Carol Feineman, editor of the Lincoln News Messenger, has invited City Council members to write a column for the newspaper. We appreciate and accept this generous offer. Over the many weeks to come, I expect a variety of topics to be covered.

This week’s topic, not surprisingly, is our city budget. Contrary to the impression that may have been created by the ‘bold type’ lead to an article in last week’s paper, the City Council has not approved a tax but we have had a good deal of discussion about this topic.

The actions that have been taken by the council in recent weeks is to place a measure on the ballot (Measure K) that asks voters to decide if they will approve a utility users’ tax (UUT). The other action was to adopt a resolution to clarify that the ordinance accompanying Measure K would be amended to exclude cable television services, if the utility users’ tax passes.

The utility users’ tax would apply to water, sewer, trash, electricity, gas and telephone (land and cell) services. It should be noted that now that Measure K has been placed on the ballot, as city officials and city staff, we cannot advocate either for or against this measure but are limited, by state law, to only providing information regarding the measure.

Of course, as individuals, we do have the Constitutional right to express our views, as long as we do this on our own time and not as representatives of the city.

As background, over the past two years, the city has experienced a significant drop in revenue. Some of this is related to building activity that has essentially come to a halt and part of the drop in revenue is attributable to the way the state has restructured its finances to reduce the amount of money transferred to local government.

Declines in property values and taxable sales have also resulted in lower property tax and sales tax revenues.

As most people who follow the news know, the local, regional, state and national economies are all suffering. But we only have control over our own budget so we took steps to adjust to the new economy.

Cities largely provide services and the majority of the cost of these services is staffing (wages and benefits). About a year and a half ago, the city manager negotiated agreements with all city employees (labor groups and management staff) that resulted in staffing reductions, with many of those layoffs related to the lack of building projects.

But some of the positions eliminated were supported with General Fund revenues (property and sales taxes) and these layoffs resulted in the elimination of recreation programs, reduced library hours, fewer police and minimal fire staffing.

For the employees remaining, merit and cost of living increases were deferred (these steps are an avoidance of cost increases) and the city match to the deferred compensation program was suspended.

Twelve mandatory furlough days per year was also implemented which equated to a 4.6 percent reduction in pay. Management positions are exempt employees so their pay was reduced accordingly and, in the case of public safety, schedules were adjusted and overtime calculations modified to achieve an equivalent cost reduction. These agreements were made three months prior to the budget deadline, well ahead of any other jurisdiction in the region.

With these actions, concessions and some reserves, we adopted our budget on time.

The city also formed a citizen advisory financial taskforce comprised of volunteer residents from all parts of the community. The committee spent about six months reviewing the city financial structure and learning about state law that regulates and constrains how the city can manage its money.

The committee issued a report that concluded that there is a structural imbalance in the General Fund and in that report offered a set of options that might address this imbalance.

Some of the options included privatizing refuse collection, then adding a franchise fee, reducing or eliminating services and implementing a utility users’ tax.

While the committee did not recommend one option over another, it was apparent that the utility user tax was the option that could provide enough revenue to meet the budget shortfall. The efforts and work of this committee is to be highly commended.

About six months ago, the city began informal discussions with the labor and management groups to prepare for the upcoming budget. As these discussions became more formal, agreements were reached with the public safety and management groups that eliminated the furlough days in return for continued deferral of merit/cost of living increases, continued suspension of the deferred compensation match, executive management not being reimbursed for SDI contributions and all employees picking up the full cost of the employee share of the Public Employee Retirement System (PERS) contribution which is 9 percent for public safety (police and fire) and 8 percent for the balance of the groups.

Shifting the cost of this program to the employees is a cost reduction to the city of between 5.7 percent and 9 percent, depending upon the group.

The agreements also included language to implement lower benefit compensation for new employees. Two employee groups represented by Local 39, the Professional and Administrative and the Classified groups, had not voted on the concessions prior to the council adopting the current fiscal year budget so staff reduction assumptions were included in the adopted budget.

Since the adoption of the budget, the Local 39 Professional and Administrative group has agreed to the concessions and our budget will be amended to reflect those changes. The Local 39 Classified group voted to not accept the concessions and layoffs in that group were implemented to meet our budget plan.

The budget adopted for this year included the concessions agreed to by the labor groups and management, use of some reserves and $1,000,000 in one time revenues from the sale of city land.

Based upon our revenue projections and the cost of services at our current level, a structural deficit continues to exist in the General Fund. The services related to the General Fund are library, recreation, police and fire. Police and fire account for 80 percent of the General Fund costs. The city is prohibited from transferring funds from other accounts into the General Fund and the option of loaning money from other accounts to the General Fund when there is no assurance that the loans can be repaid is not prudent fiscal management. So, the city is left with three options to address the structural deficit in the General Fund; increase revenues, cut costs or use reserves.

To balance our budget for the coming fiscal year and to address the structural deficit in the General Fund, we will use the options available to us.

The community, through voting on Measure K, will decide if the city will have additional revenue. If not, we will use the options that are left to us which will be to further reduce staffing in General Fund services (library, recreation, police and fire) and using available reserves.

Over the last six months, there have been several budget workshops and discussion of the budget at our council meetings. This has been a very open and transparent process and we will, especially over the next two months, continue to provide information to the community.

On the evening of our next council meeting, Aug. 24, prior to the meeting, we will hold another workshop regarding the utility users’ tax.

People in our community are angry about the economy, employment, housing values, retirement investments and the cost of government in general but even after venting our anger about these issues, we still have to deal with next year’s budget. And the continued involvement of the community in this process is encouraged and appreciated.

Tom Cosgrove is Lincoln’s mayor.