Wednesday, November 19, 2008

Can We Talk?

There is gnashing of teeth in Mt. Lebanon over whether all of our Commissioners pay appropriate homage to the true spirit of the town: The idea that nothing is too good or too expensive for our children's welfare. Precisely, as Commissioner Dan Miller writes, the question is whether one or more unnamed Commissioners agrees that pools and playing fields are "essential" to the community, when the question of more investment is called.

On that question, it may be the case that the comment and its implications can be understood in different ways. If Raja is the Commissioner-to-be-named-later, then his explanation of the comment is plausible. Our kids and the town's spirit are intact; it's our budget that can't afford the extra cost.

Looking at the mini-brouhaha in this narrow light means that we can continue avoid talking seriously about some of the more challenging tradeoffs implicated in the current budget round. Mt. Lebanon developed its "no expense is too great for the well-being of its pampered citizens" reputation in an era of apparently unlimited resources -- including ever-expanding access to bond markets. When the budget gets better, things will be well again.

Look again and look more broadly. The party is over. Do not take Raja's explanation to mean that we can build new fields when the flow of money resumes. Take Raja's explanation to mean that the era of serious tradeoffs has begun. It is likely that never again will this town -- or this country -- have all of the resources that it needs in order to do and to buy all of the things that it wants. We cannot have the best of everything for ourselves or for our children.

To make this concrete, and for discussion, and not as a recommendation, consider some very specific and very difficult questions:

Does Mt. Lebanon need all of the full-time police officers and all of the full-time firefighters that we currently employ?

I love our public safety departments. They are, in my experience, great people, well-trained, dedicated, and responsive to a fault. They are also very, very expensive. (There is a standing joke in my neighborhood in which folks stand around wondering when the Mt. Lebanon Police Department will buy a helicopter.) Not long ago I poked around the Internet to see whether there are any established standards for measuring the size of public safety departments relative to community population. There are. It turns out that Mt. Lebanon is within national norms, both as to police and as to fire.

But the statistics are misleading, and they are only a beginning of an analysis. They do not conclude it. Police and fire departments should be considered separately.

On the police department side, Mt. Lebanon is a very, very safe community, with a very low crime rate. However, once in a great while, something traumatic and catastrophic happens in Mt. Lebanon. A police department is a kind of insurance policy: We pay a high premium so that when the metaphoric hurricane hits, we're prepared. For the little stuff -- traffic control, drug education in the schools -- we like the services a lot, but we don't necessarily need every last bit of them. We could reduce our premiums -- pay for fewer police department resources and use that money elsewhere -- and arrange for different kinds of protection in the event of a metaphoric hurricane. For the smaller scale, shorter term, less traumatic neighborhood-level issues, things like Neighborhood Watch programs could make up some of the shortfall.

On the fire department side, Mt. Lebanon is like much of Pittsburgh: filled with very old homes that present unusual risks. Neighborhood Watch programs aren't as effective; it is more difficult for many people to see and respond on their own to the kinds of risks that these homes create. Still, it is worth wondering out loud whether Mt. Lebanon and neighboring communities collaborate on capital investments, staff, and training to the maximum extent that they might. Mt. Lebanon is very proud of the fact that we have a "real" firefighting force, supplemented by a collection of well-trained volunteers. With fewer paid professionals, more volunteers, and especially more collaboration with neighboring communities, could we have the same level of security without spending as much money? It is a conversation worth having.

Public safety is something of a sacred cow, which is why I lead off with it. Get the difficult stuff out on the table first. If that's not your cup of tea, then how about some lower hanging fruit:

How much money does Mt. Lebanon Public Works pay for leaf-sucking? The cost of the vacuum devices and the cost of the staff may be sunk, so it may be that the marginal cost of leaf pick-up every Fall is fairly small. But it is surely a luxury, and the town wouldn't be different without it.

Likewise, the fact that we have unlimited sidewalk garbage disposal (as many cans, boxes, and sofas as you can throw away in a given week) is both fiscally luxurious and environmentally wasteful. If you really want Mt. Lebanon to get Kermit's seal of approval ("It isn't easy being green"), then the next garbage disposal contract should limit each household to a single can of trash per week. Sofas and extra cans cost more.

To reiterate: These are public conversation starters. There are other things that you might prefer to raise; go ahead, in the comments. I'm confident that the Commissioners and the Municipality staff have long been involved in comparable discussions. It's time that the town talked about them too, and in public.

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15 Comments:

Blogger Bill Matthews said...

Re: McNeilly Property - - The land was purchased in 2004 for just under $2.0MM and funded by a bond issue. At the end of 2007, we still owed 99.6% of the original debt. Proceeds from the sale of McNeilly should be used to pay off the “mortgage” on the property.

Re: Leaf Sucking - - Yes, it is nice to have the leaves collected street side and used for compost, at a cost of about $15 per single-family home ($166K / 11,000). I guess we could save about $10 per home if we discontinued the leaf pick-up (we would each still have to buy refuse bags to hold the leaves until they got to the landfill). Then again, part of that savings would also be offset by an increase in trash collection fees to transport the leaves to the landfill…

Overall, I think MTL runs pretty well. Would I spend the budget a little different? Sure. Would I purge some rogue initiatives? Absolutely! Would I take $100,000+ out of Administration? In a heartbeat!! That being said, 95% of the Municipality spend is on track.

November 19, 2008 10:38 PM  
Anonymous Anonymous said...

Well Stated Mike, sure do miss having well thought out commentary like this on the city as a whole.

Jonathan Cavell
JonathanCavell@gmail.com

November 20, 2008 8:42 AM  
Blogger Joe Polk said...

The following letter to the editor was in the most recent Almanac newspaper:

www.thealmanac.net/ALM/Story/11-19-ML-Vescio

November 21, 2008 12:02 PM  
Blogger Greg Nilsen said...

Very well said, Mike. We've really got to come together and help the situation all together. After all, if we just decide to do those things that benefit ourselves, we'll do nothing more than degrade the community as a whole.

So, yes, let's get the discussion going and get as many voices about what needs to be done as we can.

November 21, 2008 3:30 PM  
Blogger Bill Matthews said...

You just can tell a dollar budgeted from a dollar spent -- even with a scorecard.

A phenomenon which makes it difficult to understand the municipal budget is that the budget description does not necessarily reflect the actual expenditure of funds (intended or otherwise). For example, we have budgeted more than $500,000 since 2003 for "Destroyed Sign Replacements." The budget describes this service level as:
Signs, such as street, stop, speed limit and parking restrictions when destroyed by accidents or vandalism. Also includes replacement or new signs as recommended by the Traffic Board.

Based on a lack of personal observations of traffic signs in dire need of replacement and the absence of crews actually replacing/installing signs, I cannot believe we have replaced or installed $500,000 of signs since 2003. I think the budget dollars are being spent elsewhere in the maintenance of the Community and probably for good reason – you just can’t tell by the budget. And this is only one service level, out of more than 160.

Speaking of the other 160+ service levels in the budget, the Municipality routinely spends dollars in the service of the Community, not appropriated by the Commission via the budget process. Except for a few rogue initiatives, for the most part probably fittingly, but in violation of the Home Rule Charter.

However, neither the Commission nor Administration stands much on formalities - unless you speak for more than 5 minutes at a Commission meeting.

For the most part I think the budget spend is OK and I would retain funding for the Community programs on the chopping block and perform street maintenance with pay-as-you-go funding (as opposed to bond issues), even with a tax increase.

November 22, 2008 1:16 PM  
Blogger Joe Polk said...

Mike -- when people are asked why they moved to Mt. Lebanon, most of the time they say it is because of the schools or because of public safety. When the previous commission discussed the layoff of a police officer, a number of residents came out to urge the commission not to implement the suggested change.

I'd be interested to hear from these residents that you referred to that joked about when "the police was going to buy a helicopter". Do they really think that the police department is buying things that it doesn't need? What exactly do they mean with that comment? If they are really upset about the spending of any department, let alone the police, they can attend commissioner meetings and directly interact with their commissioner in order to voice their displeasure. Otherwise, it's just complaining or joking amongst friends.

As for the fire department, you will find that for a combination department (paid and volunteer), we are actually on the low end of staffing for shifts. This point was driven home when we recently talked to a firefighter from Massachusetts who was in town for a health and safety seminar for children.

He asked about the size of Mt. Lebanon and then the amount of paid firefighter on any one given shift. When I mentioned that 3 was the maximum of paid firefighters, he looked at me and said "What?!!?" I asked him why he was so puzzled about our staffing and he said, "that's because we have 8 people on a shift" -- and this is for a town that is comparable to Mt. Lebanon in land size and population.

I encourage anyone that feels that our public safety personnel could/should be reduced to spend time with the members of each of these departments to truly understand their staffing and economic concerns for their department.

November 23, 2008 10:28 AM  
Blogger Yale Class of 1983 said...

I hope that my initial post was clear that I was using the police and fire departments only as examples, and not because they deserve to be singled out. I was using them as examples precisely because budget questions there are probably more difficult than they are in any other area of the town.

I could have excluded the public safety departments and instead asked the identical questions about the public library, for example, or about public works. Here is a hypothetical: If Mt. Lebanon were to cut public library funding or public works funding -- things that are central to the character of Mt. Lebanon but also cows that are just as sacred to many people as police and fire -- could that money be put to better use somewhere else?

The questions are not aimed simply at reducing budgets. The questions are aimed at showing that the town has to engage in explicit tradeoffs. We might agree that all of the public safety budget is wisely spent and not a dollar should be reduced. (The joke about a police helicopter, which I have heard more than once, suggests that the police department might want to investigate how it is perceived in the community. High quality but at high cost, perhaps?) However, preserving public safety means that the town will have to look hard at reducing or cutting other, non-public safety programs. If the town wants to keep that non-public safety funding intact, then the money will have to come from somewhere. Reduction in public safety budgeting is one possibility. Reductions in other budgeting are other possibilities. If we keep police and fire, we'll have to give up something else.

Mt. Lebanon can no longer afford to have the best of everything. It may be true that Mt. Lebanon can no longer afford even to have the "right level" of everything.

November 23, 2008 10:49 AM  
Blogger Bill Matthews said...

As far as the budget goes I think it is possible to maintain services and keep the budget to a modest increase (0.9% over 2008 budget) by practicing some fiscal accountability. If we cannot, then maybe we do need to start making serious trade-offs. But I don’t think we are there yet.

There are a number of programs that are slightly increased, flat or even decreased compared to 2007 actual. The budget busters are programs increasing more than 10% over 2 years. To make the budget, these programs should be capped at a 10% increase over the actual 2007 spend. Extraordinary increases (cumulative increase over 10%) would require extraordinary explanations.

I would also restore the Community programs recommended to be cut. Street Reconstruction should be moved from a Bond Issue, back to the General Fund. This is an annual maintenance issue and should not be funded with bonds.

Hence -- my amendments to the Manager's Budget would be as follows:

General Management (15,000)
Information Services (93,000)
Planning (5,000)
Engineering Services (5,000)
Street Maintenance (30,000)
Curbs (5,000)
Pedestrian Routes (70,000)
Ice and Snow Control (112,000)
Traffic Planning (10,000)
Sanitary Sewers (75,000)
Storm Sewers (10,000)
Equipment Maintenance (75,000)
MRTSA (73,000)
Recreation Management (23,000)
Tennis Center (30,000)
Community Center (12,000)
Eliminate Assistant Manager (125,000)
Undesignated Fund Balance (100,000)
Restore Community Activities 91,270
Street Reconstruction 1,000,000

Net GF Increase Over 2008: $ 223,270

Percent Increase Over 2008: 0.9%

The other area that needs investigating is the cost of Employee Benefits. My understanding is the medical program is up 29% this year. Something seems amuck. But without further investigation, any adjustment would be capricious.

November 23, 2008 11:47 PM  
Blogger Yale Class of 1983 said...

Bill,

This is well-thought. Now let me use my professor's prerogative and change the facts:

Assume that Mt. Lebanon faces a budget shortfall. Assume that the Municipality lacks an anticipated $250,000. (In the current economic climate, I have no idea how realistic or unrealistic this is. But it is clearly an error to assume that anticipated revenues will simply materialize.)

How would you -- or anyone, including the Commission -- deal with that?

I hope that someone at the Municipality is working on this kind of scenario. We should *not* be judging budget tradeoffs in the heat of a crisis.

Mike

November 24, 2008 2:09 PM  
Blogger Schultz said...

Bill - what about the $400k in improvements to the golf course? I'm not saying cut out all of it - but some of that could offset the incremental increase you proposed. With regards to the leaf pickup (again) - I realize this is a cherished service here - but do we have to spend $200k on it? I'm sure if our workers only went around picking up bagged leaves it would cut the amount of work in half. Add another $100k in savings to your revised budget Bill.

November 24, 2008 6:06 PM  
Blogger Bill Matthews said...

Mike,

$250K is about 1% of the operating budget and a sudden downturn (like tansfer taxes or EIT) should be absorbed by the undesignated fund balance. If it is a one-time thing we move on. If it is anticipated to be an extended outage, the budget process should deal with it.

MTL’s budget process, self-described as modified zero base budgeting, is a good tool for making the trade-offs I think you are talking about. But folks need to be involved.

In “our” process, expenditures are broken down into big buckets by departments. Which in turn are further broken down into “Programs” and the programs into “Service Levels”. Sometimes there are also smaller buckets inside the bigger buckets.

For example: Public Safety is a big bucket, Police is a smaller bucket, Traffic Safety is a Program, and Basic Traffic Enforcement is a Service Level.

The department managers make their budget recommendations with scads of service levels that may or may not be funded. The Municipal Manager then ranks these service levels by what he believes are the Community’s priorities and draws a line. The Manager at this point has also considered available revenues and whether or not to recommend raising, cutting or holding millage flat. Service Levels above the available revenue line are funded, below the line are not.

Continuing the example above, Traffic safety in the 2009 proposed budget has a 4 discrete Service Levels, in addition to “Basic Traffic Enforcement” (5 total Service Levels). # 5 contemplates purchasing a motorcycle (not helicopter) for traffic enforcement. The Manager recommended funding 3 of the 5 Service Levels, or $575K of the $680K requested.

Now the Commission with input from the Public revisits each of these decisions made by the Manager and prepares a final budget for adoption.

I think this is a good process to make the trade-offs that need to be made, to support the Community we want to be, considering the limitation of resources. This forces a discussion on every program in the municipality, every year. It is much better than the school district process that seems to focus only on additions or deletions to the budget, not the base budget.

This process is also why I routinely say, if I did the budget it might look different, but I am only "one" here in the great state of Mt. Lebanon and it is a Community budget.

Some things I would do different:

I would not allow the Manager to spend more cash from a bucket than what was put into it in the first place. No exceptions. If you need more, appropriate more.

I would look at each service or facility to ensure we are receiving all the revenue the service / facilities can realistically generate to cover the costs of same. Facilities don’t have to be self-sufficient, we are a Community after all, but I am a fan of user fees. If a group wants an enhanced facility, they should be prepared to pitch in for the cause. In Main Park: Tennis, Paddle Ball, Bocce, Basketball, Baseball and the Playground have all made meaningful contributions to improving their respective facilities.

I would charge a quarter every time a public official complains about how the assessment freeze makes the budget difficult. The budget is supposed to be difficult. Danny O was absolutely wrong in what he did with assessments, but his heart was in the right place. If officials need more revenue, they should stand up and be counted, not reliant on back-door tax increases. MTL used to proudly boast it had not raised taxes (millage) in X years. All the while real estate tax revenue was doubling. I guess a resident’s tax increase is just a public official’s “revenue enhancement.”

Lastly, I would take a hard look at staffing, not at what it costs, but how it contributes to the Community.

The question is not as simple as what any given position does, but more to the point what would not get done without the position.

This question is not as obvious as may seem. For example, if eliminating position “B” meant critical activities X,Y&Z would not get done. We really need to see if position “A” or “C” could pick these activities up. Now that might mean some things “A” and “C” are doing do not get done. Unless of course, “D”, “E” or “F” could do them. And so on, and so on… Going through this exercise we might find out that eliminating “B” ultimately means something “Q” did no longer gets done. And when we look closely, we find we did not need it done anyway.

November 25, 2008 4:07 PM  
Anonymous Anonymous said...

Two thoughts:

(1) Does the golf course turn a net profit? If not, we should take a closer look there before we look to touch either the Public Safety, Fire Dept, Street Maintenance, etc.
(2) How much money would we actually save by getting rid of leaf pickup? I suspect not that much given that we already have the equipment, and the labor impact is for a relatively brief time.

November 26, 2008 1:19 AM  
Anonymous Anonymous said...

Tear down the ice rink, the swimming pool, the tennis courts, the ball fields, the golf course, the library . . . should I keep going??? For heavens sake, none of these amenities turn a net profit, or at least not a profit worth bragging about. But that's not why we have them!!

Mike is absolutely correct - it's about choices and priorities. We can't have everything and at the same time oppose every tax increase. It just doesn't work.

Personally, I think Mr. Feller has done an admirable job (under some difficult circumstances) of identifying a number of cuts that we can (and should be able to) make up with personal and corporate contributions, volunteerism, commitment and some want-to.

November 26, 2008 9:10 AM  
Blogger Mike Madison said...

$250,000 is, of course, only a starting point. Maybe I wasn't imaginative enough.

Run scenarios that assume:

(1) A $500,000 shortfall.

(2) $1 million shortfall.

(3) A $2.5 million shortfall.

(4) A $5 million shortfall.

Eventually we will reach a point where the usual resources cannot be massaged to sustain the current program; meaningful cuts would have to be imagined.

November 26, 2008 9:22 AM  
Blogger Bill Matthews said...

Mike,

I would say that if costs are up modestly due to "inflation" (not budget creep) AND the Community is economically healthy, a modest millage increase could be in order. We get what we pay for and there are reasons we each picked MTL over an adjoining Community or County. Lots of Communities with fewer services and lesser tax burdens would welcome any of us.

NOTE: Currently there is an independent efficiency study underway in the municipality that may produce some budget balancing (waste eliminating) suggestions to avoid an unwarranted tax increase. That would be tremendous!

Now what if the economy is not so rosy?

This year transfer taxes are down. What does this mean to our budget? Is it a short term anomaly? Are folks put-off by high taxes and moving elsewhere, can't get financing, nervous about making a change, all of the above and/or more?

Additionally, I understand Earned Income Tax (EIT) collections may not be meeting projections, at least at the school district. What does this mean?

A couple years ago MTL wanted to rebalance the funding streams, placing a greater load on EIT than real estate. EIT was considered more "robust." Whatever that means? I think it meant MTL believed it could count on steadily increasing tax revenues, without having to raise taxes. MTL would ride in the wake of ever rising wages. Which again -- may be stalling.

Back to balancing the budget...

Across the board cuts rarely work and especially to anyone's satisfaction.

Maybe we just climb the prioritized service levels delineated in the budget and tick them off one-by-one until the budget is balanced. The "if you can't have the best of everything, have the best of what you can" approach.

HOWEVER, if we have to get out of some things, get out gracefully where appropriate. It was shameful that the Municipality funded the MTL Historical Society to the point they signed a lease for space with the Parking Authority, only to recommend pulling their financial legs out from under them. And to add insult to injury, MTL is loaning the million-dollar 911 Center in the Municipal building to the Mt. Lebanon Village. Could the Historical Society not have shared the space – I heard they asked first anyway.

I think we make the budget work this year and the Commission needs to spend the next 6-9 months really understanding where the money goes and what is important to the Community. Although it could get interesting, considering one resident’s essential service is another’s government waste. Focus on the essentials of the Community. Take the focus off “some” of the big initiatives (don’t forget them, just temper them).

OF SPECIAL NOTE -- ON THE OTHER SIDE OF TOWN: The School Board earlier this year launched an Audit and Finance Committee to more deeply understand the District’s fiscal matters, throughout the year; as an alternative to boarding the Administration’s budget time table which historically was designed to operate like an express rail service. (BTW - Mr. Allison is embracing and supporting this increased understanding and transparency!)

November 28, 2008 12:54 PM  

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