For those of you who read along, the most common comment I get is “Dude, you repeat yourself allllll the time.” Point taken. I hate it. Unfortunately, most readers are not following along. So one has to ‘tell the entire story’ over and over and over. And over. What kills me about this story is that it was only two years ago.
If you recall, during the pandemic, most everyone got free money (stimulus checks) from the Federal government. In the Summer of 2021, the Federal government announced a similar give-away for cities called ARPA. I wrote an article on it called Christmas In July.
We were given $9,000,000 dollars with a 600 page book of rules. One rule was that we had to decide on how to spend it by 2024. Another was that we had to actually spend it by 2026. We were also told we needed to be very careful–you couldn’t spend it on just anything.
We held a spending discussion on September 16,2021. Before the meeting, the City Manager gave us a suggested budget for spending $8MM of it, which had been vetted to pass those legal tests and left $1MM for the Council to debate over.
Over my strong objections, the Council voted to budget all of it, at once, using the City Manager’s template. I voted ‘no’, saying that we should only budget money on the most urgent items–ones we actually could spend money on now, and put off discussing the majority of the items to give us time to decide in a thoughtful manner. That is what most cities did.
Since then, the City Manager has come back to the Council several times to Re-allocate large portions of the money because many of the items in his original budget were not spent. That left money for new things like the Ferry.
September 2021
April 2022
January 2023
January-12-2023-ARPA-update-and-reallocation
September 2023
As I discussed last week, at our Budget Meeting, the City Manager discussed re-re-allocating this $1.2MM of ARPA money in order to fill expected shortfalls in the budget. But despite this, the Mayor said that he still hoped to keep $400,000 for a ferry next year.
The process…
I have always objected to the entire process.
- Use of one-time money for ongoing expenses. One-time money is money that is unpredictable. It’s the opposite of structural revenue. Permit revenue is one-time money. Property taxes are the opposite; you know it’s coming every month–like a paycheck. ARPA money was the ultimate one-time money, which is why I referred to it as Christmas in July. The rule of thumb for budgeting is: never use one-time money to pay for ongoing expenses. An ongoing expense is a salary. That’s why police officers are generally funded with property taxes and not permit revenue. But we used $1.75MM to fund police officer salaries with ARPA money. Which is fine for those two years. OK, now how do we keep paying them?
- Unnecessary haste. We allocated money for programs we literally could not spend money on at the time, because there was no infrastructure in place to do so. Take a look at the money that is up for re-allocation, there’s a whole lot of ’emergency’ stuff in there. By ‘allocating’ it all in one night, we got a chance to look like we were doing a whole bunch of very noble stuff with great urgency.
- Lack of discipline. If that September 2021 vote had been realistic, the money would have been spent and there would be no money left to play with. That’s what a budget means. If we had wanted the ability to change direction so many times, we should not have voted to spend it all in one night. In reality, we simply gave full discretion to the City Manager to spend (or not spend) bits and then repeatedly come back to the City Council to re-allocate the unspent parts. And that is exactly what has happened over and over. The net effect being to use a great deal of the money simply to plug budget holes in an ad hoc manner.
My colleagues obviously disagree. They believe this is simply being ‘flexible’.