Why Big Changes In the Budget Don’t Just Happen


Some residents seem to expect that the City Council Special Budget Meetings are an opportunity for the needs and desires of the community to be heard and have a large, decisive impact on the proposed budget.  In my several years of involvement with being active in the city I’ve learned it just doesn’t work that way.  I apologize in advance for the long read, but I’ve been studying this for awhile now and I think I know why this is so.  It’s not brief, but here’s why:

City Budgets are Complex

The city’s budget is a complex document and it requires a complex process to formulate.  The four hundred-or-so page budget document released for consideration is just a summary of the “real” budget, which consists of spreadsheets containing the projections and upcoming purchases that go into making the overall departmental numbers.  Those spreadsheets take a lot of time to produce.  Building them requires a lot of research of various things such as: historical budgets, current laws, labor contracts, capital equipment purchases, depreciation, the city’s credit rating, payroll schedule, etc., just to name a few.  The effort required to come up with the city’s budget in light of its overall long-term financial plan is quite substantial, and it can only be effectively undertaken by professionals who specialize in doing the job.

If you read the 400-page document, you’ll find that true line item detail in the budget is hit and miss at best.  The majority of the expenditures are rolled into overall numbers, effectively hidden from public view.   Large capital investments such as the purchase of a batch of police cars or a piece of heavy earth moving equipment might rate as important enough to be called out in the final document individually, but expenditures for most things never see the light of day.  From time to time, Council may be called upon to vote their final approval on a purchase, such as was the case with the large play scape that was installed in Dodge Park a year or so back.  Even then, the matter is largely already decided; the item for purchase has been selected from the preferred vendor and the planning for how it is to be utilized or implemented has already been done.

The reason for this is that a look at all of the numbers would be completely overwhelming, and the public is not demanding detail at this level.  The majority of people don’t read the 400-page version, and they sure wouldn’t read a few hundred extra pages on top of that filled with nothing but numbers and their justifications.

All of the foregoing is by way of explaining why Council doesn’t have much direct input into specific numbers in the budget overall.  In our Manager/Council form of government, just about all of the actual (and substantial) work of figuring out what gets spent where is delegated to an unelected team working behind the scenes.  Our elected officials have some incidental input, but they’re mostly not going to make a material difference in, say, how much gets put into the police pension fund, how much of the general fund balance is going to be utilized to make up for any tax shortfalls, or how many police cars the city will purchase in a given year unless they put it to a vote.   Otherwise, that stuff is decided for them, long in advance of the approval of the budget.

Why Council Doesn’t Write The Budget

In order to be able to do a competent job of actually formulating the budget and making the important decisions, the Mayor and Council would have to work full time, and they would have to have expertise in finance.   They would also need a staff to do all of the paperwork.  That’s simply not compatible with the way their elected office was envisioned, or for that matter how the Council/Manager form of government typically works.   Being a member of Council in Sterling Heights is not a full time job, nor does it pay like a full time job would, and we don’t ask our candidates to prove their competency with finance and Microsoft Excel before we elect them.  And we certainly do not have a staff at the Council’s beck and call ready to perform number crunching on alternative budget proposals.

Let me spell all of the above out for you in one sentence: City Council involvement in the annual budgeting process in our form of government  is a mere legal formality.   The state mandates that city budgets take the form of an ordinance, and the way to get that done is to have the council vote on it.  That’s it, that’s all council is really needed for as long as they agree with the underlying philosophy that guides the creation of the budget.  They delegate the actual figuring of the numbers and writing of the ordinance to the Administration, and as long as they don’t find anything unusually objectionable, they rubber stamp it.

Why Council’s Role is Important…but not all-powerful

Council does an important job in setting the tone for the budgetary process and then signing it into law.  They are consulted by the City Manager along the way, and he reminds them in the meetings that they can amend the budget if they so desire.  Council is responsible for listening to the residents and deciding among themselves if there are common concerns that merit some form of action.  But remember, they don’t write the actual budget itself, and no single one of them can independently change that document.  Their main task is to make sure the residents don’t show up with pitchforks and flaming torches over some huge issue in the numbers, and if not, they sign the thing into law and get on with life.  It’s really all they’re there to do.

When it comes to setting the overall tone, Council definitely has an impact.  Should the council decide that the budget needs to be trimmed back by, say, 10%, they could pass a resolution informing the Administration of what they expect.  This takes a willingness to move in a direction contrary to the way things are going, and it would definitely take a Mayor who could exercise strong leadership to make it happen.

Mayor Notte is content to let the Administration set the direction, as is much of the council.  That is why a large cut in spending will not be forthcoming with the current elected officials in the majority.

Why Resident Proposals Don’t Have Much Impact

Let’s imagine for a moment that a resident, or even an individual member of council, wanted to propose a significant change to the budget.  Let’s imagine this change is a reduction in the overall Police Department budget of $1 million.

On the surface, this doesn’t seem very complicated.  Take the current police budget, subtract a million bucks, and tell the cops that if they don’t like it to go pound sand, right?  Go buy fewer pencils, police cars and ticket books to make up the difference.

Unfortunately, it doesn’t work like that.  You see, we need police cars, ticket books and pencils in order to operate the department.  We have contractual obligations to pay the police a certain amount that require a very large effort to legally change (and survive the inevitable arbitration process) .  We have to pay for lights and heat for the department, fuel for the patrol cars, and meals for prisoners.  So when you make a demand like “take a million bucks off the top”, it takes some serious recalculating and planning to figure out how to make it happen, if it’s possible to do so at all.

A couple of weeks ago, Councilman Smith wanted to propose a $5 million reduction to the Fire Department budget, and the mayor shot him down.  The rest of council didn’t say a word.  Why?  Because a $5 million reduction in that department’s budget is huge.  And although a reduction by that amount could possibly be done — and probably should be, as I’ve opined here before — actually doing it requires a monumental effort.  The entire department would have to be restructured to accomplish this.  Doing that would require overcoming an enormous amount of organizational inertia, as well as careful planning, a great deal of discussion, a significant sales job for the residents, and true leadership.

Councilman Smith’s Naïveté

Rather than just suggesting a $5 million dollar cut and expecting it could happen, Mr. Smith should have attempted to build some form of consensus with his fellow Council members.  He should have sat down and had substantive discussions with the acting Fire Chief to figure out what reductions over and above those already proposed were possible.  He should have sought the opinions of residents who were likely to be on both sides of the issue in order to come up with a proposal that represented an actual compromise everyone could live with.  He should have  put some real effort and thought into his goal of reducing that department’s budget.  Then he should have arose as a true leader and sold the rest of council on his plan and how it would be to the benefit of the city as a whole.

Instead, he naïvely waved a stupid piece of paper around and allowed himself to get shot down by someone who couldn’t even spell parliamentary procedure, much less officiate over it, and then complained that it wasn’t even worth his time to make a motion to change anything.

Well, considering the effort he put into it, at least he was right about that much.

Where do we go from here?

I’m going to let you in on what is perhaps the most poorly kept secret in Sterling Heights:

There is going to be a tax increase.

It’s inevitable.  The only way the city gets out of the financial mess that it is in is by raising taxes.

The residents are not rising up asking for a smaller government.  The City Administration is not going to cut the mission and scope of the Fire Department or Police Department.  There is very little outside of those two departments that remains to be cut back.

True, the residents will have to vote on the issue and there is always the chance it won’t pass, but all indications are that a tax increase is like money in the bank.  It WILL happen.

Is There An Alternative?

Yes.  Replace the mayor and the members of council who typically vote with him.  Elect people who take a hard-line approach to government spending and have the leadership skills necessary to both reduce the size of government and sell it to the residents.  Then replace the City Manager and Budget Director (who is retiring anyway) and cut the Fire Department by that $5 million, the Police Department by probably a larger amount, and hope for the best.

I’m not a gambling man, being very conservative when it comes to taking certain types of risk, so I wouldn’t bet on any of the things in this alternative to happen.

Should Conservatives Just Give Up?

Absolutely not!  But in order to effect change, you first have to understand what you’re up against.  You need to realize the scope of the problem, the complexity of the budget, and the situation the Council and the Administration find themselves in, not to mention the various departments in the city.

A change is do-able.  Eminently so.  But it will require time, a concerted effort, and leadership.  Waving papers around and acting offended or being chagrined when that isn’t enough to change things is not going to make any difference whatsoever.

I look forward to the process, and I will be involved — as a commentator, not an elected official — in effecting change.  The residents — more of them than the twenty or so regulars that turn up at council meetings — have to want it.   I think they do, they just have to be lead appropriately.

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Posted on May 2, 2012, in Issues and views. Bookmark the permalink. Comments Off on Why Big Changes In the Budget Don’t Just Happen.

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