This letter was sent to Mayor Lloyd Winnecke by Stephanie Brinkerhoff-Riley via e-mail
Lloyd,
I am writing on two issues-the requested transfer and the proposed 2016 City budget.
I will vote for the transfer of $8 million in rainy day and Riverboat funds to pay bills in the general fund. I believe the purpose of the ordinance was to increase transparency in the use of funds to cover shortages in property taxes and general revenue. It was not to impede government operations. I think it’s important to understand in real time what is happening to the City’s budget due to stagnant revenue and for there to be a conversation about how the City adjusts in the long-term.
Whether the City is able to reimburse those accounts and still pay all of its bills for 2015 is a question I believe will be answered negatively. However, that is to a certain extent beyond my control and an election issue at this point. We are all well aware of the City’s ability to sit on bills that come in for the months of November and December and to get advances on 2016 revenue. I suspect the City will be able to manipulate its way into a positive number in ending the year. However, it begs the question of how healthy this system really is for the future and how stable it would be with an unforeseen economic crisis.
I do hope the conversation about revenue shortfalls that the ordinance was meant to trigger actually occurs. I know from meeting with Russ Lloyd, Jr. expenditures exceeded revenue by $5 million as of June 30th of this year. Revenue was $43 million and expenditures were $48 million. Russ told me that he expected revenue for the year in the civil budget to be $79 million. I believe the estimated revenue is high, and most of the need to transfer funds stems from chronic overspending.
The City had over $9 million in County Option Income Taxes (COIT) on January 1. 2012. Those funds have been all but eliminated in the overspending of 2012, 2013 and 2014. I do agree with Conor O’Daniel that transfers in prior administrations to cover budget shortfalls were largely covered by excess COIT funds.
Civil budget revenue over 2012 to 2014 has not kept up with expenditures. Expenditures, according to the annual reports, for 2012 were $76 million, for 2013 were $79.2 million and for 2104 were $79.5 million. Revenue has been largely flat over the three years ranging from $75 million to $76.5 million. I believe this failure to adjust to property tax caps has exhausted extra funds previously used to cover the months when property tax receipts are not available (March/April and September/October). The City typically starts getting advances on the property tax receipts at the end of April and end of October.
The problem with using Riverboat funds to float the budget at any point is these funds are all earmarked for capital projects. The 2015 budget for Riverboat funds is $13,123,156 in revenue and $13,033,410 in spending. Capital projects are affected when these funds are tied up. The same is true for current COIT funds, as the budget for 2015 is $15,560,894 in revenue and $16,879,431 in spending. The proposed budget for 2016 as to these funds is similar in that there is not much, if anything, to use for other purposes. Keeping the COIT funds that had been built up should have been a priority in managing the City’s cash flow.
I will not vote for the amended budget as present to the Finance Chairman last week, because it allows spending at a level that will not be covered with available revenue. Russ told us at a City Council meeting that revenue for the civil budget for 2016 is likely to be under $80 million. Getting to $79-80 million largely comes from an increased fee to cable companies and a higher payment request to Evansville Water and Sewer. It does not come from an increase in property tax receipts in any real amount. Although I applaud the Administrations’s efforts to find new revenue sources, we have a problem with largely stagnant revenue and the inability to keep up with the growth in fixed costs.
I cannot in good conscious vote for a budget that allows $85 million in spending. I understand the argument that the Administration will not actually spend $85 million, and mostly because the money won’t be there to spend, but the high cap is likely to mean the Administration will continue to spend more than it takes in.
In looking at labor costs as 87% of the civil budget, I can’t help but focus in on the 39-44 new employees that you have hired. Not all are full-time, but most are full-time, and all are perpetual. I confirmed this number with George Fithian this morning. You weren’t just handed an expensive government, your decisions are contributing to the problem.
My other problem with the City’s amended 2016 budget is the cut to funds for the demolition of 161 uninhabitable houses that will likely now be auctioned later this year. A group of people spent 8 months trying to break the cycle of blight perpetuated by the annual auction. The demolition cost for these homes is approximately $1 million. Even if government officials cannot agree on whether or how to land bank, we do the citizens of Evansville a disservice when we allow these homes to be auctioned.
If nothing else, I believe there are five votes on the City Council to transfer $1 million in existing Riverboat funds to demolish these houses, so that the County is auctioning lots instead of structures. The County would hopefully delay the auction to accomplish the demolitions. Like structures, 70% of vacant lots that are auctioned return to be auctioned again. However, in the meantime at least unsophisticated and unsuspecting families won’t end up renting one of these structures before it makes its way back to County ownership.
We have been reminded in the transfer debate that the City has stockpiled Riverboat funds. I think most of these funds are earmarked for capital projects, but if not, it’s a fine use of these funds to demolish this year’s crop of uninhabitable houses, as well as next year’s crop. Hopefully, down the road there will be tax credit legislation for new construction on vacant lots and the tax abatement program for investment in blighted structures allowed by Senate Bill 415 will be developed for local use.
I appreciate your time. Please let me know if you would like to discuss these issues further.
Sincerely,
Stephanie Brinkerhoff-Riley
City Council member From The 3rd Ward
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