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City Council, December 8

Council approves franchise fee hike to balance budget
But some Council members would prefer to cut costs further
Marc Knapp

The Mayor said that it was a tough budget. It followed a tough year and had been exacerbated by the depth of the present recession. The City had cut just about everything that it could without paring back on essential services. But even so, it needed to find about $3.8 million in additional revenue to balance its 2010 budget. And as already reported, the City plans to do this by tacking an extra 2% on the utility franchise fee that users pay in the City. This represents a 67% increase in the fee.

Nobody disputed the difficulty of the times. But some Council members were not happy about the higher franchise fee. Why couldnít the City look more to cutting costs? Probably the major part of the meeting last night was devoted to these issues. And the meeting was prolonged by the frequent meanderings of Council member Shirley, who chaired the Ways and Means Committee, and whose comments and observations more often than not, were superfluous, if not irrelevant.

A summary of the budget for the General Fund can be seen by pressing Download file and a summary of the Enterprise Funds by pressing Download file. The City is projecting a 1% fall in both revenue and spending for the General Fund. Revenue is projected at $124.8 million and expenses at $125.5 million. The shortfall, projected at $0.65 million will be made up from the surplus of Enterprise Funds. Viewers may be confused by the $2.19 million add-back item relating to Non Departmental Expenses in the General Fund. The City is instituting a hiring freeze and furloughs for staff. Rather than deal with this adjustment on a departmental basis, it adjusts them altogether and the $2.19 million represents the aggregate projected saving. But in fact, spending of each department after the furloughs etc will be lower than shown in the departmental breakdown. It should be noted that the Gaillard Authorium is a net $1.2 million loser in the Enterprise Fund. I suggested that the City mothball this building. This would probably save somewhere around $1 million a year.

The Budget for the Enterprise Funds shows a 1% rise in revenue and flat expenses. Revenue is projected at $21.8 million and expenses at $21.15 million. The surplus of $0.65 million will be carried over to the General Fund.

Council member White leads opposition to franchise fee hike
Council member White opened the discussion on the budget items and immediately took issue with the higher franchise fee. It was a tax he said, and should be considered so. Its timing was bad considering the state of the economy and the hardship faced by the community. The Mayor explained that the City chose to raise the excise fee as opposed to raising property taxes. There were many entities in the City that did not pay property taxes Ė College of Charleston, MUSC etc - but all used gas and electricity. It was a wider net that was cast by raising the franchise fee and would be a lesser burden on most property owners.

We suspect that most Council members agreed with the Mayor in preferring an increase in the franchise fee over property tax. But Council members White, Gregorie, Alexander and Mallard were not convinced that it had to be either. Had costs really been cut to the bone? Why was there any overtime in the Budget? Could there not be further staff cuts? And should we be spending $2.4 million on professional services?

Cost cuts made to point of endangering essential services
The Mayor and CFO Bedard responded a number of times to these questions. They reiterated that cuts had been made to the point that further cuts would endanger essential services. Yes there was a lot of overtime Ė about $2.4 million. But it was necessary. A major part related to overtime for police, when their services were needed for special events. And much of this overtime was recovered by the event sponsor. Then there was the overtime paid to staff who were called out in emergencies, and fire department employees.

As for Special Services, many were essential services and related to maintenance of IT and for software. The cessation of some of these services would lead to the closure of departments and to some police operations.

Mayor challenges Council
In summing up before the final vote, the Mayor said that yes, costs could be cut to achieve the $3.8 million sought. Then he outlined a theoretical plan - double the number of staff furloughs, donít open the Arthur Christopher Gym, donít buy any new cars for the police, or trucks for the Fire Department, maintain a hiring freeze and for senior staff, and donít go ahead with digital radio for the police. He didnít say it, but the challenge was there for the Council members if they wanted to accept it.

In the final vote Council members White, Mallard and Gallant voted against the budget and Council Member Gregorie abstained. Our reading is that their opposition was more to spur staff to seek further costs savings than straight out opposition. Even if the cost savings are not forth coming, we expect the Council members will vote on the second or third readings for the budget as it is.

I suggested more furlough time, especially in the administrative areas of the staff. I feel that a lot of staff are overpaid and when benefits are added, extremly overcompensated considering their level of responsibility and ability. The furloughs only amount to about a 5% cut in pay. The Mayor just received major pay increases. I feel he should forgo them for at least the next two years. Administrative staff should be taking furloghs, more in the 10% to 15% range. The problem is the Mayor does not have what it takes to protect the citizens of Charleston! He is more worried about the few than the overwhelming majority of citizens that are taking it in the wallet!

Where are the energy costs savings?
We should mention one question that was asked by Council member White that we thought was interesting. He noted that over recent years, the City had spent handsomely on energy saving in its properties. These savings did not seem to be reflected in the amounts paid for energy. Why so? In our view he did not get a satisfactory answer. He was assured that there had been energy savings but it seemed to us that he had only the word of CFO Bedard.

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