city in financial distress, help might come in the form of a temporary takeover by the state. In the private sector, an unwillingness or inability to put some people out of work results in an organizational failure which puts everybody out of work.

Another human dimension is the tremendous pressure, both professional and personal, under which the city commission is operating. Professional, because citizens are second-guessing every tentative and actual budget decision; personal, because suspicious souls among the population speculate about unworthy motives driving this or that elected official. As only one example, there are already those who suggest that if commissioners Hallock and Prentice had not announced they won't seek re-election they would not have dared suggest selling off Normandy Oaks Golf Course or considering a volunteer Fire Department, respectively.

In terms of administrative staff, the personal element comes in the form of admiration or dislike, of respect or not, for individuals. Thus, a recommendation to consolidate two or three departments or to reduce the size of a department seems like a good or bad idea depending on one's feeling toward department's leaders and workers -- praise for and criticism of Code Enforcement and of the City Clerk's office being examples. Thinking impersonally of "the department" in functional and financial terms is easier if one hasn't been well-served or badly treated by someone in that department.

Even the financial option of increasing taxes has its personal/human dimension. Do the voters already feel overtaxed? How will those on fixed income respond? Voters' most recent decisions have been mixed: they approved mandatory staffing levels for the Fire Department . . . turned down a School millage . . . approved a Library millage.

All that said, the need remains to make functional and financial decisions.
To that end,  most of what needs to be said has been said -- by commissioners, staff, VersagiVoice, citizens, the press -- and it may be helpful to review the long-running budget dialogue which began the budget-before-last.  --  FJV 21 July 2005