Cities are shouldering increasingly tighter budgets in the face of the state’s financial woes.
The Legislative Analyst’s Office outlined a budget gap of $40 billion during 2008-09 and 2009-10 back in January. Since then, the economy has continued to spiral and the budget hole has only grown wider.
As part of a series of question and answer pieces on how local government officials plan to handle tightening budgets, PublicCEO.com interviewed Scott Mitnick, City Manager of Thousand Oaks, to learn more about how an increasingly stretched budget will affect his city, and other cities, throughout the state.
From your city’s perspective, what is your posture?
As with many other City’s in California, Thousand Oaks has been dismayed by the State’s handling of its budget and recurring structural deficit over the past five years.
Thanks to legislation championed by the League of California Cities (notably Prop 1A), cities are now better protected from the type of state funding raids that had become commonplace during the 1980s, 1990s, and early 2000s.
The State of California presides over one of the largest economies in the world. Fundamental change to the state budget structure is needed to ensure long-term fiscal solvency at the State level. The City of Thousand Oaks will continue to be actively involved with the League of California Cities to ensure that, wherever possible, local revenues are protected from state cuts.
The state should be forced to emulate what cities such as Thousand Oaks do every year: adopt a balanced budget prior to the beginning of the fiscal year. In order to do this, the state should learn to either cut expenditures and/or increase revenues.
There has been discussion that counties are more dependent on the state’s budget issues – how do you feel it equally affects cities?
Cities are independent municipal corporations. Counties are political sub-divisions of the State. Counties are arms of the state charged with implementing state programs and services, such as regional social welfare services not provided by cities.
Much of the current State budget cuts do hit counties, specifically social service programs. In the past, cities were hit much harder than counties.
Over the years, counties were provided specific portions of sales tax revenues to help provide more financial certainty and security … Counties were also allowed to take larger chunks of city revenues to help balance their budgets.
Over the years, local city redevelopment agency revenues have been hit far harder than county budget cuts.
What is your biggest fear with an even more shrinking budget?
Aside from State budget challenges, cities are facing reductions in sales and property tax revenues as a result of the global recession.
Thousand Oaks has a proud history of managing taxpayer dollars in a fiscally conservative manner (e.g. Maintaining reserves, avoiding enhanced retirement benefits, not growing the bureaucracy, not adding new positions or services, living within our means, etc.)
Thousand Oaks has a healthy and diverse local economy that helps tremendously during economic downturns.
As far as cities are concerned, the State has demonstrated over the past few decades that it cannot be trusted in terms of leaving local government revenues alone.
The state is likely to push more unfunded spending mandates down to cities while at the same time taking more local government revenues away to help balance the state’s budget.
One focus for our community in the coming years will be working to “keep local revenues local.” We will be looking at potential local funding mechanisms with our partners at the Park District and School District.
Cities will turn more and more to taking budget matters into its own hands in an effort to avoid being so dependent on the state … more use of local revenue measures, etc.
Those items on the table that were already close to being cut, will likely come back on the table and be given an even keener look. What programs for your city will be most affected by further budget cuts?
City of Thousand Oaks has already taken proactive steps by freezing vacant positions, use of early retirement incentives, delaying certain capital projects and working with the existing workforce to do more with less.
Down the road cuts: Service reductions and further delay/cancellation of capital improvement projects.