POSTED ON SEPTEMBER 1, 2010:
Slipping on the Galoshes
Mayor and city council and, maybe, voters have something to agree upon with upcoming "Rainy Day" fund vote
Good Times, Bad Times. “Have the discipline to put some money aside for uncertain times. Right now, the only certainty is uncertainty,” says Terry Simonson
FILE PHOTO/MICHAEL COOPER
It doesn't actually have anything to do with the weather, but a proposed charter amendment to create a so-called city "rainy day" fund to be voted on this fall could go a long way toward eliminating the cold, hard realities of a lean budget year, according to its supporters.
The Economic Stabilization Reserve Fund proposal will go before voters on Nov. 2. The City Council voted on June 24 to send it to citizens for their approval in the form of a charter amendment. The proposal basically would create a savings account for the city, allowing it to endure downturns in the economy more easily and reduce or eliminate the layoffs, furloughs and other cutbacks that marked the city's budget process this year.
District 9 City Councilor G.T. Bynum, one of the leading proponents of this proposal and other recent, progressive ideas (see Cover Story, Page 16), believes its impact on city finances could be profound.
"This would be the most fundamental change in the way our city is governed in 20 years -- 25 years, since the third penny sales tax was passed," he said. "This would restrain the growth of government, it would protect people's livelihoods, city employees, make their employment more predictable. And it would really get the city government to operate more like a business -- to set aside money in the good times to weather out the bad."
Under the terms of the proposal, if the general fund revenue for a budget year exceeded the same amount for the preceding budget year by more than 4 percent, 50 percent of that excess revenue would go to the Economic Stabilization Reserve Fund, while the remainder would go into the general fund and be used for capital expenditures. That money could then be accessed during lean times when general fund revenue declined throughout that of the previous budget year.
Thus far, no organized opposition to the proposal has materialized. Supporters argue that it would be a badly needed equalizer for a city that depends too much on unreliable sales tax receipts.
"Quite simply, the roller-coaster ride of good and bad times that city finances are on will be eliminated," said District 7 Councilor John Eagleton. "This will fill in the low end and smooth out the high end."
Eagleton has been an advocate of the creation of such a fund for many years, he says, arguing that if Tulsa had had such a system in place to set aside some of the strong sales tax receipts it took in from 2006 through 2008, the cuts that became necessary to balance the city budget this year -- which included eight furlough days for all city employees, layoffs for police officers and other city employees, salary cuts for firefighters and the elimination of various city services, such as highway lighting -- would have been avoided.
"I've been moo cowing about this since before I was elected," Eagleton said.
Terry Simonson, Mayor Dewey Bartlett Jr.'s chief of staff, acknowledged the availability of such funds would have been welcome news when the new administration took office in December 2009 and tried to come to grips with the severe budget shortfall created by rapidly declining sales tax receipts.
"We were looking for every possible source of funds to soften the blow," he said.
Unfortunately, Simonson said, close to $11 million had been spent from the city's operating reserve fund, leaving a balance of just $2 million and eliminating any possibility that funds from that account could have any kind of meaningful impact on the budget situation.
"There wasn't any other kind of reserve operation fund or contingency fund," he said. "So that led to some questions for us: Do other cities have any kind of fund like this? And can we afford to do it?"
Simonson pointed out that reserve, contingency and rainy day funds are not necessarily the same.
"Contingency and rainy day funds do share some similarities, and they are forms of reserve funds," he said. "But a key distinction is that a reserve fund is not necessarily a contingency or rainy day fund. Rather, reserve funds can be for any number of purposes, while contingency and rainy day funds are for unexpected contingencies, emergencies or revenue shortfalls -- in short, forms of uncertainty such as storms, floods, major disruptions of utility services, attacks on a city, etc."
Simonson said the mayor supports the creation of some sort of contingency fund in addition to the operating reserve fund already in place.
"On the one hand, people might wonder why we haven't had this before, but I think most people see the sense in this not just from a business standpoint, but in their home budgeting," he said. "Have the discipline to put some money aside for uncertain times. Right now, the only certainty is uncertainty."
The proposal has drawn the tentative support of the leaders of the city's Fraternal Order of Police lodge and the firefighters union. Phil Evans, president of FOP Lodge 93, said the proposal is a good first step, but the long-term answer to the city's money problems is to simply live within its means.
"I don't think our expenses for the next year should exceed what we take in," he said. "We shouldn't spend any more than that."
Evans noted that the city's reserve operating fund -- which recently was replenished -- already serves as a sort of savings account for Tulsa.
"But this is kind of an extra fallback," he said of the proposed charter amendment."
Stan May, president of Firefighters Local 176, said his organization knew very little about the proposal and how it would affect the budget. But he said his lodge has been calling for programs to be put into place that would help eliminate the kinds o