Mayor’s Report 7/9/24 – Budget Update

Good evening Council,  

Tonight, I bring you an update regarding our current budget and budget planning for next year. 

Beginning with our 2024 YTD revenues and expenditures ending June 30^th.   

• Revenues are on track and are slightly above our expectations in a few areas, including real estate transfer taxes. 
• Expenditures are under budget in most every category with a few exceptions, such as medical expenses for retirees (8% over budget) and overtime in the Fire Bureau (32% over budget), which I will address later in my remarks. 
• Cost savings for 2024 total $2.1M, primarily from vacancies or held positions but also reductions to our fleet, IT consultants, printing and phone costs, and other operational expenses.  

Looking ahead to 2025, as you all know, we are preparing two budgets – our “regular budget” and a second “Home Rule budget” contingent upon November outcome.  
 
We have completed the first draft of the “regular budget” – internally what is referred to as Level 1.  As we move to the second draft, Level 2, Director Campbell has provided the Executive Leadership Team targeted percentage reductions based on the annual expenses per department as a guide to begin further reductions.   

We are projecting roughly $3.8M in cuts as part of the “regular budget” and $1.7M in cuts with a “Home Rule” budget as well as the utilization of the remaining $3.4M in ARPA to balance the budget. We are not proposing the use of any reserve funds in either budget.  

Both of these budgets also include tax increases along with the cuts. The regular budget includes a potential 8 percent increase in real estate taxes, roughly one mil, which will generate $2.5M. The Home Rule budget includes a potential .3% increase in Earned Income Tax, which will generate $4.8M, and no increase in real estate taxes.  
 
Please note that because we are proposing to use the remaining $3.4M in ARPA funds to balance the budget in 2025, there will be even more work to do for the 2026 budget to bring our revenues and expenditures into balance. If the stars align, and home rule moves forward, I’d like to consider setting aside $1M of ARPA funds for additional improvements to our city parks, specifically South End Park, Joe Jackson Tot Lot, and Ewell Gantz Playground instead of using it all for revenue replacement.  

Budget Timeline 

Between July 29^th and August 2^nd, Director Campbell and I along with Michelle Busch and Sharon Allen-Spann will be meeting with each department director and their key staff to review Level 2 budget with the goal to present two budgets to Council by October 1.   

A budget information session will be held on Saturday, October 12.  On this day, both of the budgets will be presented by the departments.   
 
There will also be a shorter meeting on November 14^th at 6 pm, post-election. At this point, we will know which budget we will be working with and can review again the budget that will ultimately be introduced to Council.  

The budget will then be officially introduced at the last stated Council meeting in November, a timeline governed by existing law.  

Fire Bureau Staffing 

Following the social media post from the IAFF, Local 319, on Monday, July 1^st, I have been fielding a lot of questions from the press regarding staffing levels in the Fire Bureau. I want to be clear — there have been no reductions in staff in the Fire Bureau. We have 69 fire suppression staff, including 4 new hires, a number that has remained consistent through my time as Mayor.   

During the last contract negotiation in 2023, the IAFF, Local 319, indicated that they were opposed to continuing the side letter agreement in place since 2015.  The side letter agreement, which expired on 12/31/24, ensured funding to maintain a minimum of 15 suppression staff paid at straight-time (i.e., not overtime, which is time and half). 
 
Last November, I provided a cost analysis to the fire union, outlining the budget implications of various staffing levels and overtime pay so that we could all understand what the cost impacts would be. 

On a platoon of 17 firefighters, the average shift in 2023 had 11 on duty based on average use of paid time off.  (An arbitration award allows the union to have 8 staff off during any one shift, but in 2023 it averaged about 6 firefighters off any one shift.)  6 to 8 staff on paid time off means that 35-47% of staff are unavailable to work any one shift, which directly impacts overtime costs.  
 
In 2024, the average hourly rate for a firefighter is $31.82/hour and the average overtime hourly rate is $47.73.  To maintain a baseline of 15 on duty staff, the projected cost to hire back just one firefighter with overtime pay is $418,115 annually (this includes acting officer pay). 

Following the adoption of the 2024 budget, the minimum staffing level for the bureau was set at 13.  However, as the year progressed it was clear that we were going to overspend the approved budget.  As of June 30, the fire bureau has expended 82% of the overtime line item. Thus, on July 1, the minimum staffing level was set at 11.  

In short, at a time when we are facing a significant budget shortfall and every department is cutting expenses, we simply can not afford to pay 1/3 to 1/2 of any shift overtime at time and a half.  It is not sustainable.  

The Local 319 has requested a meeting to discuss staffing levels and I’m hopeful we can determine the best path forward that ensures public safety within our budget parameters.