Striking a Balance

PROLOGUE

What word is six letters long, begins with the letter, “B,” and has all kinds of people angry, flustered, and downright sickened of politics?

Nope, it’s not “Baboon,” although those monkeys really do get under people’s skin.

“Badger?”  Wrong again.  We don’t need no stinking badgers.  (UHF, anyone?)

I got it – you are thinking of “Batman!”  Well, you’d be wrong because Batman gives people hope, he does not make them angry (unless, of course, they are bad guys).

One last guess.  C’mon, you can do it.

What’s that I hear you say?  “Beetle?”  Well, those things DO make people angry and flustered, but you are wrong yet again.

No, I am speaking of the “Budget.”

A seemingly harmless word.  After all, it is a conglomeration of two excellent three-letter words.  Who doesn’t like their “bud?”  And who doesn’t like to “get” something?

Well, let’s talk about balancing the budget so that our buds can get what they deserve.  Namely, our city employees, small business owners, and those who desperately need the help of our city’s social services.

PART 1:  “CAVEAT EMPTOR”

Before we get moving here, I would like to make a few of caveats:

1)  This post is long.  If you have a short attention span, please cease reading and go play a quick game of Fruit Ninja.

2)  As I have done my research over the course of the past month or so in preparation for this post, I have done so with the realization that my proposal to balance the budget will never be actualized for this year’s budget cycle.  Regardless, I wanted to give you all, the voter and citizen, a glimpse into my fiscal sense and the types of initiatives I would promote once I am elected in November.

3)  Some of my solutions may seem simple.  That’s because they are.  Oftentimes we complicate issues for ideological or self-aggrandizing purposes.  That is not my style.  I think of when Dave Grohl looks at Paul McCartney at the end of the documentary, “Sound City” – moments after recording an amazing track that was comprised of only two chords – and says, “I wish it was always that simple.”  Sir Paul looks back at Dave and says, “It is.”  I agree.

4)  “Wait a minute,” you may say, “what does a a former educator and administrator know about budgets and finance?”  Great question.  A:  a lot.  I have an MBA in nonprofit/government management from the university of Notre Dame, and I have led numerous strategic planning processes and served on numerous finance committees.  Furthermore, I am a small business investor and have co-founded nonprofit organizations.  Furthermore, I feel that my Masters in Arts and my educational history gives me an even more unique perspective and the ability to creatively & critically think more so than many who spend their entire lives in finance.

5)  I was a skateboarder when I was a teenager.  A pretty good one.  Last week I bought a new skateboard – the first one I have had in ages.  I bought it so that I could get around town more easily and ride it to Plum Street once I get elected.  One thing I learned over the weekend?  Riding a skateboard requires balance.  As I have aged, I have lost some of my balance.  And so it goes with our City Government.  It is getting older.  It is getting weaker.  And its balance is way off.  To figure out why, we need to delve into the past when it once had far more balance.

But first, a look at the paradox with which every thinking-politician must accept.

PART 2:  “I WANT MY CAKE AND I WANT TO EAT IT TOO!”

A “paradox” is defined by the Shorter Oxford English Dictionary as “a proposition or statement that is actually self-contradictory, absurd, or false.”

Politics is the careful maneuvering of policies that are fraught – verily, constructed by – paradoxes.

There are always two realities at play in everything that a person, governing entity, or community say they desire.

Reality one:  The Market.  The market governs and dictates our self-interest, i.e., what we want for our own well-being and how we are going to get it.

Reality two:  The Polis.  Polis is the Greek word for “city-state,” or any political society.  To be more direct – the polis is any community in which we find ourselves a member.

Deborah Stone, author of “Policy Paradox,” tells us that “Often people want things for their community that conflict with what they want for themselves.  They want good schools and clean air, perhaps, but also lower taxes and the right to burn their trash.  Citizens in this view have two sides:  a private, rather self-interested side and a more public-spirited side, and we might think of the public interest as those things desired by the public-spirited side of citizens” (Stone, 21).

Or, to put it into pop-culture terms, I am reminded of when George Castanza adamantly yells, “You know we’re living in a society!  We’re supposed to act in a civilized way!”

The problem is that living in a civilized way oftentimes is at odds with what we want for ourselves.  We want to have enough money to care for our families.  This is something that everyone should have to ability to accomplish.  However, when the things we want put burdens on our safety, schools, and other public services we need to re-examine our priorities.

Everyone wants safe streets and quick response times.  However, not everyone seems to realize that these thing are not free.  They cost money.  Lots of money.  People want to work downtown, but don’t want to see the income tax rise.  Well, that income tax set at 2.1% accounts for 70% of our City’s revenue and it is not enough.  People want to live downtown, but they do not want to pay to do so.  I would love to see a proposal for a balanced budget and long-term surplus that freezes the income tax and maintains the property tax abatement.  If you can produce that for me then I nominate you for President of the World because you are the smartest financier on the planet.  The problem is that it is not possible.  You cannot have a 2.1% income tax and virtually NO property tax and expect to run a city.  Ain’t gonna happen.

I just filed my taxes and my wife and I only owed the City of Cincinnati $37.00.  That’s it.  I would be happy to pay $300 for the privilege of living in the greatest city in America.  But maybe that’s just me.  That said, I think it’s time to move on.

PART 3:  STORY TIME – “BUDDY THE BUDGET”

So, we live in a community.  In fact, we all live in NUMEROUS communities – our local community, our religious community, our cultural community, and our political community.  These communities do not always play in the same sandbox, and, as I discussed above, our public and private desires don’t even live in the same country, let alone near the same sandbox.  No wonder finding balance is so difficult.

So, how do we do it?

We do it, like all the great authors of old, by telling stories that everyone can understand and to which they can add their voice.

What follows is my story of the budget:

“Buddy the Budget was born many, many years ago on the Banks of the Ohio River.  He was born to early settlers of a City Called ‘Losantiville’ in a State called, ‘Ohio,’ that was presented to Veterans of the Revolutionary War in 1803 – years after the settling of Losantiville in 1788.

‘Losantiville’ was a word conceived of combining English, French, Greek and Latin and ‘translates’ as ‘City Opposite the Mouth of the Licking River.’  The Governor of the Northwest Territory, Arthur St. Clair, a member of the Order of Cincinnati, changed the name to Cincinnati in 1790.

Buddy had numerous trials and tribulations along the way, but for the sake for brevity (too late!), our narrative catches up with Buddy in the year 2001.

In 2001, Buddy was healthy, a little chunky, and ready for action.  He had good parents at the time, but many of his friends were moving out of Cincinnati.  In fact, 10% of Buddy’s friends left the city between 2001 and 2011.  Buddy’s parents thought it would be a good idea to rollback some of his property tax allowance in an effort to help bring his friends back.

While many of Buddy’s friends moved back to certain areas of Cincinnati, Buddy’s parents never began giving him his allowance back.  This made Buddy resentful and distant.  Buddy’s parents were afraid that raising the property tax would alienate Buddy’s new friends that had moved into his neighborhood.

Buddy still received a moderate allowance from income tax.  In fact, 70% of Buddy’s allowance still comes from income tax.  His parents are afraid to raise the income tax because, if they do, some of Buddy’s wealthier friends may move away as well and take their toys and businesses with them.

While Buddy was losing allowance year after year, Buddy’s parents kept hiring more people to tend their neighborhood and make it safe.  This made Buddy really happy, but also sad at the same time.  Buddy knew that safety was his City’s top priority, but also knew that if his allowance kept shrinking that he would not be able to pay his Police and Fire friends.

So now, Buddy is the center of attention.  His friends in Cincinnati want safety, but do not seem to want to up his weekly allowance.  Buddy does not want to have to see ANY of his friends go away, but if he doesn’t begin demanding more money for all of his chores, he will be the one sent packing and have to take his friends with him – and Buddy does not want to leave.”

 PART 4:  TIME TO GET SERIOUS – TAXES

You CANNOT manage a City Budget by rolling back property tax as population declines and continue to hire more police and firemen/women.  It is unethical.  It is fiscally irresponsible.  It is flat out absurd.

In politics, we (sadly) find ourselves, all too often, dealing with the mistakes of the past.  So it goes.

Many mistakes have been made over the course of the past 12 years, but it is time to start making decisions that not only rectify those mistakes, but lay the groundwork for the future.

This city has lost an estimated $79.6 million is property tax revenue from 2001 – 2011.  $79.6 million.  I am certain that those moving into The Banks or the Gateway Quarter, those who truly understand how beautiful our city is and WANT to see it grow, would have NO problem with paying for where they live.  When people pay for something they value it more.  They care for it better.  They serve as more dedicated stewards.

$79.6 million.  Gone.

$79.6 million that could have fattened the war chest so that more money could be allocated to our neighborhoods.  This is about GREATER Cincinnati, and the tax payers downtown need to realize that, to be good neighbors, they need to pay property tax so that those in Mt. Auburn, Corryville, Lower Price Hill, Westwood, Avondale, Mt. Washington, etc. can ALSO actualize their dreams.  With property tax comes more revenue for ALL of our neighborhoods.

Furthermore – the 2.1% income tax is fairly low and should remain low so as to attract more business and retain the business we have.  That said, I propose raising this income tax by .2% to 2.3% along with rolling back the property tax abatement.  This will actualize more money for the City and allow us to move forward without layoffs.

If you are like me and do NOT want to see Police and Fire cut this summer, then this has to be done.

As population steadies we need to freeze our recruit classes for at least one year (maybe two).  This will give us some breathing room.

Since 2006, our City’s expenditures have been greater than our Revenue.  This does not make any sense and has to stop.  To do this, the city needs to be very strategic in revenue-allocation.  And, while we do not like tax hikes, we DO like safety and schools.  A paradox, to be sure, but we must be willing to sacrifice for the greater good.  After all, we live in a society.

To put some numbers to all of this:

In the 10 years between 2001 and 2011, the City has spent an accumulated $63.7 million on Police and LOST an accumulated $79.6 million in property tax.

I say it again – this is irresponsible, at best.  Unethical, at worst.

Am I proposing raising taxes?  Let me be direct – yes, I am.  For the betterment of our community.  For the safety of our children.  For our future.

PART 5:  TIME TO GET SERIOUS – NORFOLK/SOUTHERN

My grandfather, who ran for Democratic Office in Conneaut, Ohio, made his living on the Nickel Plate Railroad.  I like railroads, but not enough to not sell them.

Selling, leasing, whatevering public assets has become quite a controversial subject lately.  Since I have made my stance on the parking lease crystal clear, I will leave that alone for now.  However, to repeat in brief, I support the lease and would love to see only a portion of the upfront $92 million used to fill budget deficits.  If my plan was actualized, we could keep an additional $10 million from the lease in the coffers.  I propose we only use $15 million of the upfront cash to fill budget gaps, as opposed to the original $25 million number.

Ok, moving on.

We are the only municipality in the country that owns a long-distance railway.  We have owned our section of the Norfolk Southern Railway since the year the Cincinnati Redlegs began playing baseball.  For those of you unfamiliar with the the history of Reds Baseball, that year was 1869.

Our lease is up for renegotiation with Norfolk Southern in 2022, but Norfolk Southern has the option to allow the contract to lapse, thereby allowing for renegotiation or keeping the arrangement the same until 2051 (“Memo,” Milton Dohoney to Mayor and Members of City Council, December 6, 2012).

I say we unlock the financial potential of the railroad on our books.  Currently we receive $20 million in revenue from the rail lease and that money is earmarked for infrastructure projects such as paving roads.  However, the railroad is valued around $1 billion.  We NEED to unlock the true value of the railroad, or at least $100 million of it so that we can use the revenue to fund the pension, among other crucial items, as well.

PART 6:  TIME TO GET SERIOUS – STREETCAR

As you are probably aware, I support the Streetcar.

I also support the hiring of John Deatrick as Streetcar Project Manager.

The kerfuffle in Council over Deatrick’s hiring was over the fact that Deatrick is already retired from the City and collects a pension.  If he were to be hired back, he would, in effect, be “double dipping,” i.e., collecting a salary AND a pension.  The 5-4 vote in Council on April 8th was in favor of rehiring retirees while still paying their pensions.

And we all know that our pension fund is in BAD shape with an estimated $700 million unfunded liability.

Ouch.

I support Council’s decision yesterday, but I would like to see Deatrick’s salary capped around $120,000 – not $180,000.  I also would like to take this time to let the reader know that Deatrick’s salary would come out of the Capital Budget fund, NOT the General Fund.  The Capital Budget Fund is for projects that, ideally, would beef up development and positively affect the General Fund.  So, his salary is not coming out of the Police/Fire salaries.  Just wanted to clear that up real quick.

To make money, you have to invest money.  A simple maxim that, once again, we have no problem implementing in our private lives, but have serious problems implementing it in our public lives.  A paradox.

The entire Streetcar Project needs to be re-framed, and Deatrick has proven that he is a man who can do it.  He has managed the Fort Washington Way Project, The Banks Project, and the Washington DC Streetcar Project when he served as Deputy Director & Chief Engineer at the District of Columbia Department of Transportation.  Deatrick began his career as an Urban Development Technician at Cincinnati’s Department of Transportation and Engineering in September of 1973.

My only question is why was John Deatrick not brought on board earlier?  The only thing I can think is that he was tied up at The Banks.  Fair enough.

Deatrick will help get the Streetcar online.  He will help bring costs down through his numerous connections.  He will help re-brand the entire project.  We need John Deatrick, and we need the Streetcar to continue our development and forward progress.  The Streetcar will bring more people downtown who are willing to pay a property tax (since their transportation costs will go down), and more small businesses will grow along the Streetcar’s route which will result in more income tax revenue.

Boo Yah.

PART 7:  TIME TO GET SERIOUS – PENSION

Speaking of pensions. . . . .those of you who have been following my campaign probably realize that I have spent a lot of time talking about the pension and the $700 million unfunded liability.

That’s because we have no more time to ignore it.

I propose that we keep our system one of defined benefit as opposed to contribution.

At the same time, I feel that the City needs to scale back its Cost of Living Allowance (COLA) to a more simplified version.  Currently, the City offers a Compound COLA, but that is simply not financially feasible at this time.

Getting further away from the paradox – feels good, eh?

PART 7:  TIME TO GET SERIOUS – ATTORNEY FEES

I feel that y’all know how I feel about the Coalition Opposed to Additional Spending and Taxes (COAST).  If you don’t, just go read a few of my tweets or every other blog post on this site.  COAST defines paradox.  They want it ALL.  They want to pay for NONE of it.

One of COAST’s founders, Chris Finney, is an attorney that likes to sue the City.  And he makes good money by doing so.  I propose a law that requires attorney fees to be paid as a percentage of the money attorney’s recoup for taxpayers.  Finney sues on “behalf of” the tax payers a lot.  The tax payers don’t seem to be getting rich off of these cases, but he does.

The City needs to stand up for herself and legislate rules and regulations for legal fees to be paid in direct proportion of how citizens benefit.  This IS possible and the genesis of such legislation is already sitting down at City Hall thanks to Vice Mayor Qualls and Councilwoman Quinlivan.  When elected, I will push this legislation through to the best of my ability.  You see, when Finney sued Mallory over his car allowance, the City rolled back family health benefits for Council.  Now, Council members, if they have a family, have to pay 15% of their own money back into the benefits package.  When Chris Finney sues the City, he makes life harder for its employees.

He needs to be stopped, and COAST needs to join us in the real world where we have to pay for services rendered.

PART 8:  TWITTER FEEDBACK

I like Twitter.  Not a surprise to those who follow me, or to those who know me.

That said, I put forth a challenge to the Twittersphere this afternoon as I was sitting down and collating all of my research.

The challenge:  “can a budget be balanced via twitter conversation?  let’s see.  send me your thoughts in 140 characters or less.  #unityassists.”

some responses (and many thanks to those who participated):

@RoeblingBridge: “we need to stop city population shrinkage.  Tax increases, property or income def won’t solve that.”

“we can’t survive w/o increasing population.  Why live in Mt. Washington, Westwood when prop tax is 1/2 on other side of border?”

(while @RoeblingBridge and I disagree on most things, we DO agree that population shrinkage is one of the MAJOR concerns facing our City.)

@ScottDean24:  “raising the [tax] rates takes care of many issues all at once.”

@PlumStPlayPen:  “Stop Spending more than you take in!”

@cincynotebook:  “Yes.  Proven track record of saving money on major projects.”

(in response to my tweet, “hire Deatrick for @CincyStreetcar project?  why/why not?)

“Yes.  Due to state funding decreases, we need more revenue to fund services & investments.”

(in response to my tweet, “repeal property tax rollback?”  Furthermore, we, as a City, NEED to fight for our fair share from Columbus.  This will also help us to rectify the budget shortfalls.)

@CincyCapell:  “right size CPD, get cops out of admin/offices, onto streets.  CPD is admin heavy”

“CPD payroll is city’s largest expense.  Until the dept is streamlined, efficiencies found we’ll never bal budget”

@timothyrh:  “why did the city wait so long to get Deatrick on board in the first place?”

(in response to my tweet, “hire Deatrick?”)

@derekbauman:  “Yes”

(in response to my tweet, “repeal property tax rollback?”  It should be noted that Derek lives on Vine Street in Over-the-Rhine and is one of the people to whom I referred above as being willing to pay to live in our beautiful city core.)

@BillBrash31:  “can you DM me your email, I have some budget proposals but they won’t fit in under 140 characters”

I DM’d Bill my email and he had many ideas – namely, to sell/lease the City owned garages and lots, but not the meters.  For meters, Bill proposes the City passing an ordinance setting annual parking meter rate increases and using projected revenues to take out a bond to pay for the redevelopment of Pogue’s Garage and the modernization of meters across the city.  Bill also proposes doing away with the property tax abatement.

PART 9:  SUMMARY

My proposal, in brief:

1) Raise income tax from 2.1% to 2.3%.

2) Do away with property tax abatement.  Bring more money to City Hall so more can be allocated to our neighborhoods.

3) Freeze recruit classes for at least one year.

4) Lease the parking meters, use the money for NEW investment at the MLK interchange and Pogue’s Garage.  Allot $15 million to fill budget shortfalls, not $25 million.

5) Unlock true value of rail assets from lease to Norfolk/Southern.

6) Move forward with the Streetcar and hiring John Deatrick, but set his salary at $120,000.

7) Address the $800 million unfunded liability in the City’s pension by floating a bond issue.  If nothing else, make COLA simple, not compound, and retain the defined benefit plan as it stands in the context of simple COLA.

8) Pass legislation that bases attorney fees for those suing on “behalf” of the tax payer as a percentage of actual cash recovered for the tax payer.

PART 10:  EPILOGUE

There are many, many other ways to address our budget and retain & attract business, like fighting the Tea Party-backed So-Called Right To Work proposal.  But that will have to come at another time.  My intention here was to keep things local.

Balancing the budget is like balancing The Purple People Bridge and One Lytle Place – quite difficult.  However, it IS possible once we get outside of ourselves and our own self-interest.  It IS possible to look out for yourself AND the members of your community.  In fact, I contend that the BEST way to look out for YOURSELF is to look out for those in your COMMUNITY.  You see, when the community thrives, the individual is happier, more stable, and able to provide for his/her family more effectively.

We have to realize that we are all in this together.  We all have to make sacrifices and we all need to give.  For if we don’t, we will find ourselves in scalding hot water.

Cincinnati is on the move and has made numerous changes in the past few years.  The way Cincinnati looks at her budget needs to change too.  And the budget needs to stop being more than a pawn in a political game as its balancing affects real human lives.  The lives it affects the most?  Those belonging to the people who rarely, if EVER, have a say in how money is allocated – the poor, the children, the workers, the voiceless.  It is for them that I want a structurally sound budget.  I want to see my buds get what is rightfully theirs.

My wife and I love all of the amenities downtown, but we’d like them even better if everyone was getting a piece of the pie.  I don’t want to speak for anyone else, but WE do not have a problem paying a little extra for the children of Cincinnati’s future.

So, in closing, I leave you with another six letter word that begins with the letter, “B.”  A word that I will proudly say when I refer to Cincinnati in the years after I get elected:

“Better.”

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