The City Manager Requests Another $9,000,000 in Fiscal Year (FY) 2024 on Top of the $8,000,000 Fiscal Year (FY) 2023 Budget Increase Taxpayers Saw Last Year.
We review the Portsmouth FY2024 Budget in Four Parts.
By Buck Fuller
Part I: If Cream Rises to the Top
We get to see what sinks to the bottom of the milk bottle in this budget. Here are a few conclusions.
- The City has a spending problem and it’s growing fast.
- Bloated salaries for the white-collar positions are justified in order “to attract good quality hires.” But in reality, the quality of staff, as seen in Finance and Legal to just cite two examples, is inadequate judging by the need for significant increases in training and education.
- The City Council doesn’t know what it doesn’t know. Just because its members were elected doesn’t mean they are knowledgeable or qualified.
- Being unable to identify how to manage the resources they have, neither City management nor the City Council can make the difficult economic decisions to effectively limit the scope and scale of the City’s endeavors in order to better control spending and preserve revenue.
- The result is a City whose budget and spending are out of control, where it seeks sources of revenue by tapping reserves. Taxpayer, beware.
- Longer-term priorities, such as better managed water resources and police and fire protection, may suffer as a result.
This Is Crazy!!!
City Manager Grows Her Fiefdom
Does the City Manager, Karen Conard, seem to be pulling out all the spending stops while pushing out the property revaluation to the last possible minute all while she still has this mostly non-financial Council? After all, this would seem to be a golden opportunity for her to grow her fiefdom.
City Council Offers No Resistance
The City Manager has a pliable Council. From observation, the Council seemed easily distracted by the variety of presentations given at the all-day meeting for the City Council on Monday May 15th. This City Council doesn’t seem to recognize what fiscal restraint would look like even if it sat on the dias with them.
Based on what is proposed for this coming fiscal year, FY2024, that starts on July 1, 2023, the City will continue to grow significantly. The new budget will have City expenses grow by $17.2 million over two years (FY 2023 and FY 2024).
That’s up $8 million for FY 2023 and up $9.2 million in FY 2024 (without using the $4.4 million in reserves). In FY 2023, 27 new employees were added. The FY 2024 budget requests an additional 9 full-time employees. That brings the total for 2 years to 36 new employees as Portsmouth’s population barely grows.
Need to Hide the Expense Growth
We know the City wants to hide this because it is draining money from its prized reserves. These so-called Reserves are really budget surpluses funded by our property tax dollars, that we taxpayers were overcharged in past years. As surpluses, these dollars go back into the General Fund to be used for whatever the staff deems a priority in future years.
Of course, it might be wiser to preserve these Reserves that have been built up over the years for an economic downturn or for rainy-day purposes or for maintaining the City’s AAA bond rating.
No Rainy Day
But right now, FY2024 sure doesn’t seem like a rainy-day. Rainy days are for economic downturns. Tax receipts remain strong. Businesses in Portsmouth are doing well. Car registrations, as shown below, remain robust.
Examples of Using Reserves
In the FY 2024 proposed budget, the use of fund balances or “reserves” are meant to cover up the real numbers that show the City’s growth in expenses is out of control.
Hold on to your wallets. Look at https://files.cityofportsmouth.com/finance/fy24/FY24ProposedBudget.pdf which we will refer to throughout this discussion.
On Page 467, see for yourself how the City Manager is tapping the “Parking and Transportation Special Revenue Fund” like a piggy bank for use in various other departments, such as Prescott Park. Page 316 shows transfers made to the recycling center.
Page 463 shows the requested transfer of $100,000 for “Plan Studies.” In FY 2023, this same Parking & Transportation Special Revenue Fund was spent down by $1.9 million for similar transfers.
This year, the request is for an additional $1.5 million more. That’s a total of $3.4 million in the two years! See the top of Page 167 for additional detail on the use of these Parking Reserves.
Reserves Help Fund New Departments
By taking funds from these Parking Reserves, as a further example, money gets transferred into one of the City’s newest department, Information Technology. Increases in headcounts are funded by additional transfers to the “white collar” or “administrative” departments of legal, finance and the City Manager’s own administration.
Here, we have the establishment of the “Assistant City Manager for Economic Development” in the entirely NEW Economic Development Department.
Inflation: The Convenient Villain
Inflation is a convenient villain for explaining why costs are going up. It is also a lazy argument to justify the results of poor cost controls and lousy planning. One way to examine this is to look at a chart of the growth of population in Portsmouth plotted alongside the growth of Full-Time Employees (FTEs). Here is such a chart:
You can see that for the current fiscal year (FY 2023) and the budgeted FY 2024, the FTE count has jumped well ahead of the projected population growth of 0.5%. The City is expanding its government faster than what the growth in population growth requires.
Growth in City government had tracked population growth until the new City Council was voted in at the end of 2021. Its first budget, FY 2023, the new City Council demonstrated that it was unable to restrain City management (or itself) when approving new programs and greater expenses.
This shows poor management rather than inflationary pressures at work.
Part II and Part III will discuss where the growth in expenses occur.
