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REGULAR MEETING FEBRUARY 13, 2017
<br />were able to take a number of steps in partnership with the Council, going into the 2017 budget,
<br />that have allowed us to keep the budget in balance, and that is a budget that balances revenue and
<br />expenditure. But if we proceed on the business -as -usual path, by 2020 we will be at a
<br />$10,000,000 structural deficit. So, we have taken a lot of good steps this year, going into the
<br />2017 budget. I would urge that the remainder of the steps that we have to take —many more
<br />painful choices ahead —we absorb them in 2018 so that we can bring that blue line and that red
<br />line into balance and not be faced with a real challenge in 2020. Some of the things that are
<br />driving our expenditures up, in addition to revenues taking a hit: increased health costs for
<br />employees, increased overall personnel costs, and anticipated increased costs for streets, curbs,
<br />and sidewalks. Again, we hope to get a little shot in the arm from the State that would help us out
<br />here, but we know better than to assume that it's going to happen. A potential drain in funds to
<br />cover EMS operations, because we guarantee Medicaid reimbursements, will continue at the rate
<br />that we have been enjoying, so far.
<br />Mayor Buttigieg continued, I will now read this long slide to you. These are some of the things
<br />that you helped us do in 2017's budget to address the fiscal curve. One (1) of them is reducing
<br />the pressure on general and income tax funds through the use of TIF. We want to be careful that
<br />this does not become a slippery slope and that TIF does not come to be regarded as a magic
<br />mountain that we can tap into for anything, but it did relieve some pressure for us to make
<br />certain qualifying expenditures, often on debt - servicing or other infrastructure, and it has enabled
<br />us to balance the budget. We were also able to actually reduce the workforce in Administration
<br />and Finance —two (2) positions fewer thanks to efficient operations, there. The IT expenses
<br />even though they showed up at a high level on every department's own books because of the
<br />allocations —were in total across the City $300,000 less, thanks to a reduction of the need for
<br />outside services and efficiencies that were found. We think that the priority -based budgeting
<br />practices will continue to yield savings. Next year we will have to do more. Again, just a few
<br />highlights of potential ideas to address that fiscal curve: working with the County to make sure
<br />that we have property taxes that reflect real value; making sure that all of our vacant positions
<br />are not filled until we know that they are needed; working toward a strategic purchasing plan and
<br />coordinating our purchasing efforts to make sure that we are getting the best bang for our buck;
<br />working with the State in advocating a State solution that would address the $3,400,000
<br />projected shortfall on streets; partnering with the County in new ways —I think we can continue
<br />a dialogue with the County that will be mutually beneficial; and considering other revenue
<br />options.
<br />Mayor Buttigieg continued, Just to remind everybody of where our full -time employees are
<br />spending their time: just over fifty percent (50 %) of the employees of the City are in Public
<br />Safety, the bulk of whom are uniformed Police or Fire personnel. The majority of the remainder
<br />are in Public Works, followed by Parks and Recreation. I don't want that number to be
<br />deceptive —it's eighty -nine (89 )—but that number gets considerably bigger in the summertime
<br />because of our seasonal workers. And then, we have twenty -three (23) in Community
<br />Investment, twenty -two (22) in Code Enforcement and Animal Control, and another one - hundred
<br />(100) in Administration and Finance or other responsibilities, including your friendly Mayor's
<br />Office. We got a bit of an unexpected lift due to higher- than- expected property taxes this year,
<br />and also higher -than- expected revenue at the Morris, and a special LOIT distribution from the
<br />State that could be put toward streets. The result of that is that we actually came in $5,800,000
<br />ahead, when you look at revenue versus expenditures for 2016. It's great news. We can't bank on
<br />it, going forward, because, again, a lot of this has to do with income taxes. Unlike property taxes,
<br />income taxes are comparatively unpredictable. As soon as a recession were to hit, for example,
<br />you would see a pretty sharp and sudden decline. But, this is good news, in terms of offsetting
<br />some of the concerns I flagged a moment ago. It also means that we were able to sustain healthy
<br />cash balances in our funds. We talk about property taxes a lot —they are definitely the bulk of
<br />how we pay for our City operations. I do want to point out how much we rely on income taxes as
<br />well: the Economic Development income tax, COIT, and then the Public Safety LOIT just
<br />specifically for salaries, for sworn Fire and Police officers. Also, something that I realize not a
<br />lot of people know, which is that the total local option income tax rate in South Bend is one-
<br />point- seven -five percent (1.75 %). This is actually lower than many other communities, including
<br />Elkhart County next -door to us, known for its tax - friendliness: they are at two percent (2 %); we
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