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Lincoln Citizens Deserve Truth, Realistic Expectations, on City's Financial Future

Monday August 5, 2002

In today's Lincoln Journal Star you will find a copy of the Mayor's 2002-03 recommended budget and another insert describing City Council amendments to the budget.

On the surface the budget appears to have been resolved. The political spin says: "although we are having some tough times, if everyone pulls together and we all chip in, things will be all right." At least that is what the mayor and his staff would lead us to believe.

Let's get real. The 2002-03 budget is based on revenue projections of a 4% net sales tax increase (net = gross sales tax minus LB775 refunds). Previous projections were even higher--6% net sales tax increases. In reality, the net sales tax increase was 1.56% for the fiscal year ending August 31, 2000. For the fiscal year ending August 31, 2002, the net sales tax increase will be approximately 2.06%. A sudden turnaround would be nice but is unlikely. In hard dollars, the projected net sales tax receipts for August 31, 2002 are $47,462,085; collections appear headed for about $45,200,000, a shortfall of $2.25 million - hardly a linchpin on which to base the next budget.

During the budget process I proposed two measures to provide better accountability and financial integrity. First, I requested the addition of an independent internal auditor to accurately assess city management and expenditure of funds. In these days of "Enron Accounting" this additional oversight measure is prudent and would provide ongoing monitoring of the City's coffers. In fact, representatives of the City's outside auditors agreed at a recent City Council meeting that a city the size of Lincoln should have an independent internal auditor and stated that the cost of such a position would likely result in lower outside auditing fees, better efficiency in the expenditure of public funds, and economic savings for the taxpayers.

Second, I proposed returning more than $412,000 to the City's general fund by having the fire department accurately account for costs of the ambulance service. Specifically, the Ambulance Enterprise Fund does not pay for all of the personnel staffing the five full-time ambulances, let alone the other six ambulances used for standby and non-emergency transport. Instead, the taxpayers of Lincoln are subsidizing the ambulance service by paying the salaries of some of the ambulance staff. This is contrary to promises made by City officials when the City took over the ambulance service. Interestingly, the response I received from several City officials, including Fire Chief Michael Spadt, was that the Ambulance Enterprise fund would lose money if it is expected to pay for all of its expenses.

I proposed that the $412,000 be used to reduce the sales tax projections to a more realistic level. The $412,000 savings could also fund many of the Mayor's proposed budget cuts.

The Mayor may trumpet his minuscule ".17%" decrease in his proposed city property tax rate, but this is little more than `smoke and mirrors' when, in fact, the city is on the verge of a real fiscal crisis. We only have to look at the Statehouse to see an example of what could be happening to Lincoln City government. Lincoln taxpayers should also be aware that the City General Fund Balances (Reserves) are projected to subsidize the 2002-2003 budget shortfall with another $2.4 million.

Based upon realistic sales tax projections for the next fiscal year, the proposed budget stands a very real possibility of being obsolete in fewer than 6 months. Recent wasteful spending practices, such as the sale of the Old Federal Building and increased rental rates for office space for City agencies, will likely force City officials to face some very unpleasant choices.

My compliments go the city employees who have demonstrated their willingness to make some real sacrifices to accommodate the present situation. City employees are the backbone of our City government on a day to day to basis. Unfortunately, they have become pawns in the budget game.

Elected leaders must face reality and make the tough decisions. The momentary calmness is merely that--a momentary quiet before the storm. Budget shortfalls of approximately $60 million, after the expenditure of all of Lincoln's excess City General Fund Balances, are projected for the next four years

Last year I was the only City Council member to vote against the entire budget. I could see the economic horizon was not as rosy as was being painted and the necessary cuts from the budget were not made. Barely two months had passed when the Mayor sounded the alarm and started freezing City expenditures. The following months witnessed more measures to reduce expenditures to fit revenue shortfalls.

Lincoln is a community made up of educated and hard-working citizens. They deserve the truth and realistic expectations for the future, not a four-color self-promoting newspaper insert from the Mayor.

I hope the Mayor and my colleagues on the City Council are willing to take the necessary steps to prioritize City government needs to preserve the fiscal integrity Lincoln has enjoyed in the past. We need to fund the "essential" needs of the community, including adequate police protection. The "desirables" will have to wait until the economy improves. I hope the final budget will be more realistic and one that I can support.

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