Blog: Straight Talk about Glendale's Budget

People expect value for their tax dollars; and rightly so.  We all know that things cost money; but we should not shy away from high expectations for exceptional customer service.  My push for outstanding municipal services and a quality of life we can all be proud of has been put to the test during my first term of service on the City Council.  The last few years have been extremely challenging for the residents of Glendale as well as for our City organization.

HONESTLY ASSESSING THE CHALLENGES

The City of Glendale’s fiscal year 2012-13 budget featured a projected $15.4 million General Fund shortfall and a $10.6 million GWP (Glendale Water & Power) shortfall.  Therefore, for the third year in a row, the Great Recession required us to make significant cuts to our budget.

Half of the General Fund shortfall was directly attributable to the State’s dissolution of the City’s Redevelopment Agency.  Unable to balance their own books, the State took the money from local governments.  The balance of the shortfall was from necessary deposits in internal service funds, increased insurance costs, and the migration to our leading-edge advanced and basic life-support paramedic program.

The GWP shortfall reflected the gap caused by the capital-intensive infrastructure program underway and the City’s hesitancy to issue debt to pay for such investments.  Over the years, the City on occasion increased rates (primarily for water; electric rates have not been increased since 2006/2007), but did not issue bonds for long-term capital projects like rebuilding reservoirs and power sub-stations.   The result was a draw-down on cash reserves.  Coupled with a drop in revenue attributable to the economy and increased consumer conservation, the budget shortfall emerged.

When I came into office in 2009, I became convinced that the economic indicators demanded that we reevaluate our priorities and address our needs structurally and strategically.

Looking to the future, the lackluster economy portends slow growth.  And although positive growth is better than negative growth, we cannot afford wishful thinking.  State and federal assistance continues to shrink.  Indeed, the State continues to raid resources historically reserved for local government. 

Confronting the “Brutal Facts,” I demanded a long-term and sustainable organizational structure that balanced needs with resources.

IMPLEMENTING SOLUTIONS THAT SUCCEED

Understanding how our business works is important.  We are a service business, and our greatest cost is for personnel: librarians, fire fighters, police officers, GWP workers, etc.  Just a few years ago, our personnel costs made up 85% of our General Fund.  We have reduced that cost to 79.4%, and our goal is to reduce and maintain that percentage at 75%.  Similarly, we have dropped our management costs to 18% of payroll, well lower than our target of 20% and our recent high of 28%.  Over the last few years, the City has cut all non-essential unfilled positions.  In fiscal year 2011-12, we had 1842 full time equivalent employees.  At mid-year of 2012-13 we are projected to have 1605. We have accomplished this downsizing through offering early retirement, and through a small number of layoffs.

We enacted long-term pension reform for our City employees through the creation of a “two-tier” benefit structure for new hires that eliminates pension-spiking, pushes the retirement age later, and calculates pensions at a lower rate.  We also addressed near-term solutions.  I voted to lower salaries and negotiated for current employees to pay a higher share of their monthly pension contributions. For example, the General employees pay 10% of their salary toward their pension (previously 8%) and the City contributes 6% (previously 8%).  Police and Fire pay 12% of their paychecks towards their pensions. 

By focusing both on the long-term and short-term impacts, the City of Glendale now features a workforce that pays the highest share of the cost of its own employment in the region – making us extremely cost-efficient.   This doesn’t mean that there isn’t more work to be done, but I think you can agree that we have been making steps towards pension reform.

DELIVERING WHAT THE COMMUNITY WANTS & FOCUSING ON PRIORITIES

Generally, Police and Fire services have not been cut.  Employee costs were trimmed and overtime costs reduced, but the number of sworn positions are left intact, year over year.  Indeed, Glendale Police Department is delivering yet another “top 10 safest city” designation, and Glendale Fire Department once again secured the designation as a “Class One” fire department from the Insurance Service Organization (ISO).

In other departments, decreasing personnel without diminishing service levels meant that our organization needed to reorganize and reprioritize.  Consolidations, streamlining and granting more authority – and accountability – have allowed us to maintain our “organizational velocity”.  Few if any services have been eliminated.  To make sure our leaner organization continues to offer excellent service to the community, Council will assess each program and department’s performance in the coming year. This has to be done in an environment where we still give priority to business service and attraction.

Last year Council migrated to a Performance-Based Budget in which departments are studied for ratios, trends, and correlations to help define the best use of resources in order to maintain adequate service levels. Council adopted clear priorities, from which department Strategic Goals are prepared, and Key Performance Indicators are tracked.

We adopted policies to effectively cap personnel cost growth, contain total costs, curb departmental liabilities, and measure department performance in a timely and competition-driven manner. From now on, quarterly reports will gauge Glendale’s progress.

MY VISION FOR THE FUTURE

Glendale is progressive AND fiscally conservative.  Healthy reserves, cost-efficient employees and forward-thinking policies are helping ensure that Glendale remains safe, attractive and a highly desirable place to live, work and do business.

Glendale’s previous pension reduction and cost controls place the City ahead of other cities and the State.  The reforms that we have enacted over the last few years are a giant step forward in dealing with our structural costs.

Despite the ravages of the Great Recession, Glendale remains a dynamic and an attractive place to do business.  Companies of all sizes, investors and stakeholders from all walks of life, shoppers, diners, employees, residents and families proudly call Glendale home.

I am proud that City Council tackled the economic situation head-on.  We have restructured our organization and reduced personnel costs, and we are rethinking how to best deliver services in tough economic times.  We have much work left to do, and in my next term I am committed to continuing making sure our City is fiscally responsible while maintaining the highest standards.