Dan DoonanLabor Economist

Town Hall MeetingMarch 6, 2010

Pueblo’s Budget Situation & Some Possible Solutions

Proposed Furlough Savings

• We are told savings would be:– $140,000 per month, or – $1,680,000 per year

FY2008 Audited Results(In Millions)

Revenues - $62.5Expenditures - 57.7 Operating Surplus - $ 4.8Transfers - (12.9) Surplus - $(8.1)Reserves - $ 4.8Reserves as % of Rev’s - 7.8%

Transfers:- Capital Projects-$9.7- Road and Bridge-$1.8- Non-Major Gov-$1.7

FY2010 Budget (In Millions)

Revenues - $67.8*Expenditures - 76.2** Operating Surplus - $ (8.4)

Reserves (End of Year) - $ 3.8Reserves as % of Rev’s - 5.6%

* Revenues include $4.5m in borrowing** Expenditures include $5.2m in economic development

($4.1m subsidy to locate a plant in county), and $5m increase in ‘Other Admin.’ (transfers to capital proj. & Road & Bridge)

Economic Development

• $5.2 mil allocated to economic development• Looks like $4.1 mil to attract new plant

– 450 Jobs promised– Unclear if that number is assured– Subsidy is about $9,100 per job, if all jobs materialize– Will help generate taxes, which will eventually repay

the subsidy• May be a good deal long-term, if jobs remain

and promises are fulfilled• Doubles 2010 budget deficit, though

Capital Expenditures• Courthouse being built?

– $6.8 mil in unanticipated clean-up costs at new site!– That’s 4 years worth of furloughs…

• Health Services building recently built (or being built?)• Other Admin budget category up $5 mil in 2010,

includes:– $3.9 mil transfer to Road & Bridget ($1.1 mil last year)– $4.5 mil transfer to Capital Projects ($0.9 mil last year)– These two account for $6.4 mil increase in Gen. Fund

• Were these the right decisions? Was timing bad? What are options now?

Desert Hawk Golf Course

• Course lost $585,000 in 2008, $506,247 in 2007• Course owes at least $5 million to General Fund• 2010 Budget transfers $253,000 more to course,

and it will still lose $137,000 (after transfer)– Total 2010 expected loss of $390,000– Subsidy of $17 per 18 holes (≈ 23,000 rounds/yr), ‘08

worse• Could present an opportunity:

– Gov entities can have ‘Enterprise’ status -- TABOR exempt

– Not clear course can produce income – Poor fundamentals or poor pricing? Losses have been piling up

• Question of priorities…

Debt payments to Drop

• Long-term debt payments over next few years --from 2008 CAFR:– 2010: $2.0M– 2011: $1.5M– 2012: $1.1M– 2013: $1.1M

• Drop likely due to:– 1999 Gen Obligation Bond being repaid in 2010 and – 2006 Gen Obligation Bond being repaid mid-2011

• Frees up some cash over next few years versus baseline

Revenue Options• When constitutional limitations resume, revenue

options limited – but some exist• User Fees can be increased at discretion of Board

of Commissioners, worth comparing impact of increased fees to cuts in public services:– Charges for use of Court (Gen Fund subsidized)– Recreational fees (Gen Fund subsidized)– Highway use charges (Road & Bridge Gen Fund

subsidized)– Fire Protection (industrial blgs impose high costs)– Business related fees– Permit and license fees

Other Cost Savings• Contractual services spending

– Renegotiate service contracts– Cut spending levels– Bring work back in-house

• Management Layers (Span-of-Control)– 8 administrators in DSS, for 300 employees – plus

management staff to do day-to-day management• Non-essential capital and travel spending• Ideas from recognized employee organizations• Better deals with vendors of employee benefits

– Could get better prices, win/win for budget and employees

Issues With Furloughs

• Shut-down days or flexible days off?• 24-hour institutions and public works

– May just result in more OT• Case Workers (workload will not drop)• Federally funded employees (need to take

hit too?)

Alternative to Furloughs

Banked Leave / Payroll Lag - CSEA/AFSCME Local 1000

• Workers continue working• Pay withheld for some work (1-day per month?)• Pay is repaid at later date (next year, 2-years?)• If separation occurs (retirement, quit) – pay is

refunded at that time.

Services to public continue, county gets short-term help, and employees keep most of what they deserve.

Labor/Management Partnerships

• This situation will pass, and TABOR will be back…• Labor/Management Committees can offer

strategic way to navigate difficult circumstances in future

• Find savings in useful, positive manner over time -- instead of pressure last-minute situation

• Employee groups have ground-level knowledge, which is vital

• Establishes communication from bottom to top• Gives workers a voice to prevent trouble, instead

of responding to it

Thanks for your attention…

• I hope this provides some useful ideas for dialogue

• I’ll be glad to take questions