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Click here to see Alderman Ross Arnett's presentation on the City's Finances

Alderman's Notebook
from ECA newsletters

January 2012

Two of the most frequently asked questions I got at the yearend gatherings this year are, “what’s happening with the City budget,” and “when are you guys going to get the sidewalks fixed.” Two good questions that I think actually fit together quite well.

Taking sidewalks first, from what I’ve heard during public comment on the latest sidewalk legislation, there is agreement that sidewalks are part of the public right-of-way and should be managed the same way as curbs and roads. That is, the City should be responsible for installing and repairing all of them. Several reasons for sidewalks, curbs and roads being a public responsibility are that all three are in the public right of way and the City already maintains curbs and roads; all three provide for public safety; and the City can install and fix all three at wholesale cost, with proper construction standards, and with consistency throughout the City.

With these areas of general agreement, the question becomes how to pay for installation and repair.  Some installation is already done by developers for new and redevelopment projects as part of obtaining City approvals. Installation in established areas of the City could be forestalled until better economic times. Repairs could be done by the City out of general revenues coming from property taxes and state transfers, as is done currently for road repairs. Other options include a cost sharing arrangement between the City and specific property owners whose sidewalks need repair. Sharing arrangements could include long-term, low-interest loans from the City or a lien on the property to be repaid at the time of the sale of the property.

I’m sure that other arrangements for sidewalk repair could be employed, but the major issue is that we need to start making the repairs, now.

The other side of the budget and sidewalk equation is the issue of the prospects for the fiscal year 2013 revenue and expenses. We now know that property assessments are going down an average 15%, not the 10% decline assumed for the current year budget. Along with expected declines in federal and state transfers to the City, revenue could be down $3 to $4 million from this year’s level of almost $95 million. Add to the pending revenue decline is the fact that the City has not been making any contributions to either the pension plan for police and fire or for a retiree health benefits program fund. Those contributions should be between $2 and $3 million a year.

Thus, we are heading into an environment where the new budget could start down $5 to $7 million below current levels before we even get to a determination of what spending for things like policing, fire fighting, water and sewer will be. So ask yourself, “How much money will be available for sidewalk repair?”

Or, to put it in more appropriate form, you need to help me sort out these priorities. The new budget (FY 13) season is starting and I will be holding a Town Hall style meeting at 7 PM Thursday, 26 January in the meeting room of the Eastport Fire Station. I would like to talk with you about these and other issues of importance to Ward 8.

As always you can reach me at 410-295-9743 or EastportRoss@aol.com to discuss these or other issues.

Your Alderman,
Ross Arnett

November 2011

For the first time ever last year the City Council Finance Committee produced a written report of its recommendations to the Council. In the past, the Finance Committee recommendations were recorded by Finance Department staff and were worked into the budget, maybe, and largely without comment or explication of the Committee rationale. This report is an important new step because in addition to recording its recommendations and rationale, the Finance Committee called for several studies to be made by the Administration on some specific issues and due by specified deliverable dates. Some of those studies are now being delivered to the Council.

The Committee asked for a compilation of all City owned property with its value and use. It also asked for an accounting of all property rented by the City, again with its cost and need. Another call was for a study of City owned vehicles, their cost, repair and maintenance, and replacement program(s). Other like study requests were made of the Administration by the Committee and the staff have been pursuing them all and reporting back. One study that is ongoing is illustrative of a paradigm shift in the City.

By way of background, a few years ago the Department of Neighborhood and Environmental Programs (DNEP) performed an analysis on the City recycling program. That study produced information on the costs of the City’s solid waste collection. DNEP found that it cost the City $426 per household to collect residential solid waste (trash, yard waste and bulk pick up) while charging only about $380 per household in fees. They further learned that the county provided similar services for about $275 per household. The Finance Committee got right on this and, as a part of their Report, has requested the Administration to analyze this issue.

Solid waste is collected by the City Department of Public Works. Under direction of the City Manager, they have taken on the study effort. The big question is why can’t the City collect solid waste for the same low fees as the county. This has led to several interesting findings. First, the county contracts out their solid waste collection. Second, the collections are not exactly similar in that for one thing the county collects trash only once a week.

Public Works began a study of the value of contracting out solid waste. As one can imagine, that has gotten the attention of the city staff and their union representation. The result of all of this is what is a Managed Competition process, and this is the paradigm shift.

Managed Competition will allow a contracting process that will allow the City workers to bid on the Request for Proposal (RFP) along with the private sector contractors. The Administration has set up two arms length and independent groups, one to determine the set of services to be contracted out and one to prepare the City staff response to the RFP. Many good things are developing out of the process. First, Public Works is taking a hard look at our waste collection processes, issues such as what do we want collected and is the City doing that in the most efficient way under current procedures?

As can be imagined, our sanitation workers are concerned for their jobs. But pleasantly, they are determined to win the contract. They have realized that, to be competitive, they will not likely be able to bid the full 25 staff devoted to waste collection, perhaps only about half the number of staff will be competitive. Public Works, on the other hand, has recognized that the waste collection staff perform other duties in addition to picking up trash, such as snow removal, sand bagging operation and other work. All of these things must be sorted out to make for a fair competition.

In my view, no matter who wins the contract, the City will be much better off in terms of less costly trash collection and more efficient operations. I also feel that, if the City staff wins the competition, there will be a huge boost in staff morale and prestige – they competed and won a fair competition. By the way, be sure that the Finance Committee and probably the rest of the Council will be watching to ensure that the competition is fair.

Obviously, this process can be used across other City process with the expectation that efficiencies and cost savings can be achieved.

I will be speaking about these and other issues at the next ECA membership meeting the evening of Thursday 17 November.

Your Alderman, Ross Arnett

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September 2011

The City Council has finished its August break and is ready to get back to work, at least I am. We have several issues to address immediately.

The City’s financial situation is always on the top of my list. I am very cautiously optimistic about a few things and guarded on others. The Fiscal Year 2011 budget that the Council passed had a $2 million surplus of revenues over expenditures. Then we got two surprises, each $2 million dollars: the Park Place TIF payments that were unbudgeted and unexpectedly high health care spending. These surprises more than wiped out the planned surplus. But in July we learned that the City Departments spent, on average, only 92 percent of their appropriated budget. The final numbers are not in, but the 2011 budget may come in better than thought.

Even if the 2011 budget turns out better than expected, we are far from out of the woods financially. I am now on the Finance Committee and in a much better position to watch the FY 2012 budget spending, which began July 1. The Finance Committee now reviews any new hire requests and the City Manager and Finance Director have set up criteria and measurements to help the Council know the degree of need for staff and the budget impact of any new hire. In fact, Mike Mallinoff has stated that he does not let any request get to the Council unless it is a critical need. Bruce Miller lets us know of any impact on the budget, especially on the $2.8 million in cuts approved by the Council. It’s early, but so far we’re holding the line.

I am also keeping a close eye on the cashflow problem, and again, so far things are looking all right. The other looming financial issue is the impending property reassessments. The 2012 budget is based on the assumption that assessments will go down by 10 percent. Given the continued woes of the general economy and the housing market in particular, the 10 percent could be optimistic. If the reassessments go lower, our revenues will be more adversely affected than planned and FY2013 will be tougher than expected. That may mean that we will need to tighten the 2012 budget even more in midstream.

Another issue the Council will be grappling with is the redistricting of the Wards based on the 2010 Census data. Ward 8 grew the least of all the Wards and its boundaries will need to expand to add around 600 new residents. The Mayor nominated and the Council approved a Redistricting Commission and that group has been meeting to come up with recommendations to the Council for new boundary lines. As you may have seen in the media, redistricting is a hot topic for state, county and local governments.

The committee held a public meeting on August 25th and it was very poorly attended. August is vacation time for many and, in fact, I was away for the hearing. The Commission will hold another public hearing on September 19th at 7:00 p.m. in the Council Chambers to give residents another opportunity to voice their opinions. If few attend the next hearing, the Council will assume that this is not an important issue for residents and will either accept or make adjustments to the committee’s recommendations given our sense of what is best for the City and without your input – almost always a dangerous thing to do.

There are other issues on the near horizon, such as maritime zoning, transportation and parking, and restructuring City government. I will be writing about those issues in the next Newsletter. Finally, I am planning a town meeting at the Eastport Fire Station, probably in early October. I will let you know the time and date and post the agenda as soon as those matters are finalized.

As always you can reach me at 410-295-9743 or EastportRoss@aol.com to discuss these or other issues.

Your Alderman, Ross Arnett

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May 2011

On May 16, 2011 at 7:00 p.m. at Maryland Hall, I will be presenting my analysis and proposed amendments to the Mayor’s budget for 2012. This presentation and discussion is sponsored by a coalition of civic associations including the ECA. Please come to hear and be heard on our city’s current and future fiscal situation.

Meanwhile, here is a very brief synopsis of my thoughts on the budget: The Mayor has proposed a spending increase of 15.6%. However, since most of this increase will go to restoring depleted reserves, this is a move in the right direction. But we have not yet caught up to where we need to be and should think of 2012 as the year to get ready rather than the year to move ahead as there is a tsunami coming in 2013. Property tax revenue is projected to decrease by 7.3% starting in 2013 and extending through 2015 – the three-year assessment period. 57% of General Fund revenue comes from property taxes. At the same time as our revenue will go down, our debt service costs will go up in 2013 – for several reasons.

The bottom line is that I believe we must make adjustments in this year’s budget to head off some of the pain coming next year. If we act this year we have a number of options. If we wait until the tsunami is upon us, we will be forced into a reactive mode. I have a number of ideas for things we can do now to prepare for what’s ahead. 

Please join me on May 16th for a full discussion on this year’s budget and what it means for our future as individuals and for the City.
Next week, I will be posting a PowerPoint presentation on the Budget. on ECA’s website. [Click here.]

Your Alderman, Ross Arnett

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November 2010

I want to share with you what I believe is the City’s financial situation in a nutshell. For several years our spending exceeded our revenues. Overspending was primarily paid for by using up our cash reserves. This overspending and our current lack of cash reserves have caused serious cash flow problems for the City.

Our revenue comes largely from property taxes. As taxes are collected, the state pays this revenue to the City in lump sums, mainly in October and January. But our spending (mostly salaries and benefits) occurs at a very flat rate throughout the year. This results in peaks and valleys of cash on hand to pay our bills. With no cash reserves to fall back on, the city took out a $10 million short-term line of credit to handle this cash flow issue.

Because the City would prefer not to keep addressing cash flow problems through revolving short-term credit, the City is considering a number of options, and probably a combination of each option.

1. Reducing our monthly debt service costs by recalling about $30 million of existing 20-year bonds and reissuing those bonds at the current lower interest rates and for longer terms. This would lower our current interest payments. Debt service is paid out of general operating funds and is part of our cash flow problem.

2. Continue with a program of short-term borrowing. In addition to the $10 million line of credit, this summer the City Council authorized an additional $6 million line of credit. However, the Council also amended the Charter to say that by the end of this year the City’s total short-term borrowing must be at $5 million or less at any one time.

3. Continue to cut operating costs by reducing services or transferring some of them to the county. More than 80% of operating costs are personnel salaries and benefits. Current revenue projections for the FY2011 budget are $6 million less than the $81 million in revenue in the FY 2010 budget. The City has to produce a balanced budget for next year with lower revenues, but we also need to rebuild cash reserves. The more we fund reserves this year and in future budget years, the quicker we return to a positive cash flow balance.

4. Raise property taxes. Always an unpopular option, this would be especially hard to do given the current economic situation. This option is also regressive in that it places the most burden on those with fixed incomes, lower income property owners and small businesses.

None of these options come without a cost and inevitably the tax payers bear that cost in either higher taxes or reduced services. So let’s examine the four options.

Recalling and reissuing long-term Capital debt reduces current operating costs by lowering debt service payments in two ways: by refinancing current bonds, the city would take advantage of current much lower interest rates on bonds and lower its payments each month by extending some of the bonds beyond the current 20-year term. However, the City would pay a higher total interest over the life of the bond, likely millions of dollars. This refinancing might also make it more difficult to meet future capital needs, for example, aging water pipes in the older parts of the City like Wards 1 and 8 and a new water treatment plant.

Short-term borrowing is surprisingly inexpensive. Our $10 million line of credit will cost us only $275,000, mostly due to the short-term nature (1 year) of the loan. The problem with this kind of debt is that it keeps escalating. First we needed $10 million, and then almost immediately, the Council was asked for another $6 million to finish FY 2011. Relying on a revolving line of credit to finance operations while we build reserves could become an expensive option.

However we handle the short-term cash flow problem, cutting spending has to be part of any long-term solution. Our lower revenues are not a short-term problem. We are now learning that property assessments are likely to go down considerably with the next round of assessments due next year. That means that our taxable base will go down immediately. State and federal aid will be at lower levels, and our commercial base is shrinking. All this means less revenue for the City. The long-term solution is to significantly cut costs or raise taxes, or a combination of both.

Cutting costs means restructuring City government, which usually includes cutting jobs or cutting pay and benefits or both. Again, this option is painful to consider given the economic conditions. The ideal way to cut costs is to eliminate services yet retain employment options for our personnel. There are ways that this can be done:

1. The County uses contractors to collect trash and does so at almost half the cost of the City. Our collection staff can be hired by the contractors and our trucks can be sold.

2. We could partner with the County to provide water, just as we do for sewer. This would shift huge capital costs from the City to the County. It would also reduce current operating costs by eliminating water plant staff and some the Finance Department billing staff. However, those staff will still be needed and we could negotiate with the County to reemploy our displaced staff. Another advantage to providing water with the County is that we have a huge liability with our ancient water delivery systems in the City, especially in Wards One and Eight. If the County takes over the water delivery system as well, we would spread these costs over the 600,000 County residents than the 36,000 City folk.

3. We need to consider whether the City needs and can afford to run its own parks and recreation facilities, or whether that is better done at the county level. In addition to the County, at least two private organizations are interested in a public private partnership to run the Rec Center. All of the staff in our parks and recreation can be reemployed by the County

4. Similarly, we need to examine our transportation system. Would a regional system be more efficient and effective? All of the staff in our transportation can be reemployed by the County or a regional transit authority.

Raising taxes is the final option. In my conversations with residents and businesses, most could tolerate a modest increase, IF it was accompanied with cost cutting and more efficient and effective City operations. The latter means the City doing things that the City must do for its residents, businesses and visitors, and the County, or others, doing the things that make more sense to be done at those levels. There are concerns about losing autonomy over our operations, but I think we are reasonably well-protected by virtue of being the State Capital and the County Seat.

These are urgent policy questions because of the financial issues facing the City. I urge my constituents to follow and participate in the coming debate on these matters. We probably need to employ a combination of all of the options: some refinancing, some short-term borrowing, some cost cutting, and possibly some tax increase. Please let me and the other members of the City Council know your thoughts.

Your Alderman, Ross Arnett

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September 2010

With last year’s elections, this year’s elections, and the budget turmoil, you may not have noticed some important improvements in the City. Starting with the Moyer Administration and continued under Mayor Cohen, there have been major improvements in the information available to the City Council and citizens in general.

First, over the last few years, there has been a dramatic increase in both the amount of financial information available and the ease of access. Ellen started the trend and Josh has continued it. Under Moyer, the financial advisory Blue Ribbon Committee was formed. That was a group of knowledgeable residents who reviewed the city budget and financial processes and made several sage recommendations, some of which have been followed. Mayor Cohen has continued with a similar group, the Financial Advisory Commission (FAC).

The FAC is a permanent oversight body that will work with the Finance Department and with the Council’s Finance Committee. The Mayor has promised great access to the financial information of the City, and so far a large amount of information has been given to the new group.

Of course, information doesn’t solve our budgetary problems, but it is an essential beginning.

With the advent of new technologies and a change in mindset, the City has been posting a large variety and amount of information on its website—www.annaplois.gov. One can view any meetings that have been taped by staff—from Council Meetings and Committee Meetings to special events. The Mayor posts a weekly message and the site is full of links to other information sources. Events and schedules are also available at the City site.

Finally, the City website allows for all kinds of reporting and tracking. For example, have a pothole on your street? Residents can report it to Public Works electronically and then track its disposition interactively on the web. Going for a building permit? Again your permit’s progress through the permitting process can be tracked online. Need to know how to contact your alderman or a City Department? Again, all of that information is on the website.

I’m not saying we’ve reached perfection, but access to information is much improved in the last few years. In addition, the responsible city staff is very interested in your feedback on the website in terms of additions or improvements.

So check out the City’s website. Once you learn how to navigate it, I think you will find it to be quite helpful. Also look for the reports from the new citizen groups that have been formed to mirror the existing City structures, such as the FAC.

As always you can reach me at 410-295-9743 or EastportRoss@aol.com to discuss these or other issues.

Your Alderman, Ross Arnett

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Summer 2010

Though we are still in the midst of a budget and financial crisis, the Council must still keep an eye on the future. More on the financial business at the end, but for now I will address the Annapolis Economic Development Corporation (AEDC).

On 20 July the Mayor signed into law the code creating the Annapolis Economic Development Corporation. The well chosen place for the signing ceremony was next to the vacant Fawcett’s Boat Supply building, a symbol of our declining downtown and the hurting Annapolis business environment in general.

The AEDC replaces the City Department of Economic Affairs as a public-private partnership. It is patterned after the very successful County Economic Development Corporation. The goal is to recruit and retain business in Annapolis to serve Annapolitans. The Corporation will start by recruiting a Chief Executive Officer and, from there, a small staff to carry on the mission.

An important starting place will be the development of metrics, measures of Annapolis business activity, something we don’t have now. A whole host of things will be measured on an ongoing basis, such as commercial floor space in total and the amount and kinds of space currently occupied. There will be measures and analyses of mix, the types of business services existing and missing. In other words, measures of all the types of things we need to know to recruit and retain businesses to serve the community and our visitors, but mostly to serve us.

The Corporation will start with $400,000 per year from the City, about what the old Department of Economic Affairs cost. But it is set up as a 501 c 3 corporate entity, which allows it to generate tax advantaged investments from the private sector. The hope is that a mature AEDC will be able to exist without much financial help from the City.

An important aspect of the governing Board of the Corporation is that it includes ex officio members from the Chamber of Commerce and the Visitors Bureau, and maybe most importantly, the City Manager. The latter is important because it will help insure coordination
and cooperation among the many City Departments that process planning, permits and inspections. Getting through the bureaucratic process has proven to be very time consuming and confusing for local businesses. Expediting these procedures while still maintaining standards will likely be the strongest improvement in the business atmosphere.

That the Mayor and the Council are committed to the success of the AEDC is evidenced by the fact that we passed a budget with $400,000 for the Corporation in a very troubled budget period. But this is an investment in our future with a much improved business community. Good business not only serves us with goods and services, but also helps our tax base. Businesses pay property taxes and other taxes, but use far less City services than do residents. This business “subsidy” will help hold down increases in property taxes, our primary source of revenue for the City.

Meanwhile, our City finances continue to be a problem. At this writing, the City is again out of cash, even after the $10,000,000 (that’s $10 million) line of credit. It has all been used up and we are only in the first month of the fiscal year. As predicted, at this point the only solution to our cash flow problem that I can see is more borrowing. But that will lead to a vicious cycle that can only lead to disaster. Or maybe not, maybe the banks coming in and restructuring the City operations could be a good thing – we’ll see soon enough. The next big infusion of money is 10 October when the first half property taxes come in. Until then who knows what the Chief Executive Officer (Mayor) plans. If it’s more borrowing, we will only push off the cash crunch by a few months. Stay tuned.

As always you can reach me at 410-295-9743 or EastportRoss@aol.com to discuss these or other issues.

Your Alderman, Ross Arnett

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May 2010

I write this budget update, the city’s financial picture is a moving target, but one that continues to deteriorate. A number of factors are contributing to the city’s financial woes. Tax revenues and transfers from the state and county have been lower than expected. But most importantly, the city has overspent its adopted budgets, spending down cash reserves. Budgets adopted in the past have not been truly balanced.

Mayor Cohen has said he inherited a “financial train wreck” and he did. Since he made that statement, things have only gotten worse. The deficit has deteriorated more, even while the Mayor made reductions in staff and overtime spending this spring to try to address the problem, because of new reductions in revenue from the state and more overspending by departments.

The most recent financial challenge is a growing cash flow problem. Finance Director Tim Elliott has now said unequivocally that he needs the $3M line of credit the council authorized last week to be able to make payroll and pay other bills through June 30th. In addition, the City will need to access the remaindering $7M of the $10M line of credit that the Council approved on a 5-4 vote on May 3rd to make payroll in the first quarter on the new fiscal year starting in July.

I opposed the $10M line of credit because I don’t believe we should increase our debt until after we make the hard decisions on how to get our budget back into balance. We must come to agreement on what are the core services the City can afford if City is to avoid ongoing deficit spending in the form of a rolling line of credit that will become increasingly unaffordable. At some point, banks will refuse to lend the City more money.

In addition to $10M line of credit, Mr. Elliot has said that to restore minimum 5% reserves the City is required under law to hold and to avoid ongoing deficit spending, the City will need to cut $8M in spending for the next year. $3.7M of those cuts must be immediate (that is, be in place on July 1 at the start of the new fiscal year) and permanent reductions which can only be done by permanent staff reductions, possibly as many as additional 50 filled positions or significant across the board pay cuts. The other $4.3M can be achieved through temporary reductions such as furloughs (also pay cuts but temporary in nature). One furlough day saves the city about $140,000. To save $4.3M through furloughs the city will have to close for about 30 days over the course of the next year.

As of this writing the Mayor is preparing to submit new proposals for balancing the budget. The FY2011 budget could be voted on in May but will most likely be voted on at the June 7th City Council meeting. Council members are divided between those who want to make necessary cuts now before things get worse and deeper cuts are needed and those who want to raise taxes.

These issues are not easy, and I wish to thank members of my informal budget group for the wonderful work they have done in analyzing the budget and helping me frame suggestions for how to bring the budget into balance—Lee Finney, Chris Ledoux, Robert Libson, Jean McCoy, Julie Mussog and Harvey Singer, and attended by Fred Paone and Ian Pfeiffer.

The bottom line is:

• Mayor’s budget as proposed is unrealistically optimistic
• Things have gotten worse – most significantly the cash flow problem, which must be addressed immediately
• We must focus on $8M in cuts “done the right way” – $3.7M in immediate, permanent cuts in spending, and $4.3 in other spending reductions.
• Timing is important – any delay will lead to deeper cuts and/or worse outcomes
• Necessary cuts will reduce city services. Eighty-five percent of the budget is salary and benefits.
• The alternative is a significant tax increase.

The way to achieve necessary reductions can be through a combination of temporary and permanent cuts that will of necessity result in cuts in services to residents. The City must focus on what are core services. I would like to hear from residents of Ward 8 on this. You can reach me at eastportross@aol.com or 410-295-9743.

Your Alderman, Ross Arnett

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January 2010

The new administration has started and there is some good news and some not so good news.

Starting the new Council with a closed session and all of the contract hires has been a less than stellar start. The parking decal gaff was a leftover from the last administration, but still not good. I think the City did the best that could be expected with the snow removal, but I did hear a lot of grumbles.

On the plus side, the new Council work sessions are a great idea and I encourage you to attend or watch. They are held on the third Thursday of the month and are televised live and you can call them up for viewing at your choice of time by using the City web site. These sessions allow you to see the Council at work rather that in the stilted normal Council legislative meetings. The Mayor has provided a lot of good information in the meetings so far, a welcome change.

Though I don’t like the way the new Chief Administrative Officer (the City Administrator function, only different) was hired by contract, I can say that Doug Smith is already making a difference. Doug is determined to dig out the data that is needed to get the City running efficiently and effectively, and he is making changes to operations that look like they will produce results.

Another Smith, Gail, is also making a lot of changes that show promise. One can already tell the difference when you visit the Mayor’s office. Gail is doing a good job of organizing the office and staff procedures and processes.

Josh’s eight “idea teams” also look like they will produce some useful information and suggestions for positive change. They will report on their work towards the end of this month. I have been impressed by what I’ve heard so far.

I’d say that on net, Josh and his team have gotten off to a good start.

And we will need all the good work we can get because the City has been in bad shape, especially the budget. This current fiscal year, 2010, is in deficit according to the data in the Blue Ribbon Report and the next two years are looking tougher yet. The Council and the Administration are going to have to find significant ways to cut spending, and the sooner the better.

The next two months will be critical. The employee contracts must be negotiated by Feb. 1st. In March the Council will get the budget books for FY 2011, which starts the first of July. We need to find ways to get this year in balance or balancing 2011 will be next to impossible.

In my view the balancing will have to come through cuts in services, which, in turn, means cuts in staffing. Job cuts are not a good prospect as we continue to experience a jobless recovery in the general economy. However, we have been living beyond our means for several years and must now pay the piper – stay tuned.

As always you can reach me at 410-295-9743 or EastportRoss@aol.com to discuss these or other issues.

Your Alderman, Ross Arnett

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May 2009

By law, the mayor must present and the Council must pass a balanced budget each year in time for the beginning of the fiscal operations starting on 1 July. This year the mayor presented a budget that was balanced in the sense that revenues did equal expenditures, but in my view, it wasn’t really balanced at all. There were a number of problems with the budget -- again, in my view.

For the first time in recent memory, the revenues estimate (forecast really) actually fell from the previous year. The expectation is that revenues will be down or, at least flat for the next several years, but more about that in a bit.

As I said, the expenditure side of the budget must equal the projected revenues. But our salary and benefits, about 85% of the budget, are increasing each year at a 6 to 8% rate, or about $2.6 million for FY 2010. To compensate for that increase all of the rest of the budget spending was flat lined; the mayor cut $1 million from her budget (or should I say from hers and the next mayor’s budget); and some other operating spending was cut. All of that balanced, but it left out several large expenses the city was known to be facing in FY 2010. Most notable were the cost to get the Market House back, under funding of the new recreation center operations after it opens in November, no money for sidewalk repairs, and no dollars for grants. In sum, the likely budget was out of balance by anywhere from $2.5 to $5 million dollars.

After much noise from me, the Council’s Finance Committee, with much help from the Finance Director, Tim Elliot, found money to get the budget back into balance. Much of that balancing money came from moving so-called paygo dollars from the capital improvement program back into the operating budget. That takes care of FY 2010, but does increase our bond issuance. It also increases our reserve fund back to a “safe” level.

The city tries to keep the reserve fund at about 15% of the operating budget and, by code, must keep it above 10%. I know that is kind of techie stuff, but it’s all-important to our bond rating, which, in turn, affects the amount of interest we have to pay when we issue bonds for capital projects. Our reserve fund had slipped from 18% last June to about 11% this June and would be barely above 10% in the next fiscal year. Any shortfall in revenue or increase in spending would but us below the desired 10% level for the reserve fund.

That is problem enough, but fiscal year 2011 will be worse and for that year we will not have a pay-go trick up our sleeve. The bottom line is that for next year’s budget exercise, to balance, we will either need to raise property taxes a bunch, or start cutting city services. All the more reason why we needed to get the fiscal year 2010 budget into true balance.

January 2009

In lieu of an alderman’s report this month, I have asked ECA to reprint the following article from The Capital, which points to some of the gains Annapolis is making under the leadership of the new Police Chief, Michael Pristoop. I want to publicly thank the Chief and his force for the strides the APD is making. And my best wishes to all Eastporters for a good New Year.

Your Alderman, Ross Arnett

November 2008

Chief Pristoop has released year-to-date crime data compared to the same period last year

Year To Date	January through October		Change
	2007	2008
Homicide	8	7	-12%
Robbery	161	113	-30%
Total Violent	345	265	-23%
Burglary	348	238	-32%
Total Property	1535	1318	-14%
			All Reductions

This is obviously a good start, but just a start. We still are experiencing too much crime and, as the Chief says, we have some work still to do.

As we all know from the recent armed robbery the evening of November 2, there are still bad guys out there. Fortunately the police caught this one and no one was hurt, but we must remain vigilant. We are and must be our own first line of defense.

Please be aware of your surroundings when out on foot, especially at night. If you see anyone that looks at all suspicious, move away or go up to the nearest house and knock on the door -- bad guys don’t like company. Call in the suspicious person(s) –410 268-4141 as soon as you can. Lock the doors to your home and cars. If you don’t have a security system, please consider one. They protect you from crime and fire and are now wireless. Please be careful and be safe.

On another topic, I’ve been working hard with Alderman Israel to amend the City Charter to move us to a City Manager form of government. I will be presenting that concept at the membership meeting this month, so please come if you can. In short, I believe that the city needs this kind of day to day professional management.

Finally, Public Works presented their plan to repair the sidewalks. The repairs will cost about $1.1 million a year and will take awhile to get started. In the meantime, if you have a sidewalk that is seriously dangerous please call it in to either Public Works [410 263-7049] or to me at the number below. Please, just the really bad ones for now until Public Works can get caught up.

As always you can reach me at 410-295-9743 or EastportRoss@aol.com to discuss these or other issues.

Your Alderman, Ross Arnett

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July/August 2008

Your Alderman, Ross Arnett

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February 2008

I’m sure that you’ve noticed that crime has stayed in the news. Last summer we had the muggings and now we’re having a spate of burglaries, especially on and around Boucher Avenue. The City recently released the crime statistics from 2007 and, while most categories are down slightly, the overall rate is still high, way too high.

There are some encouraging things happening, however. ECA, through its Public Safety Task Force, has made progress both in getting the Neighborhood Watch program numbers up and in getting streetlights repaired or installed. Jeanne Slawson has done an incredible job and the Watch numbers are now over a 175 persons. Recently, Bob Agee, acting Director of Public Works, walked Eastport with Vic Pascoe and Lee Finney, and me, going over the streetlight list developed by Desiree Bell and her Task Force Committee. Bob assures me that we will be seeing a lot of new lights very soon.

On the State level, Mike Busch has noticed our crime issues and I believe you will soon be hearing about some welcome help from the state under Governor O’Malley’s public safety initiatives. We all hope that these initiatives will lead to a reduction in crime in Ward 8. ECA deserves our appreciation for getting on the crime issue and for making such great progress. Your work has been noticed around the city and in the Mayor’s office. Good work guys!

Still, we need to be mindful that there are still some bad guys out there looking to invade our homes. In watching the e-mail traffic from the “Stop the Gunshots Fired” group, it is easy to discern that we have been lax is protecting ourselves. The two burglars that have been apprehended were done so through the joint efforts of undercover police officers and alert homeowners who called 410 268-4141 and reported suspicious persons and activities. In some instances, owners of homes burglarized had left windows or doors unlocked. We all need to secure our property and turn on lights at night. We must be aware that as the police crack down on the crime around Boucher, the bad guys will roam our streets looking for opportunities.

My final message on crime in this Notebook is that help is on the way—we will solve this problem. Meanwhile, we must all remain vigilant. Secure your property and call in suspicious activity.

Turning to another topic, the Council will soon be taking up the budget.

This year, the budget will be a thorny issue because we must clearly increase significantly our investment in the police force. At the same time, we are facing budget pressures because our revenues are holding steady while our expenses are continuing to rise. Expenses are primarily employment related—salaries, benefits and contract services—but also gas and utilities are going up for the City just as they are for residents. Our primary revenue source is property taxes and that stream has slowed as real estate values have leveled off. Another important source of revenue is transfers from the County and State. The budget problems of those two entities have been much in the news. It will not be a surprise to see those transfers come under pressure, thus adding to our potential revenue woes. I will be reporting more on the budget in my next Notebook message.

Finally, I want to remind you that I will be available at Ahh, Coffee at 11 a.m. the first Saturday of the month to answer your questions and listen to your ideas. I will also choose a topic to expound upon for each meeting as time and interest allow. This month I spoke about the difference between our City structure of government compared to the federal form of government. I enjoyed the meeting and I hope those that attended did as well. I will send out a reminder of the next meeting via blast e-mail. If you are not getting my e-mail blasts and want to do so, please send me your name and contact information at the e-mail address below.

As always you can reach me at 410-295-9743 or EastportRoss@aol.com to discuss these or other issues.

Your Alderman, Ross Arnett

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November 2007

Two important votes are coming up at the City Council meeting of 19 November: the ban on plastic bags and the 2 a.m. liquor licenses. I’m not inclined to vote for either of these ordinances at this point, based on my own analysis and the input I have received from residents.

Like the other council members, I am concerned about the environment and know we need to start doing things to reverse the course of global warming. My son is twenty and I don’t want to stick him and his generation with an irreversible mess. The big question is, What are the correct things to do and how to get them done?

The paper versus plastic issue is very scientifically complex and I’m not sure anyone on the Council is qualified to make these assessments. Thus, we have relied on what articles and information we can get from outside sources. Unfortunately, these often show very different pictures. Some say that plastic is the worst environmental offender. Certainly in terms of indestructible litter it is very bad, but it is the environment not aesthetics that I worry about.

Other articles show that paper, while it does degrade eventually, has the worst environmental footprint. Paper production and recycling uses huge amounts of energy and toxic chemicals. A ban on plastic bags could be driving us to a solution that is environmentally worse than the problem, but who among us knows that for sure.

The articles I find most useful are the ones that say that the right choice is neither plastic nor paper, but instead to use reusable cloth bags.

In my view, the City needs to get its own house in order first, before we start limiting the choices of the electorate. We need to do a much better job of recycling in the commercial zones of the City by providing color-coded recycling bins. We also need to provide reusable cloth bags just as we provide the blue recycling bins for homeowner use.

Council members are working the issue as best we can and my hope is that we will be able to able to come up with something better that the ordinance we have under consideration now.

As for extending the hours of operation for restaurants to 2 a.m., I am unconvinced that this is the right thing to do. The ordinance is offered as a move to make a fair playing field for all establishments, and that seems alright on the surface. But, we know that the two additional hours will be devoted to drinking, not eating. Given that we don’t do a very good job of policing the behaviors at the current 2 a.m. establishments, how can we consider adding more to the list?

During the course of our hearings on this issue, we heard from the Alcohol Beverage Control Board and found that they have no enforcement staff, and they rely on the police to manage the drinking scene. The police are primarily used to stop fights and do not, as a rule, enter the establishments to observe underage and excessive drinking, nor do they follow patrons onto side streets where unsavory activities occur. In any event, given our crime situation and the understaffing of the police force, I don’t feel this is a movement in the right direction. Until we address the enforcement issue, I can’t see making any change at this point.

Finally, the Council will begin its deliberations on the Fiscal 2009 budget with a series of meetings at St. Johns College starting Thursday evening, 15 November, and carrying over to Friday and Saturday, 16 and 17 November. Information on these meetings will be posted on the City website once they are made firm.

As always you can reach me at 410-295- 9743 or EastportRoss@aol.com to discuss these or other issues.

Your Alderman, Ross Arnett

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September 2007

First, congratulations to Eastport and the Civic Association for rising to the occasion during our recent crime scares. The citizen e-mails, reward posters, and the Association’s Safety Task Force have made the point that Eastport is not crime tolerant. I can assure you that in City Hall and police headquarters the message has been heard.

The City Council Public Safety Committee, of which I’m a member, is working with the Mayor and the Annapolis Police Department (APD) to come up with ways we can get the numbers of police officers up to the authorized strength. We are also looking at ways to make policing practices more effective. Community policing, strategic foot patrols, and more technology are a few of the areas we are exploring.

We are making some progress in getting crime down, but the real change is going to take some time. Thirty-seven candidates passed the recent testing for new officers. They must now pass security and background checks and spend ten months in the police academy before they can get on the streets. The Chief has promised that the new officers will start on foot patrols as soon as they arrive on duty.

We have been able to attract some officers from other forces in the area. Unfortunately, we also keep loosing officers as well. So the Council is going to have to help in other ways. The new cameras that businesses have put in place have already helped to capture some crime activity. You may have read about the initiative to change the shift schedules to put more officers on the street and the idea of getting a few more officers out of patrol cars and onto bicycles.

These changes, along with your voices, are letting the bad guys know that they are not welcome in Eastport and Annapolis. Now we need to make sure that we all keep up the good work.

Ross Arnett, Ward 8 Alderman
EastportRoss@aol.com

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May 2007

Well, it’s that time of year—budget time. Not a very sexy topic, but oh so important to the City’s well being and to your wallet. I apologize in advance for the amount of numbers sprinkled throughout this discourse. I tried to keep them to a minimum, but some numbers are necessary for context.

At just under $74.3 million, the Mayor has submitted a balanced budget, in that the revenues cover the expenditures. (You can view the proposed fiscal 2008 budget online by going to the City website). This was accomplished only by not funding several expenditures that are sorely needed by the City, but more on that in a bit.

I want to take a little space to address the revenue side of the ledger. Revenues come from two general sources, general funds ($52.2 m) and enterprise funds ($22.1m). The latter are revenues generated by fees we pay directly for such services as water, sewer, parking, docking, transportation, refuse, the market house and stormwater. By law, the fees for these services must cover their expenses. The City has been able to do a good job of keeping these funds in the black with just small positive cash reserves.

The general funds come from taxes ($28.2m), licenses and permits ($2.9m), intergovernmental transfers ($12.7million, with $5.1 coming from State income taxes, $1.9m from State highway taxes, $1.9 m from hotel taxes, $1.2 from police protection, and many smaller transfers) with the remainder coming from a variety of services, fines and earnings. The $28.2 million tax source draws the most attention because of the $25.7 million that comes from our property taxes.

The property tax is generated by applying a cents-per-hundred rate to the assessed value of property. Over the years, the City has been dropping the rate from a high of $1.15 per hundred to the current $.53 per hundred rate. Of course, much of this rate drop has occurred because of the dramatic rise in property values over the past few decades. While a direct comparison is not possible, it should be noted that our tax rate is the lowest of any municipality in Maryland by a considerable margin, and that includes many cities, such as Rockville, in expensive real estate areas. I will return to this topic towards the end of this discussion. By the way, the one-cent per hundred rate equals about $486 thousand in revenue with the current level of property assessments.

Returning to the general fund expenditures, almost 83 percent of the $52.2 million goes to salaries, benefits and contract services, that is, staffing. Most of that amount, about $40 million is set by union contract agreements, both the level and the annual increases. Much of the remainder of the $52.2 million goes to supplies, maintenance and repairs, utilities and debt service. What’s the point? There is an extremely small amount of discretionary wiggle room on the spending side of the budget. Furthermore, the heavy preponderance of our spending is on matters of public safety such as police and fire, but also including public works and inspections. These are the fundamental services provided by a municipality and are not easily cut.

For those few who care to examine the details of the budget looking for cuts, one item that draws attention is the $2.5 million spent for contract services. To be sure, some of this could be reduced a bit, but most is for services where we have no permanent staff. The alternative is to hire staff with the attendant fringe and retirement costs. It’s not clear that these are really budget cuts in the long run.

Another target for cuts is the City’s grant program, which this year totaled $382 thousand. The working mark for the current budget is $500 thousand, which returns funding back up to the fiscal 2006 level. The first thing to note is that we are looking at thousands, not millions of dollars. The current grants selected for funding, out of over 50 applicants, cover 24 wide-ranging programs. The City’s funding is only a small part of the total funding for these programs. In other words, our few dollars of contribution leverage many times more dollars coming from private philanthropic organizations or other governmental entities. This year we are giving priority to grants aimed at helping children and persons needing help in coping with a wide assortment of physical and mental problems. We are funding no new programs this year and are funding one grant for the full amount requested by the applicant.

In putting together the budget, the Mayor looked at millions of dollars of budget “enhancement” requests from each department. From my review, most of these looked not only reasonable, but also, often very desirable. The Environmental Matters Committee reviewed the Public Works enhancement requests and found $1.5 million in additional items they would fund over what the Mayor submitted. It goes like this throughout the budget; many worthy items did not get funded in order to keep the budget spending balanced with revenues.

So the struggle continues to hold the line on expenditures in fiscal 2008, when we have so many items where additional spending is sorely needed.

But here is the big rub. After fiscal 2008, we are headed for some significant budgetary difficulties. In FY 2009, revenues are projected to level off or possibly even to fall while expenditures are forecasted to continue on their current trend. Given the lack of discretionary flexibility to control spending mentioned above, this will put great pressure on the Council to increase the cents-perhundred rate applied to the property assessments possible by a large amount—not a happy picture. Though the revenue picture is forecasted to improve in FY 2010, revenues don’t keep up with expenditures and we will face another potentially large shortfall.

By law the City must pass a balanced budget, so, we are either facing major cuts in City services or substantial property tax increases. The latter may be sustainable by many wealthier residents in Eastport and the City but has the prospect of greatly affecting the demographics of our neighborhood and the City at-large.

Obviously, there are things that need to change, and change quickly, to keep the City on a sound fiscal footing. The Council is working on a range of ideas, mostly involving expenditure cuts, and I encourage all of you to take a look at the budget and to share your ideas with me or any other Council Member. I realize this will sound like the typical bureaucratic response, but the Council is going to invite a “blue ribbon” panel to help us evaluate the situation and develop an array of fixes before the crisis is fully upon us.

In the meantime, crime continues to be a growing concern. There are many different groups working on the problem and each group has its own set of plans to address the problem. The Public Safety Committee, of which I am a member, is planning to hold a meeting of all the different groups in June to see if there is some way to coalesce all the different ideas and energy into one united force to attack the problem. This is still very much a work in progress, with, sadly, very little progress to report.

The Adequate Public Facilities Ordinance (APFO) issue is still working and progress is being made. Mike Christman and I are working with Dave Cordle to get a package together that addresses, in the City code, the Comprehensive Plan, the Capital Improvement Program and the APFO in a coordinated fashion and following the State Annotated Code (i.e., the State Law) and the guidance from the Maryland Department of Planning. We hope to have our work done this summer and have a Council vote, probably in September. One of the side effects of getting this passed is that the building moratoria will be removed and we can start getting permit fees and taxes from work in suspense, help for our impending budget problems.

There is much more going on, but this is all the room I have for this Notebook report. As always you can reach me at 410-295-9743 or EastportRoss@aol.com to discuss these or other issues.

Your Alderman, Ross Arnett

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March 2007

First, let me say I am honored to serve as Eastport’s Alderman. Now that I have been elected, wow, have I been busy! Turns out, being Alderman is a fulltime job. Though I knew the players and the system in general, it’s the details that make the Alderman’s job so demanding. Josh left me quite a bit of material to read and digest, which is a good thing and I’m glad he left me those materials, but it is a lot to get through. On top of that, to get me up to speed, everyone else in the City is being helpful, and supplying me with background information to review and absorb. Meantime, the legislative agenda is full of many important issues. We have the smoking ban, sprinkling downtown, parking, traffic impact analysis, and the adequate public facilities all in the hopper and under discussion, along with a wide assortment of other important but less urgent ordinances and resolutions.

I have also been working on my campaign issues – crime, cars, and creeks. The Mayor has appointed me to the Public Safety Committee, the Economic Matters Committee, and the Maritime Advisory Board. These are all good committees and I’m looking forward to serving on them. The Public Safety Committee covers both the crime and cars areas. We are focusing on crime right now and I will be reporting to you on that issue as things develop and when they can be disclosed. The Committee will also be looking at traffic, parking, pedestrian safety, and bicycle path availability and safety. I need to learn more about what gets referred to Economic Matters, but I suspect the name is self-explanatory, as is the Maritime Advisory Board.

But I want to attend the meetings of three other committees, the Finance Committee, which works on the next City budget, the Rules Committee, which reviews almost all proposed ordinances before they are taken up by the Council, and the Environmental Matters Committee, which looks at the City’s part in protecting and improving our local water and air. A lot of the basic groundwork and discussion of ordinances gets done in the committees. Attending the committee meetings is the time to influence what gets to the Council Meetings for public discussion and votes.

Having elaborated on the workload, I must say that I am enjoying myself. This is what I ran for and I think together we will be able to make progress for both Ward 8 and the City on all of the aspects of the crime, cars, and creeks issues.

Finally, I am working to get up the EastportRoss blast e-mail system. It’s taking awhile because so many of you have expressed an interest in being included in the blasts. I am entering all of your names along with your e-mail addresses and sending back an e-mail to each of you individually once you are entered into the system. Once it is up I will send out a test blast. If you haven’t gotten the test by the time you read this Newsletter, send me an e-mail at EastportRoss@aol.com with your full name and any other contact information you wish to share, such as phone number(s) and address. I will also be revamping the website, EastportRoss.com with current information and contact resources. Last, I plan to have my first town hall meeting in April, probably at the Fire Hall, so stay tuned for information on that.

As always you can reach me at 410-295-9743 or EastportRoss@aol.com to discuss these or other issues.

Your Alderman, Ross Arnett

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Analysis of Comprehensive Plan
--testimony before the Planning Commission--

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