Financials

Oy, the letter from the State Comptroller on the city budget not liking the projections on the budget or the budget process. And the Recorder paints a less than flattering picture of the budget process (here).

Let me point to a statement that should give pause when we think about how unsustainable an economic strategy built exclusively upon the hope of retail development (from the Comptroller report):

Considering the current economic conditions, specific steps should be taken to “hedge” against potential shortfalls of certain revenues included in the 2009-10 budget. For example, although the City may not realize the full $3.5 million in sales tax revenue it had expected to receive from Montgomery County for the current year because of the economic downturn, the City has estimated sales tax distributions for 2009-10 at $3.9 million, which represents about 29 percent of anticipated general fund expenditures. This estimate may be too high.
[snip]

However, according to information provided by Montgomery County during our review, sales tax revenues during the County’s first quarter ending March 31, 2009, were down approximately 6 percent from the same time period last year. The County Treasurer estimates that sales tax revenues for the second quarter ending June 30, 2009 will also be down about 6 percent from the same quarter in 2008.

This report coupled with the Golf Course financials signal to me that we have some structural finance issues in the next few years based upon what is happening in the broader economy and based upon past and current governance. And just to pile on, we know that sales tax will impact county budgets and we also know that the school budget for next year will pile on even more due to the anticipated decline in state funding and an even more pronounced shifting of the tax burden to property owners.

I’m afraid that we are going to personally experience the financial consequences of our longstanding no-growth and negative-growth strategy in the years ahead.

I’m not sure that we can address this locally as the budget cuts required may be draconian assuming numbers such as above or another double digit tax increase on the school level.

I’d advise a concerted lobbying effort start now on multiple fronts as the projections look scary. And to the extent that school budget reform vis-a-vis property tax based can gain traction I think now is the time. Unfortunately our state legislators mockery of a legislative process and legislative body continues unabated so getting traction on meaningful reform looks impossible. Still we should be lobbying especially by the school board.

PS I’m not delivering on my promise to look at the Golf course figures due to many demands on my time.  I hope to get back to it next week along with some open items from some exchanges on economic growth and AIDA. I have non-public financials to worry about too.

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