Keating Report: mid-year 2015 forecast on government budgets and spending-Part 4

In Penton’s mid-year 2015 survey of city administrators, worker salaries ranked as the top line item that city officials expect to grow in their next budget. The survey questionnaire asked: “List the line items you expect to be growing in your next budget. Check all that apply.”

Salaries scored tops with about 63 percent of the 299 respondents to the question saying that salaries would be growing in the next budget. Other top finishers:

Line Item                           % of responses
Salaries                                     62.54%           
Health care & insurance        58.86%              
                                                 Capital outlays                        46.49%              
                                                       Buildings & facilities              42.47%

What’s a budget-strapped local government to do if worker salaries are sapping too big a percentage of a city’s budget?

Mayor Andy Hafen of Henderson, Nev. (population 270,811), offers one potential solution. Cities may consider using contract employees and/or outsourcing in certain areas to meet growing demands for services without compromising budgets.” The mayor says that in many instances, this personnel tactic can allow municipalities to meet service targets without the necessity of laying-off new hires if the economic suddenly dips into another recession.

Jon Russell, a town councilman of Culpeper, Va. (population, 17,145), offers a related personnel strategy that can compensate for tight budgets.  Russell (photo below on left) says his town isn’t outsourcing its work force, but he does see a trend in his part of the country that’s happening with local government administrations nationally.

“Some counties have been opting to get out of the human resources business. They are allowing that function to be contracted out. Through the process, counties allow experienced employees to be hired by the outsourcing-HR firm that provides the employees for the county,” says Russell. That way, he explains, the counties are not responsible for providing benefits, such as health care. “That responsibility all rests on the human resources firm,” says Russell.

Russell also serves as the director of the American City County Exchange (ACCE). The organization is a non-partisan free market forum for village, town, city and county policymakers. ACCE brings together local elected officials, industry experts and policy analysts to share ideas and experiences with their counterparts from around the country.

Budgeting for parks operations should be scrutinized, says Dan Biederman, president of New York–based Biederman Redevelopment Ventures (BRV). He is an urban parks and streetscape planner and designer. Biederman (photo below on right) is involved in private management of public parks.

Biederman tells GPN that there is a lot of focus in many cities in the U.S. on the need to increase the level of funding for parks. But far more important, says Biederman, would be a focus on how to spend the money that is currently allocated in a more efficient manner.

“Many eastern cities have fringe costs well in excess of 50 percent on worker salaries, and retirement and pension provisions are way above market,” says the president of BRV. He adds, “The private sector, when given a chance to manage and finance public assets, tends to both spend and collect non-tax revenues at market prices, making each dollar allocated to parks go much further.”

Biederman says more needs to be done to provide relief to parks budgets. “With the exception of states and cities that are in true budget melt-down, there’s little sign of any meaningful reform on salaries, over-staffing, fringes, particularly in the Northeast.”

BRV brings over 25 years of experience in the art and science of placemaking and downtown management to public space projects and neighborhood redevelopments The firm forms organizations dedicated to creating, turning around, and operating public spaces. It creates operating plans with self-sustaining revenue and expense budgets. The firm operates parks and public spaces on a short or long-term basis.

Michael Keating is senior editor for American City & County and the GPN web site. Contact: [email protected]

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