Reinventing The Way We Run Our City

This weekend (Friday night, January 15th, and Saturday morning, January 16th) our City Council met in a less formal and more relaxed setting for our annual goal-setting workshop. It was a publicly noticed meeting – two, actually, one Friday and one Saturday – but we were able to break bread together at the restaurant at the Marriott Beach Hotel,

Over the past couple of weeks, I spent a lot of time talking with several other folks (principally former Mayor Christy Weir, Deputy Mayor Mike Tracy, City Manager Rick Cole, and City Clerk Mabi Plisky) about what we ought to cover. In the end, we decided the council should focus mostly on how we approach our upcoming budget decisions and how we might approach the question of raising revenue in the future as the economy changes. We also spent a little bit of time on council protocols. The Friday night session was devoted mostly to some comments by our leading local economist, Bill Watkins of California Lutheran University, about how the economy is changing and what that might mean for us. The Saturday session (which ran from around 9:15 a.m. to 1:30 p.m.) wound up focusing mostly on how we might approach our priorities as our budget situation gets tighter than ever.

Rick did a good job of framing the question before us, which is – as he put it – “how to deliver $96 million of public services for $81 million”. The $96 million was the original budget we adopted in 2008-2009, before the 2008 economic meltdown, because that’s what we thought our revenue was going to be. The $81 million – a decline of more than 15% -- is the amount of revenue we’re actually likely to have this year. And next year. And probably the year after that.

The choices before us, Rick suggested, are these:

1. Stop providing some public services that the city has traditionally provided.
2. Cut compensation to our employees.
3. Reinvent how we provide many public services.
4. Muddle through.

One thing became immediately clear: We already do all of these things, and we’re likely to continue to do all of them in the future. So the question quickly became – which one of these is most important, and in what order should we do them?

The most important decision of the way was that the council made a unanimous, formal commitment to pushing ahead aggressively on #3 – reinventing how we provide many public services. It has become increasingly apparent that we can’t go on doing business the way we have always done it. It’s too expensive. We have to try to pay for part of this problem by increasing revenue; and we have to try to pay for part of it by decreasing costs, especially employee compensation, which accounts for 65% of our costs. But the big leap – the transformative leap – will come only if we figure out new and innovative ways to get things done, rather than simply relying on business as usual.

We committed ourselves to taking this one on in a big way in 2010. Look for a lot of ideas coming from the staff; and probably some special council workshops to discuss them.

Reinventing the way we do business is likely to be a long-term strategy, however; it’s not going to balance the budget this year. I’m proud of the fact that we’ve attached our budget problems head-on. In the face of declining revenue, we have actually continued to balance the budget. Some of this has come from cutting services, and some has come from cutting costs.

As I stated above, in the short run we are probably going to have to continue to do both. We began cutting services last year, but, as several councilmembers said on Saturday, we hit a wall where we were unwilling to cut services more. We also cut compensation as well, but this is a negotiating with our employees and takes time and effort to continue doing. Plus, we always must think about our ability to recruit and retain good people.

So the council didn’t reach consensus on which should be the priority in the short run – eliminating additional programs or cutting employee compensation. We did agree that we’ll probably have to do both – neither one or the other can probably get us there – and that we’ll be facing some tough choices in the year ahead.

I’ll talk more about reinventing public services – and about how we might promote greater prosperity – in the State of the City address on February 1 at City Hall.