By Reggie Connell/Managing Editor of The Apopka Voice
The Budget Debates: Part Two – Incumbent and unopposed commissioners are at the core of the 2018-19 Fiscal Budget
In 2014, Diane Velazquez burst onto the Apopka political scene with a surprising victory over 18-year incumbent Marilyn Ustler-McQueen with 55% of the vote. Her margin of victory was the largest of that election cycle. Four years later, it speaks volumes that four candidates are running against each other in the Seat #1 City Commission election, while Commissioner Velazquez remains unopposed for Seat #2. It seems likely she will keep the seat in 2018, and possibly as long as she chooses to stay on the City Council.
Commissioners Doug Bankson and Kyle Becker also defeated incumbents in 2016 with approximately 55% of the vote, and face no challengers until 2020. They too seem destined to have long careers on the City Council if they choose to remain.
With that in mind, it’s possible that these three commissioners will form the core of the City Council for years to come no matter who wins the Mayoral and City Commission Seat #1 races.
Which means the Apopka budget debate will largely be driven by this core of the City Council.
And despite sharing similar political paths to the City Council, their backgrounds, beliefs, and approaches to budget creation and management are far different.
Velazquez is a retired New York City Police detective. She values a unified Council. Velazquez welcomes debate and discussion on an issue, but once the dust settles she wants the Council to stand together.
Velazquez is open to the idea of a 25% reserve in the general fund but wants more details in order to pursue that agenda. She tends to reserve her opinions until all the details are available. She is passionate, but not ideological.
“In reference to the discussion at the end of the last Council meeting regarding 25% reserves, during the discussion, I asked for the names and telephone numbers of the outside experts consulted regarding the budget for the City of Apopka (as referenced by Bankson),” she wrote in response to a query by The Apopka Voice.
“The reference to 25% reserves has been constant rhetoric at the Council meetings during public input. At the last budget workshop, a presentation was prepared and presented by Commissioner Bankson. I am reviewing the minutes of those budget workshops; as well as listening to the audio.
I reiterate my sentiment during the discussion at the end of the last council meeting (Wednesday, October 18th). The City has an obligation and responsibility to provide the necessary services to the residents and most importantly, pay the entire city staff reporting to work to provide those services. The council voted 4-1 to keep the current Millage Rate the same as the last fiscal year. As for the five-year plan, a presentation was made at the last budget workshop but it did not have a roadmap to get there. Again, I am currently reviewing the budget workshops and audio. I hope to receive the names of those individuals/ experts that were consulted during our budget process and I reserve my opinion at this time.”
Bankson is the Lead Pastor at Victory Church World Outreach Center and a past Board Chairman of The Apopka Area Chamber of Commerce. He is the strongest advocate on the Council as it applies to smaller government and building a larger reserve in the general fund.
He is willing to cut the budget, even make modest cuts to City departments across the board in order to bolster Apopka’s reserves. To Bankson, this is both an ideology, and a sound financial plan.
“Growth is always the preferred route to increase our reserves, however, we have outspent our growth in recent years and will need to tighten our belt to obtain a healthy reserve objective,” he wrote to The Apopka Voice.
“We cannot go to the grocery store hungry and fill our cart when it comes to the budget, and then ride the back of police and fire to push our taxes higher. Unfortunately, that appears to be the juncture we are facing as reserves and borrowing reach their natural limits. As was stated by the mayor, our present policy is that we have no policy. I agree that is our present course but disagree that it is the best course to proceed.
I would propose a simple three-step approach:
First, tighten the belt. An across the board cut of 1-3% in each department until our growth catches up, minus any vital services that should be put back to replace aging infrastructure needs and not spent on other projects. We have no money set aside for things such as police vehicles and are in a position that we must borrow for things that should be budgeted for. Every household when facing a financial crunch has experienced this process and government should be no different.
Second, replenish the reserves. Set a percentage of every growth dollar that comes in to restore reserve levels. This will vary based on the level of growth we experience. Like anyone who has designated a portion of their paycheck to their 401k, by taking it off the top we can assure it won’t be spent and will be there when we need it.
Third, establish policies that reflect sound principles. My proposal is a starting point that can and should be debated until we can agree on the level of comfort in restoring fiscal stability. It gives us a five-year window to accomplish this goal by following the above-stated principles and can be accomplished sooner if growth takes hold.
Budgets can’t continue to be balanced by the use of reserve spending and borrowing. We should have a policy that when we spend reserves they must be replenished. We must also set a saving policy that reserves cash for replacement of low-level infrastructure needs such as vehicles and building maintenance rather than borrowing. We must also make sure that our assets that are supporting our retirement funds are not sold off with no regard to supporting our pension funding. We have an amazing city staff and I believe their future is worth preserving.
We have been warned by staff that our present trajectory is unsustainable and my own research in speaking with professionals in city government supports that conclusion. Skies are still blue but we can’t ignore warning signs of future storms. By preparing I believe we can avoid them altogether. Growth too is on the horizon, and when it catches up its a tide that I believe can raise all boats. When it comes we will see the restaurants and amenities we all desire.”
Becker is a data-driven Business Analyst that demands a comprehensive study of any significant issue that comes before the City Council – the budget in particular. Anecdotes, feelings, and ideology play no role in his decision-making.
He sees the entire budget process as building blocks towards a final outcome. If after going line-by-line through each item the City arrives at a 25% reserve, he would support it. But above all, he wants a comprehensive study of all factors as they work together.
He wrote this response to The Apopka Voice when asked his opinion about a 25% reserve in the general fund:
“Do you favor setting an approach for a threshold for the Reserve balance?
Most importantly, I support being smart and responsible with our budget. The GFOA (Government Finance Officers Association) has a generally accepted number of 16% and we approved 18% for this fiscal budget, which is a favorable position, so I am comfortable where we are at for this year. In terms of setting a threshold, I support a direction of having a goal in place for our reserve percentage, but the plan presented merely states it should be 25% and if reserves are used to bring the number below that percentage there needs to be a plan to replenish with 1-5 years. First, I would love to understand why the 25% number is the right number for our city, and secondly, we are already below the 25% number proposed, so what is the 1-5 year plan proposed to get us to the 25% number? These are points that have not been provided in the presentations we have received, and those are critical I think to shape a sound policy as it relates to the reserve threshold.
To the point above about the 25% being the right number:
The GFOA performed a study for the City of Colorado Springs in 2013 where they settled on an outcome similar to that proposed by Commissioner Bankson, whereas they had two distinct reserve funds, each with 12.5% threshold for a total of 25%. While the report is compelling and certainly something to reference, the report is correct in pointing out each city has a different revenue profile with resulting volatility, as well as infrastructure needs that can be vastly different. To my knowledge, no such effort has been undertaken in Apopka to get to a data-driven threshold.
How do we need to get there?
The past two budget cycles that I have been a part of we have taken a deliberate approach in going fund by fund, line by line in the several hundred page budget to ensure we are making fiscally responsible decisions. This is the primary source of responsible budgeting I support, both years of which we have had a reserve balance that is accepted as above-the-mark healthy by the GFOA. If we did explore the policy regarding the reserve balance threshold, again we are below the proposed mark now, so we
would obviously need to focus on a few levers to see how we would get there.
First is expense reduction, over 60% of our General Fund expenditures go towards Police and Fire, and this is money well spent to ensure our residents’ safety. We have taken steps over the last fiscal year to implement both Police and Fire Impact Fees to shift the burden of increased coverage of these departments from the General Fund funded by current residents to the growth that is causing it, based on performance there will be savings here that could be diverted to reserves.
Secondly there is revenue generation, this takes many shapes, but the first thing that comes to many people’s mind is a millage rate increase to increase property tax revenue. Apopka has prided itself as having one of the lowest, if not the lowest, tax rates of a full-service city in Central Florida, and while I strive to keep taxes low, increased demand for city services such as building/planning, water, recreation, and other areas, as well as infrastructure improvements to existing assets may result in the need for increased staff
and facilities, so the millage rate needs to be seriously discussed to ensure our city is set up for long-term success. Another revenue source is a natural appreciation of the tax base from both existing and new residential and commercial. This is a timing issue and I think we will start seeing a more sharp increase in that base over the next 1-3 years as we welcome some larger employers into our city, as well as businesses that see Apopka as a great opportunity for expansion.
Third point is debt service, and while debt is certainly something to be mindful of, the cost of money is still low, and it can be a funding tool to control cash flow and reduce the need for large capital expenditures in a given budget year while protecting reserve balances.
Point being, all of these levers would need to be considered when we discuss this matter further.
In July the Council invested six days and 24 hours worth of time reviewing and modifying the budget to something that I thought was fair and responsible for our residents. With all due respect to Commissioner Bankson, who I enjoy serving with, he presented a proposal on the sixth day at the 20th hour of these workshops. I think the prudent approach would have been to present this proposal at the beginning of the workshops so there may have been discussion and a potentially different lens to the discussions… had the 25% threshold been the will of the Council.”
In Part Three of The Budget Debates, The Apopka Voice focuses on the four candidates running for Seat #1 on the City Commission – Gene Knight, Suzanne Kidd, Theresa Mott, and Alexander Smith. Could one of them tip the balance on this issue?