Mayor Sandy Stimpson trimmed $21.6 million off of a revised 2014 budget he is scheduled to pitch to the Mobile City Council in a special meeting today at 11 a.m., an amount he said would be “very unpleasant” if it weren’t for about $8.6 million in revenue exceeding projections. Instead, the city will weather what is essentially $13 million in cuts by not filling budgeted vacancies, eliminating unnecessary overtime, collecting fees that have historically been forgiven and allowing the city’s overall workforce to decline along with natural attrition.
Still, without the support of a supermajority of the City Council, Stimpson’s revised budget may not be adopted, but he warned, “the nuclear option would be ugly.”
“We can go back to the old budget but it will be around the council’s neck,” he said. “Terminations, cut services…healthcare will be out around July.”
The City Council approved the current budget last October under the previous administration, but a review of year-end financial statements and an independent audit determined the city had a “severe operating deficit” to the tune of $15.8 million, according to Finance Director Paul Wesch. Pay raises scheduled to take affect Jan. 1 were cancelled and Stimpson announced a bottom-up approach to a balanced budget.
After three months of work by the finance department, department heads and volunteers from the private sector, Stimpson said his revised budget is a proactive approach to making city departments more efficient and a “huge step” toward putting the city on sound financial footing.
“At the end of the day, there are two things we are trying to do,” he said. “Be the least disruptive to employees and maintain the level of services we are able to achieve. We see this as an opportunity to start the process of being fiscally sound and living within our means…and it will take a couple years to get there.”
The administration hopes to start by implementing strict controls on personnel costs, Wesch said. Stimpson asked department heads to review each and every one of their budgeted full-time positions and target those that could be consolidated or eliminated. While no current employee is at risk of losing their job under the new budget plan, not filling budgeted vacancies will save the city approximately $5.5 million, Wesch said, and will be the first step toward lowering the city’s overall workforce.
The second step is not replacing non-essential employees who resign or retire. Wesch said based on historical averages, 351 employees are taken off the payroll through attrition on any given year, leaving the administration to assume that 157 employees will depart during what remains of this year. Divided by their average earned salary, the new budget estimates total savings of around $2 million.
Both Wesch and Chief of Staff Colby Cooper said a review of employee numbers revealed “a dramatic increase” in the city’s workforce around eight or nine years ago and the hiring of around 450 people over the last three years, a period of time when the previous administration had supposedly implemented a hiring freeze.
“There was never a hiring freeze,” Wesch said. “There will be now.”
Wesch said the freeze will include departments responsible for public safety and the city will not sponsor an annual cadet class of 30-40 recruits for the police department. But Cooper emphasized that it would not affect “mission critical” positions among the full-time workforce, which currently numbers around 2,500 employees.
“This has been a significant internal exercise,” he said. “We have done nothing more than balance the budget. The City Council will receive it and there are some critical points: no tax increases, no layoffs or furloughs, we’re not touching benefits like health, pension or life insurance and that’s significant because the sacrifice we’re asking people to make will come in other forms. But there should be no fear in this and from our vantage point, that’s exciting.”
A substantial amount of overtime will also be eliminated under Stimpson’s revised budget. Wesch said a review found as much $16 million was spent on overtime some years, including $8.5 million in fiscal year 2013. The current budget allows for $7 million in overtime, but the administration is hoping to trim an additional $1.5 million to $2 million from that figure.
“It was allowed to happen,” Wesch said of the previous high figures, adding that the department heads had the power to approve overtime. “There was no management.”
Meanwhile, he said a certain amount overtime is expected, especially during events like Mardi Gras and Bayfest, where there is an economic impact to offset those costs.
A final stopgap the administration hopes to implement with the revised budget is the elimination of fee waivers for city facilities and services. Last year, Wesch said the city wrote $3.5 million in revenue off the books by granting fee waivers for private use of facilities like the Convention Center, Civic Center and Alabama Cruise Terminal. Although both admitted offering free use of the facilities may incentivize larger conventions to choose Mobile, they said Stimpson intends to implement a new policy to have more discretion over the process while he’ll also attempt to recoup $1 million that was lost last year.
“There was an expectation (of a waiver) because no policy existed,” Cooper said. “We’re headed in that direction but it has to be fair and objectionable.”
Cooper blamed the previous administration for that shortcoming as well.
“You have to ask the question, who has the authority to authorize that? The mayor’s office made those calls,” he said.
Another $7 million in “uncontrolled” mandated costs from programs like healthcare, jail billing, the Strickland Youth Center and workman’s compensation will be offset by $8.6 million in “revenue pickups” from consumer activity and licensing fees, Wesch said, leading to the balanced budget.
“It’s a terrible situation to be in three months into a fiscal year, with only nine months to move,” he said, indicating that controlling personnel costs in the future would continue to be key.
“This is where we need to continue to be to get righted,” he said. “It’s all in personnel. Once we get past this point, we’ll begin budgeting for 2015 and beyond. The days of annual budgeting are behind us and we will begin to look at multi-year budgets. I hope this is the last time we make last-minute or post-last-minute decisions.”
Meanwhile, Stimpson hopes to get the point across to the full City Council before he resorts to the “nuclear option.”
“I’m not intimidated by size of problem and it can be addressed,” he said. “We just need time. But every day that goes by makes it more difficult to balance the budget.”