My Position on Our City Budget

By Barbara Denny

We should be willing and able to pass a balanced budget every year because we can and should live within our means. It is wrong to use reserves to make up for any planned operating deficit or budget shortfall because it violates our community values of fiscal conservatism, risk aversion and financial discipline.

I'm more careful with public money than I am with my own. And I'm extremely careful with my own money. As your councilwoman, it's my duty to protect our city finances and provide services to you while ensuring that we live within our means. We must live within our means and approve balanced budgets, despite the fact that it's politically expedient for council to continue increasing the operating deficit year after year.

In our case, the operating deficit climbed from around $120,000 in fiscal year 2009-2010 to nearly $600,000 in fiscal year 2010-2011. During this time, the budget increased around 3%. This is exactly the wrong direction for our city.

On 16 June 2009, the day I was sworn into office, I cast the only NO vote against the nearly $800,000 of tunnel items in the 2009-2010 budget. On 16 February 2010, I cast the only NO vote on our mid-year review of the unbalanced 2009-2010 budget and stated my strong objection to the operating deficit on the record. On 2 March 2010, I again stated my strong objection to the $120,000 operating deficit on the record during a multi-year financial projection discussion. On 16 June 2010 I cast the only NO vote for the unbalanced 2010-2011 budget with its nearly $600,000 operating deficit. On the record, I've consistently stated my strong objection to operating deficits and unbalanced budgets. It's unknown how much reserves will be spent to make up any shortfall in this year's budget.

The operating deficit concept is wrong whether it's $6,000 or $600,000 spent from reserves to make up for a deficit at year-end. The reason it's wrong is that operating deficits and the resulting unbalanced budgets violate our core community value of fiscal conservatism.

Our people don't care if other cities have bigger operating deficits. Our people don't care if we can "afford" to spend reserves. Our people are fiscally conservative, risk averse and expect financial discipline. As your councilwoman, my actions and language consistently reflect these three values.
To keep elected officials in touch with community values, I suggest intensive, monthly budget workshops for a year that engage the public to articulate community priorities.

We are living in a dreadful economy. Many years from now, economists will agree that this is a depression because the relevant economic indicators are present. Add to this reality the constant threat of state "takes" from our city coffers to address severe budget problems in Sacramento.

Amid this economic uncertainty, our people don't want to hear the usual bureaucratic mumbo-jumbo that "operating deficits don't matter." They do matter. At best, operating deficits are sloppy. At worst, they're early warning signs of an emerging structural problem in our budget.

It's wrong to spend reserves to mask an inability or unwillingness to pass balanced budgets. A natural or man-made disaster is a valid reason to spend reserves. A lack of financial discipline is not a valid reason.

Relative to this topic, we should designate reserves for items like catastrophes and scheduled building maintenance in order that we may gain a clearer picture of our financial health as we prepare to tackle the serious issue of pension reform.

On 5 October 2010 council approved a change in city investment policy by a vote of 4-1, with myself dissenting, to allow up to $17 million -- which is 15% of our $114 million investment portfolio -- to be invested in unsecured commercial paper that is exempt from registration with the federal Securities & Exchange Commission. This loosening of our investment policy violates our community values in the same way unbalanced budgets do.

If we go back in time to understand how places like Bell, Vernon and San Mateo County went astray, we may find that they started with similar budget policies. My goal is to align city financial policy with our community values to protect Coronado residents, taxpayers and small business owners in the future.

We are Coronado. We should be willing and able to pass a balanced budget every year and take pride in doing so.