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The good news is that we have a budget to vote on. It was arrived at throughdiscussions that were a few times at policy level and were more than a few times at very detailed levels. We looked at funds, departments and capital projects.
Some of this detail is needed. However, I want to present a higher level perspective on the budget that will manifest some challenges and some questions, that both council and staff need to find answers for in the near future.
A very important section of our budget, which we are approving tonight as a part of the overall budget package, is our Long Range Financial Plan. This plan is based on our financial policies. These policies, in turn, require maintenance of certain balances for many funds, use of performance measures based mostly on program costs, and certain objectives for funding capital improvement projects and capital for infrastructure work.
The financial policies state that “The county will encourage economic development activities to broaden its tax base.” The policies further state that “strategic and program performance measures … will be based upon program goals and objectives … within the context of broader strategic goals and objectives.”
I am concerned that our present budget review process is focusing on the trees while missing the forest. My review of the funds in the financial policies shows we have two funds out of seven, one for debt service and one for maintenance, one fund out of seven for economic development, and four funds out of seven for what I term “defensive measures,” that is uncommitted reserves for worst case scenarios of revenue loss. The financial models in the Financial Plan show a tripling of the mostly defensive fund balances to $300 million over the next 10 years. What will we do with all that revenue? What broader strategic goals and objectives are we planning to address?
The same financial models predict revenue collected and expenses, including capital spending, to remain relatively flat for 10 years — certainly indicative of a defensive posture, but entirely contrary to the broader goals of economic development and diversity. One way to describe our budget approach is a focus on financial predictions with platitudes for a financial plan.
I want to tie two other concepts together with this perspective of our budget: first, are Los Alamos citizens really getting the value they want? And second, are we setting performance measures to achieve what we want?
First, regarding value, I often hear from our citizens the comment “Why is our budget so large?” Some may consider this a rhetorical question, but I take it seriously. I did a little survey of various communities using what I believe is a universal yardstick: total budgeted dollars per capita. In a very broad context, this indicates what a community is spending or defensively funding for a given quality of life for each resident. The results (approximate numbers) for 2009 are interesting:
• Albuquerque - $850
• Farmington - $2,428
• City of Santa Fe - $3,000
• Charlottesville, Va. - $3,073
• Las Cruces - $3,295
• Hartford, Conn. - $4,650
• County of Beaufort, S.C. - $3,500
• City of Beaufort, S.C. - $5,000
• Los Alamos - $10,000
• Los Alamos in 2005 - $7,400
Now, to me, this is interesting data — Los Alamos spends more than twice as much per capita as any of the above communities, including the one which we recently put an article in the Monitor about as having “comparable economic challenges.”
Now, I’m not going to say this makes our budget right or wrong, nor am I going to say that others are getting a satisfactory lifestyle for half what Los Alamos spends.
What I am going to say is that we need to find out why this rather extreme discrepancy exists. Perhaps it’s due to our defensive funds? I don’t know. Capital projects? Many of the other towns have capital spending programs larger than ours. The point I want to make is that we need to review our budget at the strategic level, in comparison to other community benchmarks, and ascertain that we are providing our citizens with the appropriate value for our level of spending.
Next, I want to tie in performance measures to the concept of “appropriate value” I just mentioned. A review of the report on “Performance Results for Fiscal Year 2009” issued in April 2010, is a very nice summary of project and department measures, with some limited goal setting at the department level. And indeed, this type of performance measure is important. But there is a missing opportunity here — there are no real measures to promote achieving the broad goals and objectives in our strategic plans, nor are there team oriented measures for cost saving goals and objectives which require interdepartmental initiatives.
For example, all the performance results listed in the review are for individual departments, measured against internal attributes. Good trees, but what does the forest look like? There needs to be performance measures for team goals, tied to strategic goals. Although the report mentions that there is a relationship among the department performance measures and the Comprehensive Plan Vision statements and the strategic goals, there is no measure at the higher levels or team levels that actually shows how we are doing towards achieving these goals. Such broader measures must be instituted in order to tie together and understand the real value received by our citizens for their revenue invested.
So what is the bottom line call to action from this somewhat different perspective on the budget process? We in Los Alamos have a great opportunity here: a multi-year window where we will have ample revenue (I’m counting on LANL not folding anytime soon) to execute some real progress in the strategic goals and objectives we have laid out in our plans for economic vitality, Mainstreet, White Rock, Trinity Site Project, broadband and the many other quality of life improvements our citizens deserve. But we need to assure ourselves that the way we are planning to spend this revenue is really bringing maximum value to our citizens.
We owe our citizens this: that we will plan effectively and efficiently for every dollar budgeted and we will compare our expenses to other communities so that we know every dollar is delivering optimum value.
I request that staff and Council begin this analysis now for the FY 2011 budget.