September 9, 2021
Our Budget, Our People
By: Pocatello City Council Member Chris Stevens
The unfortunate truth is that Pocatello’s finances are not better than ever before or even just fine as some would have us believe. Everyone who manages a household budget knows you cannot sustain a budget in which expenses are growing more rapidly than income.
Managing city budgets, at its heart, is about people more than dollars. Budgets require talk about dollars, but it would be a mistake to assume those speaking are not excruciatingly aware of the people represented by those dollars.
I was ever mindful as a school principal that budget reductions impacted primarily two significant school populations: teachers and students. Similarly, funding reductions at the city impact two important populations: City employees and tax payers.
I was downsized out of a job in a school district some years ago. Finances took a turn for the worse. I was a high school career counselor at the time working with students who came from homes where neither parent had any education or training beyond high school. It was the most satisfying job I ever held! I and my counterparts at the other high schools were deemed non-essential and our jobs were eliminated.
To this day, whenever I contemplate that period in my life, I get a knot in my stomach. I was not a portion of a two-person household income. I was it! No job = no money = no mortgage payments = gut-wrenching anxiety. I did what I had to do to survive. I found another job and uprooted myself. I would never wish that scenario on myself or anyone else, but I do know first-hand how budgets are about people’s lives as much as they are about money.
I don’t feel sorry for myself. In fact, it was a core experience that forces me to think deeply about budgets as people’s lives every time, I make a financial decision as part of the Pocatello City Council. It holds my feet to the fire, and I am grateful for that.
The lives of those who rely on the jobs the city provides are intertwined with the budget. The lives of the taxpayers who provide the money to pay employee salaries are equally woven into the fabric of our city budget. City Council’s duty is to think about our finances from the perspective of human impact as well as dollars.
It is critical for city council and the mayor to consider how lives are impacted by dollars as we contemplate solutions to Pocatello’s current financial difficulties. We cannot lose sight of how potentially dangerous it is to empty/significantly draw down important accounts set aside for infrastructure improvements and community projects when we have no replenishment plan in place.
Due to a variety of unforeseen accounting errors and overestimations in last year’s budget, we collected about $650,000 less than anticipated during fiscal year (FY) 2021. Council had no choice but to cover this revenue loss by using monies that could have been applied elsewhere including increased personnel costs for FY22. Every budget error has consequences.
Not surprisingly, employee health insurance costs are soaring. Health insurance is a profit endeavor, and Covid-related expenditures have undoubtedly put a big dent in profits. One can only shudder at what another Covid onslaught could do to health care costs for years to come.
Some Idaho cities have committed to paying employees very well while not overextending themselves financially or taxing residents out of their homes and apartments. They maintain their financial balance by strictly limiting the number of employees hired and ensuring they are operating as efficiently as possible. They cover temporary workload expansions by hiring temporary workers to assist. Everything is transparent, so no one is caught off guard. While these cities offer fewer jobs, the jobs they do provide are stable and well compensated. An alternative approach is to hire permanent employees with less restraint. This approach often results in somewhat lower pay and an increased likelihood that some jobs will have to be rightsized when city expenditures outpace revenues.
Contemplating the reality that budgets are not just dollars but lives, it seems the more compassionate long-term approach might be to hire fewer people in order to offer greater job stability and higher pay. Pocatello has followed a hiring pattern resulting in a larger employee pool than some of our Idaho counterparts. The upside of that approach is that more jobs are offered for finite periods. The downside is that there is less job security and hiring/lay-off swings are more likely. Finite financial revenue can be stretched only so far. The more employees whose salaries are a piece of the pie, the smaller each individual slice.
Is it wise for the Pocatello City Council and Mayor to expend funds set aside for community improvement projects to balance the budget? When funds set aside for capital improvement are gone, they are gone. Without a tax ask in FY22 to replenish those funds – which would increase the budget expenditures – those accounts will likely be empty or significantly reduced next year.
Our employee costs are going to continue to rise rapidly due to annual raises and necessary benefit increases. The backlog of important projects identified by our department heads will continue to grow. Our available cash will dwindle simultaneously. It is never wise to use finite, non-recurring income to fund on-going, recurring expenses such as salaries and benefits. Such spending puts employee jobs continually at risk of falling victim to income reductions.
Some believe the income generated by new construction will be the golden goose and fill the projected FY23 deficit. Unfortunately, without going into excruciating detail, that just does not pencil out. Given that fact, the hard times our Chief Financial Officer and Human Resources Director have repeatedly warned city council and the mayor about seem inevitable.
Census Bureau estimates through July, 2019, show Pocatello’s growth in the 4.4% range. We are the ninth slowest growing city out of the ten largest municipalities in Idaho. With such a slow-growth track record, it seems foolish to rely on new construction to save our financial bacon. Personnel and materials costs are outpacing our new construction projections based on patterns over recent years.
We must value the lives of our townspeople as well as the lives of our employees. We must come to terms with our spending. We must embrace the uncomfortable reality of our current financial situation as the first step toward a solution that does right by those whose lives are deeply stitched into the tapestry of our budgets.
City Council owes our employees and our taxpayers the very best reality-based effort we can muster. We owe both groups thoughtful, responsible spending because every dollar represents a small piece of a life.