2010 Birmingham budget

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The 2009-2010 Birmingham budget includes the operating budget for the City of Birmingham for the fiscal year July 1, 2009 - June 30, 2010 as well as a capital projects budget for the five years from 2008 to 2013. The operating budget was submitted by Mayor Larry Langford on May 19, 2009. After several rounds of modifications a compromise bill was passed by the Birmingham City Council on August 4.

Through an extended election season that saw four people in the mayor's office in the course of a few months and a new slate of City Council representatives, new warnings arose about the growing threat of severe budget deficits, largely because of over-optimistic projections for revenues and serious gaps in accounting for committed funding. The issue of how to resolve the budget deficit was central in the special mayoral election called to fill Langford's seat after his criminal conviction on bribery and corruption charges. Interim mayors Carole Smitherman and Roderick Royal made it a priority to investigate the problems with the passed budget and left it to newly-elected mayor William Bell to submit a new budget. His second proposal was passed on April 20, 2010.

Langford's initial proposal

The 2010 budget as proposed projected $402 million in revenues and expenditures over the course of the year. That figure represented a decrease of 3.05% over the 2009 Birmingham budget submitted the previous May.

At his presentation to the council, Langford acknowledged the "recent softness of the international economy" in explaining the overall reduction. He proposed to keep most departments funded at 2008 levels and to cut funding to some agencies, such as Operation New Birmingham and agencies receiving funding for assistance to citizens with HIV/AIDS. In those cases the mayor suggested that the agencies merge with others pursuing similar missions in order to increase overall efficiency.

Council response

The Birmingham City Council objected to the cuts in funding for non-profits and instead proposed 7% cuts for city departments and the elimination of city-funded scholarships to reach a budget of $389 million. Further, the council claimed that there was a $26 million discrepancy between projected revenues and planned spending in the mayor's budget. Langford said the difference was in funds left over from the current fiscal year. Council president Carole Smitherman countered that the amount in question was earmarked for revitalization of Fair Park and other projects still on the boards. Councilor Valerie Abbott agreed with Smitherman's calculation, saying that the money "is obviously not available for us to use unless you cancel the projects that it was allocated for." Langford pledged to veto the council's revisions two days before the budget was set to take effect.

Unexpected deficit

At the Council's July 6 budget workshop, newly-available financial data indicated that the city finished the past year with a $17 million deficit rather than the $13 million surplus Langford had earlier reported. Faced with the revised inputs, the Council rescinded its working budget and requested that the Mayor's staff submit a new budget accounting for the deficit and maintaining the city's policy of holding three months of operational funds in reserve. Langford has argued that the reserve policy is worthless. He later told the press that it was unlawful for him to use revenue projections developed after the May 20 date on which the first budget was submitted. He promised to return the same budget as he had the first time, only shifting more planned expenditures for the proposed domed stadium to future budgets, freeing that money for street paving and grants to non-profits.

Langford's revised draft

On July 16 the Mayor's office submitted a revised budget with some funding for non-profits not included in the earlier version and reduced funding for paving and sidewalks. The projections from the earlier budget were not changed, prompting the council to call for a forensic audit of city finances before proceeding. Smitherman compared Langford's demand that they accept the finance department's projections to "believing in unicorns." The idea of commissioning a forensic audit was later rejected as an independent audit is due in late Fall anyway.

Council's new draft

The Council responded on July 20 with their own draft proposal, the fourth to be discussed. The council decided to accept the finance director's revenue projections, but to keep the disputed amount in savings until it can be verified. The proposal cut city department budgets by 17% and non-profit boards and agencies' budgets by 20%. Before the draft was complete, Langford rejected it and urged approval of his original budget, saying that 17% cuts to the police and fire departments would be devastating. The council met again on July 28, but the Mayor's office declined to participate due to the impasse over the claimed surplus.

Passed bill

On August 4, 2009 the Council passed a compromise budget that removed cuts from departmental budgets, cut overall funding to non-profits to $2.5 million, reduced the amount set aside for pre-construction work on the domed stadium to $11 million and eliminated a proposed $5.6 million scholarship program. In all the version which passed provided for $13 million less spending than the mayor's request, eliminating an amount that the Mayor planned to withdraw from the city's fund balance, but accepting the finance department's projections of a $13 million surplus from the 2009 Birmingham budget. Langford indicated he would sign the budget ordinance.

In September accurate figures from the 2009 budget year, which ended on June 30, were still not available to the Council. The city's New World public administration software reported a general fund balance of $88.9 million (a 24% decline from the $117.4 million in the fund after 2008), but Langford and other officials said that the figure was inaccurate. Later Langford confirmed the decline and explained that in addition to unforeseen reductions in revenues ($379 million rather than the expected $392 million), the fund was used for projects approved in 2008 such as the Fair Park redevelopment. The report confirmed the Council's contention that what the mayor called a "surplus" was actually generated by withdrawing money from the fund balance to offset a budget deficit. The fund was thereby reduced from $117 million to $95 million to cover 2009 expenditures.

Furthermore the Council discovered that nearly $21 million in required expenditures (such as utility bills and legal fees) had been left out of the budget without explanation. Without a plan for cuts, the Council passed a budget totaling $425 million in expenditures even as it saw revenues continuing to decline. By January 2010 projections of revenues for the fiscal year were closer to $359 million, leaving a deficit of $66 million.

Royal administration

Following the 2009 Birmingham City Council election, Roderick Royal stepped in as interim mayor and began studying the budget in earnest. He prepared a "Plan of Action" (POA) to hand over to the incoming mayor after the results of the special mayoral election were certified.

Bell administration

Even before he was sworn in, newly-elected mayor William Bell asked Sterne Agee & Leach CEO Jim Holbrook to prepare an in-depth report on the city's finances within 30 days, from which he would draw up a plan of action.

After receiving the report, Bell recommended $18.9 million in spending cuts, along with moving $25 million from the general fund reserve and taking out a bridge loan to cover the remaining $33 million of what by then appeared to be a $77 million deficit.

The City Council balked at the idea of borrowing additional money. Bell returned in April with a revised budget with $65 million in spending cuts, eliminating the proposal to take out a bank loan, but keeping the proposal to transfer $26 million from the reserve. Among the planned cuts are $42 million less for capital projects such as the Rickwood Field Negro Leagues Museum, downtown intermodal station, and renovations to several city parks. Some of those projects may have funding restored by future bond issues. Another $23 million in operational cuts are distributed across city departments and outside agencies, with no layoffs or cuts in services expected. The council passed Bell's revised budget on April 20, 2010.

In October 2010 an audit determined that revenues had exceeded projections and that the fund balance ended the fiscal year at $92 million, or $6 million more than had been predicted.

References

  • Bryant, Joseph D. (May 20, 2009) "Birmingham Mayor Larry Langford proposes leaner city budget, funding cuts to ONB, other agencies." Birmingham News
  • Bryant, Joseph D. (June 30, 2009) "Birmingham City Council set to OK draft budget with 7% for departments, but increases council office spending." Birmingham News
  • Whitmire, Kyle (July 6, 2009) "Birmingham $17 million deficit revealed." Birmingham Weekly
  • Bryant, Joseph D. (July 7, 2009) "Birmingham, Alabama city council rescinds own budget, asks Mayor Langford for third version." Birmingham News
  • Spencer, Thomas (July 17, 2009) "Audit of city finances sought by Birmingham, Alabama council before making budget." Birmingham News
  • Bryant, Joseph D. (July 20, 2009) "Birmingham City Council proposes another budget for 2010." Birmingham News
  • Bryant, Joseph D. (July 25, 2009) "Birmingham Mayor Larry Langford rips council's fourth budget draft." Birmingham News
  • Bryant, Joseph D. (August 5, 2009) "Council passes budget for '10." Birmingham News
  • Hansen, Jeff (September 20, 2009) "Birmingham, Alabama's financial picture is unclear." Birmingham News
  • Bryant, Joseph D. (September 22, 2009) "Birmingham mayor Larry Langford details spending." Birmingham News
  • Bryant, Joseph D. (January 5, 2010) "Birmingham City Council brainstorms ways to save." Birmingham News
  • Spencer, Thomas (January 31, 2010) "$50 million deficit looms for Birmingham." Birmingham News
  • Bryant, Joseph D. (April 16, 2010) "Birmingham Mayor William Bell plans deeper spending cuts to curb projected $77 million deficit." Birmingham News
  • Bryant, Joseph D. (April 21, 2010) "Council passes Bell's plan." Birmingham News
  • Bryant, Joseph D. (October 19, 2010) "Audit shows Birmingham has $6 million more than expected." Birmingham News

External links