Every August the Council begins its budget discussions. For my time on the Council, we've been in lean years and setting a budget means making tough decisions. Even if I remain though the maximum of six years set in the Charter, it's not going to get easier. If you want to serve on the Council, aim for 2018. If we can avoid making the situation worse during the interim, a lot of our debt should be rolling off the books about then. You could do some really nice things for the city and be a hero.
 
As I mentioned recently, the Council expects that the City Manager will be recommending some sort of pay reduction for city employees to cover $2 million of a $7 million deficit. This has to be hard on employees and some are looking for ways to avoid situations that might arise that would negatively affect residents and businesses, especially in public safety.
 
I'm taking the unusual step of posting a recent email I received to move the dialogue forward. I've only posted one other email from a constituent so I do so this time with equal reservation. However, the author raises issues that are likely to arise plenty during budget discussions. It also quotes me from a meeting that I had with fire and police association members. The quotes are reasonably accurate but taken alone they do not stand with the background that residents deserve to know and understand. This preamble, the email, and my reply make for an unusually long post but these are big issues.
 
The primary point of the email was a recommendation from public safety employee representatives that the Council increase the amount of money transferred from GP&L to the General Fund, where it would be available for salaries. Some of the points may be a little confusing in the order presented but I think I address them all and bring it all together through my reply. Anyway, that's my hope.
 
UPDATE: In my reply below, I inadvertently dropped part of a sentence. The text inserted below to the original is clearly marked. I'm not exactly sure when the Rate Mitigation Fund was created but it was during the mayoral term of Jamie Ratliff. Citizens and that Council wanted to protect the fund. That protection was added to the Charter in 1996. The fund was created years before there was any serious discussion of electric deregulation in Texas so there was no connection between creation of the fund and later concerns about deregulation.
 

 
I live in District 1 and I do not agree with your position with regard to the upcoming budget. It is my understanding that you recently met with members of the police and fire associations and they proposed a viable means to avoid balancing the budget on the backs of city employees again this year.
 
A one time increase on the ROI from 7.4% to 8.3% was proposed. Using the "interest" from the current Rate Mitigation Fund (which was established originally to offset increases in electric rates when deregulation took place) would offset the increase of the ROI, so that the citizens will not see any increase in rates. Currently the Rate Mitigation Fund has 80+ million is estimated to make 2.5 million in interest in the coming budget year (based on the numbers presented at the budget retreat). Under this proposal, NO City Employees would have to take the 3 furlough days and the current banked positions would not be lost.
 
I understand that you stated you would not support this proposal and that you do not believe that the furlough is "taking anything away from employees, because they did not work and earn that money yet." Also when presented with the fact that if public safety is furloughed, equipment at Fire Station 10 would be shut down periodically throughout the year, that your response was, "we survived many years without that fire station, we will probably make it."
 
Councilman, I strongly suggest that you need to talk to your constituents before assuming that we would not support the nominal increase on the ROI rather than cutting the pay of the city employees. Make no mistake, contrary to your convoluted logic, forcing employees to take three days off work without pay is certainly a pay cut. It is very important to my family that there be enough police officers on the street to keep me safe and fire equipment to put out a fire. Those are basic city services that should be top priority in any budget. Further, cutting the pay of our hard working police and fire should never be the first option to balance the budget. Since you are up for election next May, I believe that you would be well served to make sure that your vote is in line with the voters in your district.
 

 
My reply:
 

 
First, I appreciate your writing and expressing your concerns.
 
Second, I did meet with representatives of both the fire and police associations Thursday. The quotes that you attribute to me are accurate but lack accurate context and the perspective of a lot of additional information.
 
The council has been advised that there is a $7 million gap that must be closed to balance the budget. To close about $2 million of that gap, the senior administrative staff is expected to propose reducing employee compensation and positions. To avoid salary reductions, fire and police representatives are proposing that the council increase the so-called Return on Investment taken from GP&L, from 7.4% to 8.2%, which would be enough to cover the $2 million.
 
GP&L doesn't have that kind of cash. To get the money, GP&L would have to increase electric rates. Yet the GP&L ratepayers are already saddled with a rate much higher than most other electric providers in the area. A part of the reason is the amount already being transferred from GP&L to the city. The combined amount of the ROI and other transfers is actually much higher than 7.4%. I’m confident the total transfer is more than twice that percentage.
 
A high energy rate strongly threatens the economic vitality of the city and the jobs of all city employees, especially fire and police. Some departments, such as the utilities, pay their own way but all other employees are paid from the General Fund, which relies heavily on property taxes. A high energy rate literally pushes businesses and our industrial base out of town, to areas where they can operate less expensively and make profits. If we don’t protect our property base, which fell overall 3.7% this year, all fire and police positions will become subject to layoffs.
 
It would be unavoidable. Fire and police positions and operation of both departments take the bulk of the General Fund each year, 57% last year directly. Since 2001, employees paid through the General Fund – that are not police and fire – have decreased by 27, while within the public safety departments that number has increased 56. With a further shrinking of the General Fund and all other departments being staffed at minimal levels – 35% below the Metroplex average – there is no room to shrink except in fire and police. The only way to avoid the decline is to protect the property values in the city. We can’t afford to make politically-pleasing, short-sighted decisions that have long-range consequences.
 
However, the proposal you mention doesn't suggest a rate increase. Instead, it suggests the council authorize a $2 million transfer from the Rate Mitigation Fund, which was established by the citizens to pay certain debt and to protect electric ratepayers from rate spikes. The RMF cannot be used for salaries or any other improper uses. To pull off the transfer, the council is being asked to artificially create a cash crisis by taking more from GP&L than it can afford and then using that as an excuse to justify the transfer.
 
You are correct, I did say that I would not support such a proposal and I described it as a shell game. I wanted to be direct. Because you are a constituent and deserve to know my reasons, I will be even more direct. The proposal asks me to steal and commit an illegal act, one that would be a violation of my office to which I swore an oath. Additionally, when I took that oath, I swore specifically and intentionally to protect the City Charter. My passion for doing so is because my predecessor and others gave so little regard to following the law and the Charter.
 
The Rate Mitigation Fund was created, and then later added to the Charter in 1996, for two purposes. Long-range, it was established to cushion the city from the affects of a $1 billion debt for our portion of TMPA that currently runs to 2018. To date, the city has been able to make those payments without using the RMF but coming changes in the power industry and changing regulations are so completely unknown that we cannot predict future exposures. Literally, the whole city — buildings, cars, trucks, parks, everything — is collateral for that debt. To ignore the liabilities to the city and to improperly use reserve funds should result in the recall of the council and the firing of senior staff. Even short-range, the fund can only be used to avoid spikes in electric rates, cushioning periodic fluctuations. This has occurred a few times, usually for such events as the loss of power from TMPA’s power plant when there has been an emergency shutdown and GP&L is forced to buy more expensive power from other sources. Both of these events involve using the fund for emergency expenses that are outside the control of the city but would severely impact the city and ratepayers. Artificially creating a crisis to rob the reserve funds is not a lawful option.
 
Establishing these protections was so important to citizens that they voted to shield the fund by including it in the City Charter. The Charter directs how the fund and interest are to be used: Any such funds, and all accrued interest, shall only be used to reduce debt obligations of the City incurred in connection with providing electric energy to the City or to mitigate the City’s future electric utility rate requirements (Article XVII, Section 17). Earlier councils, unable to take money directly from the fund, tried to spend the interest being earned. The citizens voted in 2004 to again amend their City Charter to protect the interest so that it too was blocked from improper use by city councils and city employees.
 
Both Charter changes were initiated by citizens and were approved by very, very wide margins.
 
I will not be a party to any subterfuge that would betray the citizens of Garland by seeking some “creative” way to circumvent the law. I know neither association, or you, were aware of the history and very limited purpose of the RMF but I am.
 
I have not seen the city manager’s proposed budget and won’t until Tuesday, although we will get a preview Monday. I have heard enough and received enough briefings to fully expect that there will be a proposal to reduce employee compensation. Although the term furlough is being used, I’ve been told that is not accurate description of what will be proposed. I don’t yet know exactly what will be proposed or how that is to be implemented.
 
There are a number of legitimate ways to avoid the reduction, including: lay-off employees and use the savings to protect the remaining employees, raise taxes although we are already one of the highest-taxed cities in the Metroplex, raise fees for services, or raise utility rates and transfer the money to the General Fund. In each instance, someone has to pay the price.
 
In my discussions with the fire and police representatives, the statement was made that furloughs were taking money from the employees. Words have meaning and I did challenge that furloughs represented a taking. The city nor the council can take what has not been given. If furloughs mean days without pay that is not a taking. To claim so is synonymous to “you owe me this.” If employees are asked to work the same number of days for less money, then that is taking what has been given. I’ve watched recently as a lot of employees in a lot of industries have accepted pay cuts just to keep their jobs. Many of them are the same ones paying the taxes used to pay city employees.
 
Also, I was told that Station 10, the one closest to my home might have to be taken out of service. The implication was that my family and neighbors would be left less safe. My answer was that we had survived for decades without it and would be at no more risk that we had always been. I’m not swayed by arguments directed to me personally. My duty as a councilmember is to the citizens, not to myself. And if someone should doubt it … well, I’ll prove it by pointing to your quote.
 
I talk to and hear from District 1 constituents and city residents constantly, both in personal environments and public. I receive hundreds and hundreds of emails monthly. I have no doubt what the majority of my constituents expect. Public safety is high on their list but so are fiscal responsibility from their council representative and being able to meet their own financial needs.
 
Contrary to your assertion, cutting the compensation of city employees was not the first option to balancing the budget. Revenue to the city has been effectively declining for years. Almost every aspect of city government in the last few years has been trimmed over and over to keep a balance. There is little left to trim. Through all that, city employees have received raises that have kept them on par with city employees across the Metroplex and the police and fire departments have been expanded. Both departments have very modern buildings and the latest safety equipment. That equipment is regularly replaced on a schedule that makes many other cities envious. Now, after several years trimming everywhere except employee compensation, employees are being affected.
 
There are other areas that could be cut to offset that $2 million, but it still wouldn’t be enough:

• Close swimming pools two weeks earlier
• Eliminate senior medical transportation to local clinics and pharmacies
• Turn I-30 maintenance back to State
• Stop maintaining parkways and leave maintenance to abutting property owners
• Reduce and privatize entryway maintenance
• Eliminate irrigation in neighborhood parks
• Reduce temporary personnel 30% at South Branch library
• Reduce library magazines, newspapers, and databases by 50%
• Reduce library children’s programs and live homework assistance by 80%
• Eliminate Sunday hours at Central library and suspend accreditation
• Reduce hours at all recreation centers by 20 per week
• Reduce Animal Shelter hours by 15 per week
• Reduce Code Compliance to 2004 staffing levels (two positions)
• Expand the cycle for replacing traffic marking from three years to four
• Reduce some police and fire staffing levels

All those combined would be less than $1.5 million, less than 75% of what would be needed to close the $2 million gap. What other services to the citizens would you propose adding to the list? Of course, the easiest way to cover the deficit would be to layoff employees, which would have fiscal benefits this year and in future years. Which positions do you suggest?
 
Recent budgets have not been balanced on the backs of employees. Until now, all recent budgets have been balanced on the backs of the taxpayers. They are the ones paying more in taxes than their friends in sister cities. They are the ones that have had services reduced and fees increased. They are the ones that see their neighbors at natatoriums, on biking and pedestrian paths, at well-appointed community centers, well-provisioned parks, at nice public venues and wonder when they will get some of those same amenities. The only nice, new, city-owned public buildings in Garland are the police and fire administration buildings and all the new fire stations. Last year when revenues first started a strong decline and citizens were losing services but paying higher taxes and fees, city employees received more than fair raises. I'm not saying that Garland employees haven't been long asked to do more with less than most any other city employees in the area because they have. They have met that challenge year in and year out with innovation and very high performance. However, through all that, in recent years, they have received fair compensation that is equal to that paid across the region. Last year employees received 3.5% raises.
 
I ran for this office with a promise to make the hard decisions, to advocate and push to grow Garland so that we can afford those amenities found in our sister cities, so we can attract home buyers and businesses that will bring higher value to the city, and to move Garland ahead as a premier city regionally and nationally. To succeed on those goals requires a long-term vision. The best course to protect the viability of city employee jobs and compensation tomorrow, and to deliver to the citizens services comparable to the taxes they pay, means making tough decisions today. There's going to be some pain for all parties.
 
Finally, I’m far from convinced the “furloughs” are a good idea in every department. There are many considerations that could make them ineffective, be highly demoralizing for employees, or actually be more costly. Questions do need to be asked and proper consideration given.
 

 
UPDATE: Comments closed to block spam hits.
 

4 comments

Comments:

Comment from: Steven Sanders [Visitor]

This is always a slippery slope. The City needs to reduce its debt but in doing so you need to almost stop all infrustructure improvements. Which puts you way behind. As illustrated last year during the Budget process by the Police and Fire Chief's, the City spends fewer tax dollars and has smaller staffing on fire and police than most all other cities surveyed yet sees some of the best services in the area. I would presume this extends to other city services as well. and is a reflection of the employees. Which make employee salary reductions extremely difficult. I think the City as a whole has great City services and do not believe, from the very little research I have done, that it is the City services that drain the tax dollar. Its the debt service.

08/03/09 @ 09:54

Comment from: robert hinton [Visitor]

GPL cannot be the answer Doug. I operate a business in Garland that has 9 branches in DFW and I am paying double per kilowatt from GPL. Our other branches put their electricity business out to bid in May and also get to choose their power company and they are averaging .035 to .05 cents per kilowatt. The businesses in Garland cannot bear the brunt of this shortfall we are alreadyn hurting and as you know when we hurt so does the city!!!

08/03/09 @ 16:15

Comment from: John Burns [Visitor]

Mr. Athas,

I respect your stance on this and realize you have many statistics to back up your opinion. However, in regards to public safety, I believe you are wrong. I have had the opportunity to ride with the police officers and volunteer with the fire department on many occasions. Would you be shocked to know that regularly, the police department has no more than 4 officers patrolling the ENTIRE city for an hour in the morning? I have seen with my eyes that this has occurred multiple times on monday mornings. Also, when you have little concern over not having a fire station for multiple nights throughout the year. Do you realize also realize that regularly, ambulances from northern areas have to respond to medical calls in the area of interstate 30? Oh yea, the City council mothballed the ambulance down there, last year. At what point does public safety become an actual issue, and not just a talking point? How many citizens are going to be deprived of the services for which they pay a premium (remember the "highest taxes in the area" talking point??). How many citizens are an acceptable number? 1? 200???? When yours (and mine, since I live in your district) house catches on fire on one of the station 10 furlough nights, and the city is breaking crazy, how many houses will catch fire and families hurt because of the extra time it takes the backup fire trucks/ambulances to arrive???

08/04/09 @ 16:16

Comment from: Eric Brown [Visitor] · http://www.garlandfirefighters.org

I agree with Steve Sanders comment, the debt service is what has been increasing the property tax rate over the last ten years.

Keep in mind that the proposal that the Fire and Police associations have developed keeps the same level of city service for all city departments and could be implemented without costing the citizens of Garland a penny more in taxes or fees.


Consider the ten year history of Garland’s tax rates, the following information can be found in the history section of the FY 2008-09 approved budget:

Year O & M Tax Rate Debt Service Tax Rate
1999 0.3790 0.2546
2009 0.3890 0.3106

This change in the tax rate clearly shows what is driving up the tax rate in the city, debt services spending not O & M spending. Consider also that on top of a basically flat O & M tax rate the homestead exemption has increased from 6% to 8% over the last two budget years. This effectively decreases the O & M tax revenue.

Since 2006, the debt service tax rate has increased from 0.2771 to 0.3106, and according to the 2009 CIP there will be an additional increase of 0.005 for this year.

During this same period the Total Primary Government debt has increased from $548,378,035 to $673,975,000 (a 23% increase in debt). This information can be found on page 109 of the 2008 CAFR.

Eric Brown

08/04/09 @ 18:18

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