RI City Filing Bankruptcy

A friend sent me this link to an article about Central Falls, RI, which has the motto, “A City with a Bright Future”.

CENTRAL FALLS, R.I. — The city of Central Falls, Rhode Island — one of a handful of U.S. cities and counties facing fiscal collapse in the wake of the economic recession — has filed for bankruptcy.

The Chapter 9 bankruptcy filing marks a symbolic blow as state and local governments struggle to pull themselves out of the recession.

The smallest city in the smallest U.S. state made the filing Monday as it grappled with an $80 million unfunded pension and retiree health benefit liability that is nearly quadruple its annual budget of $17 million.

My friend asked whether this was a sign of things to come for the Land of Opportunity and Innovation™.

Before I take a crack at it, let me tell you about delving into Comprehensive Annual Financial Reports (CAFRs). (FY2003-2010 are available online at the City of DeKalb’s Downloads page.) Right now I’m contemplating such questions as:

“Is it really a capital asset if you can’t sell it?” and

“What does it say about us that TIF property taxes are our No. 2 revenue producer?” and

“If this is audited, why am I finding mistakes?” Read the rest of this entry

As we saw in the previous post, DeKalb has had a difficult time coming to terms with population loss since 2007. It’s not difficult to see why: a “grow or die” mentality, a downtown beautification plan at stake, an $88.5 million high school to justify, and so forth.

But before we go any further, let’s place this story of denial into a budget context. Management put raises for themselves into the FY2012 budget, and managed to budget us a nice $1.8* million surplus as well — a surplus that will be used for additional raises that accompany new labor contracts, because pay hikes for union workers are not part of the budget until they are approved by council.

The budget surplus is roughly equal to an anticipated 11.91%* increase in sales tax revenues plus the city’s share of the first year of TIF surplus.

The trouble is, the surplus is only a guess. They’ve been wrong before — and in the past few years, often very wrong. Read the rest of this entry

What a lovely surprise.

I can’t wait! I can’t wait for the rollbacks to begin of the tax and fee hikes our city council has approved since 2008 to keep afloat. Shall we start with the property tax, sales tax, restaurant and bar tax, hotel-motel tax, utility tax or the first gas tax hike? When will we hear the glad news that the rest of the planned water rate hikes have been canceled?

Or maybe instead, we could re-hire the 50+ people we’ve let go.

Or maybe, just maybe, this is propaganda, groundwork to justify more planned employee raises; and some parties are swallowing it hook, line and sinker.

And afterward, whatever budgetary badness happens will be something that “nobody could foresee.”

This ties together a half-dozen posts delivered over four months. It also better separates the facts from the adventures in obtaining them.

How the RIF Played Out Publicly

In February 2010, staff reported during a special meeting that DeKalb was facing budgetary shortfalls totaling more than $5 million by the end of FY2011. They attributed the shortfalls mainly to a combination of declining revenues and rapidly rising health insurance, pension and other personnel costs.

Although the city’s workforce already had been cut by 19 workers, another Reduction in Force (RIF) plan was proposed in case efforts to negotiate 12% across-the-board cuts in compensation failed — and indeed they did fail. Read the rest of this entry

From the Chicago Tribune today:

Buffalo Grove and its firefighters have agreed to defer raises, increase employee health insurance premium contributions and establish a new two-tier wage structure that will pay new hires 10 percent less.

There’s an example of the compensation reset some of us have been saying is necessary for DeKalb. Good going, Buffalo Grove.

Council in the Twilight Zone

Better late than never? Here are a few comments on the City of DeKalb meetings Monday night.

Group Therapy

When I switched on the Committee of the Whole meeting (admittedly not right at the beginning) there was an immediate feeling of disorientation. The mayor was complaining about a constituent taking up too much of his time. It came across as a group therapy situation, specifically some sort of assertiveness training session for our unhappy figurehead.

Within this context, Alderman Gallagher named a civicly-participating resident. If the result is a slander suit, I guess I’m a witness!

Corn Fest

Next for discussion was charging parking fees for Corn Fest. Here’s what the agenda says:

The City of DeKalb has negotiated with the Big Brothers / Big Sisters of DeKalb to enter into an agreement to provide labor for the collection of funds at the CornFest summer festival at the DeKalb Taylor Municipal Airport. Per the direction of City Council, staff has been investigating ways to recoup some of the costs expended for the support of the CornFest event.

LAST year it was about recouping staff overtime for security and cleanup. THIS year, it’s about not getting into trouble with the FAA. Read the rest of this entry

FY2012 Raises

In today’s “Our view: Give DeKalb staff its raises,” the Daily Chronicle argues on behalf of cost-of-living adjustments for management staff. Let’s respond to the reasoning for its vigorous advocacy on behalf of Biernacki & Co. Read the rest of this entry

DeKalb Firefighters’ Step B

[Correction 7/5: Whoops! The link provided goes to Aurora, CO, not to Aurora, IL, which is IAFF Local 99. Many thanks to the reader who let me know.]

Check out p. 60 of the DeKalb firefighters’ contract with the city. It’s the appendix showing the base pay agreement for the latter half of 2010, the one labeled “4% General Increases For All Classifications”.

Step A to Step B is not part of the 4% “general” increase. For example:

Firefighter/Paramedic Step A annual salary: $54,682.78
Firefighter/Paramedic Step B annual salary: $67,332.91

This is an increase of more than 23%.

In a related development, I’m creating my own chart of firefighter/paramedic base pay salary comparisons, but have gotten stuck on Aurora, which has a breakdown into several more firefighter pay grades than other municipalities do. If a knowledgeable someone could take a gander at p. 18 and let me know which one fits best, I’d be grateful. Contact yinn@citybarbs.com.

An arbitrator awarded a 6% pay raise to Rockford firefighters.

City officials said the award will cost taxpayers an estimated $618,000 in 2011 and more than $1.2 million in 2012 when the 6.1 percent wage is in effect for a full year.

Arbitrator Robert Perkovich rejected the city’s offer of a 2 percent wage increase this year. [IAFF Local 413 president Lt. Brad] Walker called the salary hike overdue.

“There were no raises in ’09 and ’10,” he said. “We went 26 months without a general wage increase.”

Walker said the wage hike keeps the city’s firefighters in the same ballpark as other Illinois fire departments of similar size.

“We were just trying to stay close to our comparable cities,” Walker said of Aurora, Bloomington, Champaign, DeKalb, Joliet, Peoria and Springfield.

Rockford already faces a deficit of $4 million in the coming year. At least one alderman is calling for outsourcing ambulance services in response to the crisis.

Alderman Teresinski cautions us every year that we need to address DeKalb’s “structural” budget issues. Here’s one.

FY2009 ActualFY2010 ActualFY2011 EstimateFY2012 Budget
Total regular compensation13,702,00014,063,02213,625,02512,929,500
Total personnel expenses23,516,97424,538,65124,388,75024,322,868
All General Fund expenditures28,193,09128,629,57427,403,48829,357,321

Do you remember how many employees DeKalb got rid of last year? If memory serves, it was 34 full-timers, for a savings somewhere between $3-4 million. But from the budget figures, you can’t tell they’re gone. How scary is that?

Source: FY2012 draft budget, p. 30.

p.s. Because the city is currently negotiating with the unions, the FY2012 budget only includes pay adjustments for management employees.