Target: Zero percent adjustment

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Holding the line > Council rejects staff’s recommendation of 3 percent increase

By Arin McKenna

At last week’s meeting, the Los Alamos County Council tackled budget guidance for fiscal year 2017. After several different motions, they voted 5–2 to direct staff to develop a budget with a zero percent increase over the FY2016 budget and to provide options for adjustments up to a 3 percent increase.
Staff’s original recommendation was to follow the biannual budget adopted during last year’s budget hearings, which includes a 3-percent increase in FY2017.
County Manager Harry Burgess explained the reasons for the recommendation – the main one being the need for inflationary adjustments.
The proposed budget also included room for salary increases. Recommendations for those would have been based on the results of a salary survey currently underway. County code requires that a salary survey be conducted every four years.
“Every time we conduct a salary survey, we tend to come up against the issue of what is recommended versus the available funds,” Burgess said.
The proposed budget was based on revenue trends for the upcoming year. According to the staff report, the FY2015 General Fund balance was approximately $2 million less than projected, but nearly half that amount was recovered during the first four months of FY2016. Based on conversations with Los Alamos National Laboratory, that upward trend in revenues is expected to continue.
“In fact, if we were to project, based on our receipts today, we’d come in slightly higher than our budgeted revenue for this year,” Burgess said. “So that budget includes that increase over the last year, and we anticipate that carrying forward into the future.”
Burgess reminded council that whatever guidance they gave was not binding and could be adjusted during budget hearings in April.
Councilor Steve Girrens first argued for a zero percent increase, and later made a motion to that effect.
“It just bothers me that we continue to grow, even if it’s three-percent,” Girrens said. “And I want to keep pressures on to look for efficiencies or different types of ways to do business to try to hold the line.”
“We have not continued to grow. Over the last three years we’ve cut the budget by 29 percent,” Burgess responded.
“As part of that, we’ve asked our departments to absorb salary increases, health care increases, insurance increases and all of the above as we’ve held the line on the budget…If we were to do zero percent, it would be cutting our budget because of those inflationary pressures. And what I’m hearing is, those cuts will hurt.”
Burgess reminded council that last year they had rejected several proposed cuts because of “the level of hurt.”
“And I fear we’ll be in the same position with the same conversation if we go down that path,” Burgess said.
Burgess noted that a flat budget would also affect negotiations with outside agencies the county contracts with, and reminded council that under public pressure they had adjusted several of those contracts as well last year.
Councilors Susan O’Leary and James Chrobocinski advocated for staff to return with zero percent, 3 percent and 5 percent options, with “specific tradeoffs identified.” Chrobocinski added a friendly amendment to O’Leary’s motion to that effect to include salary increases of 3 percent.
Councilor Rick Reiss raised questions about the three option motion.
“I’m concerned about whether we have the capacity to do what we’re asking for in the system,” Reiss said. “We get a book this thick (approximately three inches) with the budget in it. Are we going to have three books?”
Burgess asked council to reconsider asking for three budget options.
“Per the charter language, I’m required to develop the budget and I’m required to publish a proposed budget by March 31. Part of my concern is, what exactly would I publish if we had these various targets?” Burgess said.
“I think we can certainly provide options. But inserting those into the proposed budget, it starts to question, what is the proposed budget? I think we can achieve what you’re asking for, but at the same time I’m trying to focus our efforts on that charter required language as well.”
Burgess also took issue with not basing salary adjustments on the salary survey and raised one additional concern.
“Producing the budget as your asking is basically taking the staff out of the budget, if I’m hearing correctly, and producing the budget from the dais. And I don’t think that’s going to be an easy process, is my concern,” Burgess said.
Deputy County Manager/Chief Financial Officer Steven Lynne echoed that concern, pointing out that budget adjustments are not applied equally across the board, but are based on council’s strategic goals.
“If council on the fly is trying to juggle 50 different variables, it could become unwieldy,” Lynne said. “If some of those options were a little more focused, based on input that we hear on the strategic priorities, that would help us be a little more focused as we go through and develop some of those options.”
Councilor Pete Sheehey made a substitute motion to approve the budget guidance as presented by staff.
‘Having seen Harry deal with severe revenue shortfalls and come up with options for us as to how we deal with those, I’m content to actually allow him and staff to develop the budget as they presented, with a target three percent,” Sheehey said.
“If indeed we find we have more revenue or less revenue, I feel that’s the point at which we can ask staff to come to us with options.”
Vice Chair David Izraelevitz seconded Sheehey’s motion, saying he found the idea of having “three parallel universes” with three budgets impractical.
“I think our job is to really look at the bottom line and the general level of service,” Izraelevitz said.
“Personally, I’m not going to be able to go into the level of detail of the police department or the fire department and the utility department, and that level of detail that they will be going into internally. That’s why we hire department managers, and I have general confidence in their ability to develop an appropriate budget.
“If we have a 3 percent budget, and we want to understand what a zero percent budget would mean, that means that we need to, as a body, cut $1.5 million from the budget that was presented. Or if we want to increase it to five percent, then we will find the right strategic places to add.”
Izraelevitz was also concerned about deciding on salary increases without having the data from the salary study.
“It’s a strategic goal for us to be competitive and attract high quality staff, and we’ve always fallen behind…I think we need to face up to the fact that there may be salary pressures,” Izraelevitz said.
O’Leary said she had not envisioned three separate budgets, but one page from each division or department identifying tradeoffs or possible additions.
All previous motions were superseded by a substitute motion by Chrobocinski, directing staff to develop a budget with a zero percent increase over the FY2016 budget and to provide options for adjustments that would increase the budget by 3 percent. The motion passed 5–2, with Izraelevitz and Council Chair Kristen Henderson opposed.