The city's fiscal situation is being improved by a more strategic approach to budgeting. There are multiple signs in the budget that the city is doing this.

The city recognizes that the key to fiscal stability is to be forward-thinking. The city's structural imbalance cannot be solved by typical one-year budget procedures. That is why Mayor Barrett wisely proposed a three-year fiscal stability plan in last year's budget. We praised this planning tool last year, and we continue to see this plan as a key strength in the city's budgeting. It is also a positive development that, in this year's budget, the city provides progress reports on each of the strategies that have been implemented under the three-year plan.

Revenue Diversification

One of these strategies is to diversify the city's revenue sources since state aid has been stagnant for so many years. Although revenue diversity is important, the comptroller has raised the point that the city does not have many options left to diversify its revenue, especially since most of the new sources have been fees which the taxpayers still have to pay. The concern expressed by the comptroller is that residents of the city may move if they see a more palatable city services bill in an adjacent municipality.

Additionally, although there is a significant increase in revenue in the 2007 proposed budget, much of it is due not to new money coming into the city, but to the comptroller revising procedures for the calculations. In the future, the city, while under considerable constraints by state law, may have to be more creative in finding new revenue sources. One such source is the sale of water to other municipalities, which the water department has indicated will be necessary to avoid regular rate increases. It is promising that the mayor's office has indicated it will be looking into developing procedures for such sales.

Another source of funding for the city is the Tax Stabilization Fund (TSF) withdrawal. This year's withdrawal from city reserves is the largest in many years. The budget director indicated that the city decided to take $2 million more out of the fund than was originally planned once it realized that the fund regeneration from last year was so large. The justification was that it is a sustainable withdrawal and that the taxpayers had paid that $2 million (albeit a few years ago) and deserved to have it go toward maintaining city services. While this may be true, it does run contrary to long-term budgeting strategies. Such a large withdrawal is not something that can be relied upon in future years and thus not an effective means to balance the city's structural deficit.

Capital Projects and Debt

A key focus of the fiscal stability plan is the city's debt. The mayor recognized in last year's budget that, while the city's debt structure has always been good in that it retires debt quickly, it has also had a large amount of debt. It was decided that this amount was unsustainable. As a result, the new capital plan of the city is to limit the amount of tax levy-supported debt taken out in a single year to the amount that is paid off.

This is an excellent goal. The only concern we have is its sustainability. The city is going to have to keep a close eye on its infrastructure maintenance so that necessary repairs are not deferred in order to keep the debt level down. It is cheaper to fund such repairs in the short run than to put them off until they become daunting and expensive.

The mayor's AIM (Accountability in Managing) program is also considered part of the fiscal stability plan. The 2007 proposed budget identifies a number of improvements to the city that have been and will be made as a result of this comprehensive look at certain city departments. One that will likely provide an extremely valuable service to the city is improved capital projects status reporting. This is an important cost-saving measure because capital projects in the past had been too decentralized, resulting in significant cost overruns.

Funding for 40 New Police Officers

Over the past few months, there have been some high-profile murders in the city, as well as a widely publicized increase in violent crime. As a result, the mayor has said that making the city safer is one of his top priorities. The proposed budget says that it "makes a major commitment to the police department in an effort to reduce crime in the city." One way that it plans to do this is to fund an increase of 40 police officers. The problem with this is that there is no evidence that the extra police officers will reduce crime. In fact, in the finance and personnel committee's hearing on the police budget, Police Chief Hegarty indicated that she never said that additional officers would reduce the crime rate; only that more officers would result in increased citizen satisfaction as more quality of life calls for service would receive responses. This is an example of reactive rather than proactive budgeting. The mayor and common council may want to take a more holistic approach to making the city safer, one that might include greater contributions from other city departments and even other governments.

Homicide Review Commission

The Homicide Review Commission, which was begun last year, and is mentioned as a success story in this budget, is an excellent example of a strategic initiative to make the city safer. According to a police department press release, it was "set up to examine homicides and to search for possible solutions to violence." The commission is holistic in that it involves not only the police department, but several agencies as well as community based organizations. It is evidence-based and proactive in that it seeks to prevent crimes by identifying trends that can be addressed in homicides and violent crime. In the October 9 finance and personnel committee hearing on the police department budget, Chief Hegarty cited an example of a success of the Homicide Review Commission. She said that the commission had identified a trend in homicides related to certain taverns in the city. As a result of this identification, the police department sent extra forces into those taverns to maintain a presence, and homicides were reduced to zero. Also, the budget states that all homicides from 2006 through July have been reviewed and over 80 recommendations developed. An interim report on the commission's progress is due out in about two months.

Police Department Outcome Indicators

While the Homicide Review Commission is a good example of a strategic initiative (and there are several others within the police department), the city does not do a good job of strategic budgeting for the department. This is clearly seen when looking at the department's outcome indicators, one of which is the percent change in violent crimes. Between 2004 and 2005, there was a 32.5% increase in violent crime. The budget indicates that the department plans to decrease violent crime by 8.6% in 2006 and 2% in 2007. There is no discussion of where these numbers came from or how the department can achieve such a dramatic change. The police department and administration may want to come up with outcome indicators that make sense, can to be explained to the public, and allow the department to be accountable.

City's Policing Philosophy

An example of short-term budgeting is the manner in which the police department has been treated as a whole by city government over the long term. Over the years, the police department has been held harmless from severe budget cuts that have affected most other city departments. This has been done with the justification that such monetary focus on the police department is needed to make the city safer. However, the data regarding police spending compared to crime levels are inconclusive at best.

This is not to say that the police department is doing a bad job. Rather, the city's reliance on the police department to prevent and decrease crime may be misguided. Chief Hegarty has said there is a societal crisis in the nation, and that when people first get arrested for committing a violent crime, it is already too late. In most cases, the police department cannot be expected to prevent people from committing crimes. The city must focus on preventive measures that other departments can offer as well.

On page 15 of the proposed budget, there is an organizational chart for the city. It provides a good illustration of the need for a holistic approach to the city's biggest problem: crime. One box represents the police department. However, there is a total of 68 boxes, and at least 20 of them have programs or objectives that can and do result in crime prevention. For example, the city attorney's office has a program to abate nuisance properties and reduce known drug houses. The Department of City Development has an affordable housing initiative. The fire department will be working with the police department to form a Fire Cause Investigation Unit to solve and ultimately reduce incidents of arson. The library has early, school age, and adult literacy programs. The municipal court has a Drivers Licensure and Employment Project. The Department of Neighborhood Services has a Neighborhood Improvement Program that works on home rehabilitations.

At the finance and personnel committee's police department budget hearing, Alderman D'Amato suggested that Chief Hegarty help the city develop a more holistic approach to crime prevention by looking through all of the city's departments and indicating which ones she considers to have an ultimate crime prevention result. Alderman D'Amato also suggested that the time is coming, or maybe is even already here, when the city needs to disinvest in the police department, which deals with crimes after they happen, and reinvest in programs and departments that are more able to prevent crime in the first place. These comments are indicative of a change of philosophy that the city may want to consider -- toward holistic, strategic planning to prevent crime.

Fire Department Ladder Company Staff Reduction

The 2007 proposed budget again includes a reduction of staffing on half of the city's ladder companies from 5 to 4 firefighters. This has been attempted in the past, and has failed due to concerns of decreased firefighting capability. However, the budget states that this recommendation is based on a staffing study as well as a GIS analysis of the city. These studies have concluded that response times and coverage areas will not be affected. The use of such studies to lend evidence to the need for such controversial cuts is good because it shows that the city is looking at the strategic needs of the department rather than making rash cuts.

Fire and Police Commission Overhaul

In 2003, the Fire and Police Commission (FPC), the oversight body of the fire and police departments, was merged with the Department of Employee Relations (DER) as a cost-saving mechanism because many of the personnel related functions performed by the FPC were similar to those performed by DER. It seems now that this decision was not well-thought out. In 2006, the mayor's office had the Police Assessment Resource Center do a study of the Fire and Police Commission. That study determined that the merging of FPC and DER undermined the key purpose of the FPC: to provide oversight to, establish operating policies, and hold accountable the fire and police departments. As a result of the study's recommendations, this budget removes the FPC from DER and strengthens it. This initiative shows that the city is willing to fix short-sighted mistakes in order to implement more strategic plans.