COVID-19 impact: 2021 budget previewed by Bloomington mayor shows more expenses than revenues

Single Bar Barchart of City Budget 2021 preview
Re: the gray bar. A detailed breakdown of proposed major categories of expenses has not yet been released for the proposed 2021 Bloomington budget.

Bloomington mayor John Hamilton’s proposed 2021 budget will be presented by city department heads next week in four sessions that will take place over successive nights, starting Monday.  [Updated at 1:22 p.m. on Aug. 17, 2020. The proposed budget has now been posted to the city’s website.]

During Friday’s media preview of his proposed budget for next year, Hamilton reflected on this year’s numbers compared to the four budgets he presented in his first term as mayor. “This is my first non-balanced budget,” Hamilton said, “meaning the expenses are higher than the projected revenues.”

Controller Jeff Underwood was on the conference call, so Hamilton was quick to clarify, “in case Jeff falls out of his chair” than the city has sufficient revenues plus reserves to pay for the budget.

Hamilton is proposing to spend $4 million of reserves, in order to maintain basic services and to pay for a collection of initiatives to stimulate the local economy that he is calling “Recover Forward.” The first phase of that set of initiatives was approved by Bloomington’s city council last Wednesday as a roughly $2 million appropriation.

Currently Bloomington has reserves totaling over four months’ worth of operating expenses. Hamilton said that by the end of 2022 the idea is reduce that to three months’ worth.

Planned general fund expenditures are still planned to decrease to around $95 million, from around $99 million last year.

Some highlights from the 2021 proposal include the previously announced reduction of sworn police officers from 105 to 100. They are to be replaced by non-sworn positions, which would be a mix of social workers and neighborhood resource specialists.

On Friday, the city released the results of a consultant’s organizational study about the police department. And later that day, the police union released a statement in response, saying that the consultant’s report indicates the department is understaffed.

Even though departments citywide requested a couple dozen new positions, just 1.6 FTEs are proposed be added this year. That’s after averaging seven or eight new full-time time positions over the last four years.

One new position is proposed for transportation demand management with the other 0.6 of a position is proposed to be added in human resources.

Hamilton said the idea is to guard against having to implement hiring freezes, layoffs, or major program cuts.

Salaries for all non-union employees are proposed to increase by 2 percent as a cost of living adjustment, which would make for six years in a row of a 2-percent increases. Under labor contracts, police officers will get 2.8 percent more, and AFSCME (American Federation of State, County and Municipal Employees) union members will receive 2.5 percent more.

Some reorganization of departments is also being proposed.

Parking services is proposed to be consolidated mostly under public works. As one example, parking enforcement would be moved out of the police department. Also, the city engineer, currently a vacant position, would head up a new engineering department. That position, which is currently embedded in the city’s planning and transportation department, is prescribed by state statute to be a mayoral appointment.

In a bit of good news on the revenue side, Hamilton said the property tax levy will rise by 4.2 percent. Hamilton said it’s the highest percentage increase since 2005. He chalked it up to the fact that the calculation is based on a seven-year rolling average. A bad year contributing to the average has now dropped out of the equation.

The picture for other revenues is not as sunny. The impact from COVID-19 will show up on local income tax revenue in 2022 and 2023, Hamilton said. Gas tax revenues are already down significantly, Hamilton said. Revenues from the the telecom fund, which comes from franchise fees for cable subscribers, continues to decline, Hamilton said.

At the same time, Hamilton said, significant annual operating expenses continue to increase as the city grows. He pointed to the operation and maintenance of the $34 million Switchyard Park. Hamilton also mentioned the Waldron arts facility that the city expects to be returned to the city by Ivy Tech. The city’s commitment to $15 an hour wages for all permanent employees means more expenditures. Sanitation pricing continues also continues to get upward pressure from the external factors, Hamilton said.

Not in this year’s budget is a “parking cash-out” program that some councilmembers called for last year, and again during a “budget advance” meeting this year. The idea would be to  charge employees a market rate—instead of the nominal charge they now pay—to park in the city hall lot.

In exchange, employees would get a raise equal to the cost of parking in the lot. Employees who choose not to park in the city hall lot could then pocket the amount of the raise.

Also not a part of this year’s budget proposal is any change to the way leaf pickup is done in the fall. Last year some councilmembers expressed an interest in seeing a reduction in that program.

The 2021 budget does not include any increase to the local income tax rate.

The departmental budget hearings wrap up on Thursday next week. Between then and the end of September the administration can make changes based on city council feedback. In late September, the administration presents the final version of the budget to the council. In early October, the budget gets adopted.

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