On the 2012 City Budget Process

It's been an interesting experience to watch the 2012 budgeting process for the City of Richmond, being performed by the very City Council that I aspire to join.  If I'm elected, I'll be a part of a city government that is operating under the budget that's now being considered, so it feels even more important than usual to understand how the City is deciding where and how to spend money.

As I watched various department heads present their requested budgets for the upcoming year, I observed a few things:

• It's been taken as a given that there will be no changes in compensation for any city staff.   I'm not sure if this happens because it's made clear at the outset that requests for compensation increases will be rejected, or because the staff already know that to be true, but it's got to be a challenging experience for city workers who know that cost of living is increasing and their own pay is staying level.  I know that when the citizens of a community are feeling limited in their own financial situation, it can be an easy target to claim that this person or that person in government is making too much money, and I'm sure in some cases, those claims might be true.  But I would also hope that as a community we can recognize the value of having our city run by professionals who are compensated fairly and equitably for their work.
• Quibbles with spending practices are all about context.  For some departments, a budget increase of  a few hundred dollars for spending on training or supplies raises the eyebrows of Council members - "why do you need that?" - but for others, there are line items in the tens or even hundreds of thousands of dollars that are vaguely described and when questioned, the department heads can't always immediately account for how that money will be spent.  Of course we should hope that for each line item, department heads and city officials guiding this process have broken down the actual need for each dollar, but it's still strange to see some smaller dollar amounts be questioned when other larger amounts are taken for granted.
• The budget management process is surprisingly agile.  One might expect a city government's budget to be fairly rigid in its ability to handle unexpected changes or evolving operational needs throughout the course of the year.  But it seems that with the good work of the Controller's office,  the flexibility of city staff and the care of City Council, Richmond is able to accomodate those kinds of changes without too much strain.  It also makes me appreciate the procedural importance of having Council meet with a quorum on a regular basis, always ready to consider any budget transfers or changes that are pressing.

So far there seem to be three areas of some controversy in the proposed 2012 budget, and I'll address my views on those here:

1) Reducing benefits for spouses of city employees who have coverage options elsewhere:

In the headlines, this is being referred to as a "spousal carve-out," which is kind of a creepy phrase to use when referring to anything to do with medical anything.  The proposal on the table is to have the city stop paying for benefits for spouses and dependents of city employees who have the option to receive health insurance through their own employer.  City expenses for spousal insurance claims have ranged between $750K and $1.2 million in recent years, although it's not immediately clear how much of that is for spouses who would be compelled to get insurance elsewhere under the proposal.

As many folks have noted, ending premium payments for spouses is something most organizations - business and government alike - have done a long time ago.  That doesn't soften the emotional and financial blow that some affected families would feel as a result of this change - it's essentially a reduction in compensation for the employee - but the City is also taking an approach that at least ensures no one need find themselves left without health insurance.

I also have to agree with those who note that this challenge is not unique to Richmond - because of the way the U.S. handles health care and insurance in general, every city and business is struggling with the dynamics of how to provide reasonable and humane access to health insurance while still maintaining costs.  In commenting on Richmond's situation, blogger Doug Masson says:

Among other things, we need to disassociate health care from employment. It’s bad for employers and, I think, it’s bad for employees. It’s probably bad for the economy as well if, for example, employees that could better use their skills elsewhere or go out on their own as entrepreneurs are discouraged from doing so because they are chained to health care benefits their employers increasingly begrudge them.

I agree that in the long run, having one's ability to pay for needed medical treatment tied to changing economic conditions and the whims of one's employer is a Bad Idea.  As a small business owner myself, I'm painfully aware that decisions we make about whether an employee is part-time or full-time has a direct impact on whether or not they're eligible for our otherwise generous health insurance benefits.  This is not an ideal coupling at all.

For Richmond, I think a change to the health insurance plan is inevitable, and we can only hope that the process is undertaken with sensitivity and care to those who will be affected by it.  As an employer, the city has a responsibility to the well-being of its employees, and at some level that includes the well-being of their families.  But given the financial constraints of the situation, I think most people would say that this is an understandable change to pursue, and one that may keep other more painful cuts from happening for now.

2) Expanding Fire Department operations to include EMS Service:

The details of this proposal are still being straightened out, but the gist of it is that the Richmond Fire Department is planning to perform additional EMS services (patient transport, responding to emergency medical situations, etc.), and that it needs to adjust its budget to accomodate the staffing, supply and equipment changes that go with that.  Council member are questioning whether the Department has fully fleshed out plans for how revenue generated by the additional services will cover the added expenses.

At some level, this seems to come down to the Council's willingness to approve the taking of a measured risk on the part of City staff.  No one can guarantee that the additional EMS services will generate the needed revenue and be financial sustainable.  But if Department Chief Mike Crawley - who surely knows more about the rhythms and opportunities related to local fire department operations than anyone on Council - says that it's an opportunity worth pursuing, I hope that Council takes that seriously.

Unfortunately, there's at least a recent history of Council not fully engaging in dialog with City staff when it comes to disagreements about the budget, so this is an opportunity to do things differently.  Certainly the burden is on Chief Crawley to continue to make a compelling and well-reasoned case for taking on the new EMS services, but it's Council's responsibility to hear that out fully, and not make the proposal a target for attack just because it's something different.

3) The Human Rights Commission budget wasn't discussed or presented at all:

Despite having its own section in the printed draft budget being presented to Council, and despite the significant interest shown in the issue by the community last year when the Commission's $74K budget was de-funded in a controversial 5-4 vote, there was no spot on the agenda of the proceedings for anyone from the Commission's staff (now practically working as volunteers) to present or comment on their department's operations, even if those operations are still being conducted with a budget of $0.

I'm not sure at what level or by whom that procedural decision was made, but it seems an unfortunate glossing over of an important piece of unfinished business from last year.  Whatever someone's opinion of the value and function of the HRC, it's still a city department that deserves to have a place in the budgeting process.

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Those are some of my thoughts on what is surely an evolving situation with the 2012 City Budget.  I'm continuing to go through the draft budget myself and learn more about the details of city finances.  I welcome feedback and comments from others in the community about these issues, and I hope that my fellow candidates for Council will publicly share their views as well, so that we can continue this conversation leading up to the election, and beyond.

Full disclosure: as noted in my disclosures page, the City of Richmond sometimes uses my company Summersault as a vendor, and so deliberations about fund allocation have a potential impact on my own business's income.

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