2008-09 Budget Strategy
Presented by Mayor Don NessTo the Duluth City CouncilJune 9, 2008
Today’s Presentation Introduction – Mayor Ness Sample list of proposed budget strategies
– Mayor Ness Budget principles – Lisa Potswald Operational restructuring – Lisa Potswald Income statements – Mayor Ness What are our next steps – Mayor Ness
Proposed Budget Strategies Eliminate or hold open 33 positions Close Human Rights Office Eliminate DEDA general fund subsidy Eliminate Office of Sustainability Turn over Zoo operations to Zoological Society Close Fire hall Eliminate Engine 3 Fire Rig Combine Parks & Library Departments Reduce Aquarium Subsidy by $100k
Proposed Budget Strategies -
Continued Close Washington Pool Eliminate City Run Adult Leagues Reduce fuel consumption by 15% Reduce size of rolling stock fleet CD, WD, PACT all pay rent & expenses Eliminate Fun Wagon service – sell asset Close 1/3 of Community / Recreation Buildings HIF funds used to support SSO Issue
Proposed Budget Strategies -Continued Eliminate support for Sister Cities, Grandmas
Marathon, Beargrease and Inline Marathon Transition to pay as you go for capital equipment Transfer responsibility for Senior Nutrition Program Implement Administrative Fine System Eliminate Staff support for many City Boards and
Commissions Reform Civil Service Process Retiree Health Care / Medicare
Budget Principles
Principle #1: Fiscal DisciplineComponent Status
1. Control over total expenditures
Line item analysis of each department’s budget as compared to prior years
Analysis of affect of cost drivers; adjustment as needed
2. Capture revenue Examine best practices in other municipalities and adopt as appropriate
3. Transparent and accountable allocations
Examination of all budgets for consistency and accountability
Principle #2: Effective Resource Allocation
Component Status
1. Improve linkage between policy, planning and expenditures
Redeploying resources from lower to higher priorities
2. Determination of priorities
3. Longer than 1 year timeframe
Multi-year realistic budget information and ceilings
Principle #3: EfficiencyComponent Status
1. Deliver services at the lowest possible cost
Implementation of efficiency measures and benchmarking
2. Transition from top-down bureaucratic to citizen-focused services
Improved citizen input and service realignment
Operational Restructuring
Restructuring and Reform City government can no longer afford to provide
services that could effectively be accomplished by other organizations/individuals.
The goal today is to present a plan for restructuring and controlling costs, not just listing cuts
The next step will be to develop comprehensive plans for implementing change.
Prerequisites for Restructuring
Prerequisite Status, budget process
1. An accessible and comprehensive management information system
New World update: position control, employee benefits, E-suite; other finance system enhancements
2. Improved budget processes and accountability
Budget realignment; full allocation and hard budget constraints by 2010
Prerequisites continued
Prerequisite Status
3. Implementation of program budgeting
Identification of programs and performance measurements to take place in 2008
4. Development of real performance measurement capacity
5. Removal of impediments to reform
Civil Service reform
Prerequisites continuedPrerequisite Status6. Implementation of customer-driven outlook
Develop plan for customer surveys and focus groups in 2009
7. Clear definition of goals Business planning process and work with Council on business plans for 20098. Better reporting to
policy-makers
9. Stakeholder participation and buy-in
Much more work needed with employees and public to identify priorities
Income Statements
Income Statement - Reserve 2008 Beginning Fund Balance $1,086,000
Current Year ChangesSale of Steam District II $2,500,000Other one time revenues 500,000
2008 Estimated Ending Balance $4,086,000 *
* Meets 5% minimum fund balance target; long term goal is to have 7% to 10% in the General Fund undesignated, unreserved fund balance.
Income Statement – Operational Deficit 2008 General Fund Operational Deficit $4,420,000* Recommended Budget Strategies
Positions held Vacant $1,403,000 Impact Neutral Revenue $363,000 Revenue Increases $330,000 Eliminated Subsidies $100,000 Eliminated Outside Agency Support $680,000 Efficiencies/Managerial Changes $187,000 Eliminated Services/Activities $435,000
Total of Strategies $3,498,000
Current 2008 Operational Deficit $(922,000) *Includes Fund Balance Restoration of $1 Million
2008 Total General Fund Impact
Restore Reserve $3,000,000 Operational Strategies $3,498,000 Remaining Deficit $ 922,000
Total Recovery by Year’s End $7,420,000
Income Statement – 2009 Initial 2009 General Fund Operational Deficit $8,360,000
2008 Permanent Fixes $3,379,000 Current 2009 Operating Deficit $4,981,000
Recommended Budget Strategies Neutral Revenue Efficiencies $750,000 Revenue Increases $750,000 Recovery of Cost for Services $200,000 Eliminated Outside Agency Support $300,000 Efficiencies/Managerial Changes $2,000,000 Eliminated Services/Activities $1,000,000
Total of Strategies $5,000,000
Additional StrategiesLists developed from ideas provided by
the administration, staff, union representatives and the public
Expense reduction/revenue enhancement list
Eliminated services/task list Operational efficiencies/managerial
improvements list
Next Steps
Next Steps Budget resolution will be presented on
June 19 Develop and implement plans regarding
each of the recommendations Work with community groups to clarify
implications for 2008 and beyond Educate the public regarding service
reductions and process changes
Questions?