NTF Worksheet: ccwatch37.doc. 8-08.

NEBRASKA TAXPAYERS FOR FREEDOM WORKSHEET:

ANALYSIS OF THE CITY OF OMAHA BUDGET: FY 2008-2009.

BACKGROUND. This budget promises no property tax increase for the next fiscal year, but valuations in Douglas County have risen about 5%, notwithstanding the estimated real estate 2.7% increase shown in the budget, so home owners and commercial/industrial property owners who received valuation hikes will pay more in property taxes than shown on the pie chart. The city tax rate has remained static since 2002, but valuations on Omaha homes have risen about 44% since that time. Property taxes would provide 22.4% of projected General Fund revenues FY 2009, a 2.5% hike in revenue. Omaha realtors tell us that property values have dropped 5-15% because of the real estate crisis, so we urge the council to cut the property tax rate to factor in this devaluation. Because of increased mortgage delinquencies and foreclosures, the property tax collection rate probably will fall. The budget boasts that the tax rate is 18.5% lower than 1999 and 33.3% lower than in 1994. This statement ignores the skyrocketing valuation hikes on property. The budget estimates a 3.5% hike in sales tax revenue to supply about 46% of revenue for the General Fund, though a recession looms with attendant lessening of consumer spending. The city made a similar error in 2001 as a recession loomed. Retail gross sales tax receipts this year are the lowest % hike since 2001. Sales tax revenue will rise from annexations, however, expenditures will rise also to service the new residents. The 2008 and 2009 hikes in projected sales tax gross receipts mainly accrue from annexations, yet Omaha cannot continue to annex neighborhoods to accelerate sales tax revenues. The Qwest Center continues to place a heavy yoke on our property tax load to repay bonded indebtedness and drains our debt service fund, a crucial reason to increase budget cuts. Revenues to repay this debt are much lower than anticipated in the original financing proposal. A property tax hike in 2012 would eliminate negative balances projected for the debt service fund, another incentive to cut spending. Appropriations for the Human Resources Dept. would rise 6.23%, though no new employees hired. General Fund revenues are not keeping pace with inflation. The Commission of Industrial Relations has not ruled on police and fire union cases; the outcome may adversely affect expenditures. Pare the budget.

BUDGET CUT & EFFICIENCY SUGGESTIONS:

· To recoup $500,000 expended for demolition of substandard structures, implement an urban homestead program for vacant lots (see NTF issue paper).

· Instead of spending $125,000 on a new police auditor, restore the civilian review board, which seemed to work well with unpaid appointees.

· Payments to the county jail would rise by almost 9%, so accelerate the merger of city and county jails to save dollars.

· Total employee wages would rise by over 24%, far above the current inflation rate. The administration should harden its collective bargaining stance to lessen this increase.

· Retired police and firefighters pay none of their health insurance premiums until age 65, when they become eligible for Medicare. Reconfigure the retiree supplemental pension benefits system, which we believe much too generous. Calculate pension payments on base salaries. Prevent police and fire division employees from loading up on overtime, working extra shifts, or cashing in comp time shortly before retirement in order to boost their pension benefits, spiking. Match comp time to that given police officers and firefighters in similar cities. Reform the unfunded pension liability problem by reconfiguring how pensions base on salaries. The pension system is imbalanced. This gaping hole may not affect the operating budget currently, but financial problems will arise for the next 27 years. We incur added pension imbalances each year, because benefits approved by contract do not become paid for on a current basis, causing about an 11% deficit annually. 6% of this deficit can disappear by removing spiking. Pension payments base on the highest 12 months of pay during the last 5 yrs. of service. Spiking constitutes $33.3 million, 75% of the expanded gap between assets and amount needed to pay future benefits. Police and firefighter spiking rose 18% in 2006. It will raise pre-retirement pay 10% above regular salaries. Police and firefighters are earning higher salaries than actuaries anticipated. More police and firefighters are retiring early to take advantage of spiking largesse. Those who retire with at least 25 yrs. of service can collect 75% of yearly pay, up by 2-3%. In one egregious case, an Omaha policeman who earned a base salary of $54,136 retired in 2006 with a $124,906 inflated pay by spiking, earning him a $90,000 annual pension. More police officers and firefighters are retiring after 25 yrs. of service, because they have no incentive to remain. Under the 2004 contract, those who retire after 7-1-2007 get 75% of their regular pay. Contracts also allow our police to retire at 45, firefighters at 50, with 25 yrs. of service, younger than in most other depts. Either rein in benefits or make employees pay larger contributions themselves. Requiring retirees to pay a part of their health insurance costs would eliminate another 1-2%. Stop the yearly losses and stabilize the pension funds. New accounting standards required of cities will force Omaha to carry long-term unfunded pension liabilities on the balance sheet. Then the pension problem could impact our city AAA bond rating. The worst part of this problem is that our city loses many of its knowledgeable and veteran police officers and firefighters earlier in their careers, before future contracts lessen their pensions. From 2001 to 2007, budget hikes for the fire dept. have risen by 33%, 32% for the police division, while only 3% budget growth accrued to other depts. Future taxpayers must fuel these pension funds without action now.

• Require that money earned for work performed by the current 350 employees retired for disability reasons from the city offset city disability payments. In 2006, the civilian pension system paid out $1,112,836 in disability payments, $5,760,896 from the police and fire pension systems.
• Offer voluntary employment termination packages with severance benefits.
• End automatic pay escalators in labor contracts.

· Health insurance hikes of $6.4 million (17%) over the last budget should give the city incentive to force employees to pay at least 30% of health care premiums, as do many other government employees.

· Make police and firefighters pay an increasing percentage of their health care premiums, like other city employees.

• Trim Police Division overtime, which causes cost overruns because of early retirements. The city pays overtime now when not mandated by federal statute. Increased Fire Dept. retirements have increased overtime pay.
• Hire lower-paid civilian employees to respond to police calls regarding parking violations, abandoned property, etc., freeing sworn officers for dangerous duties and saving $1.6 million annually, according to the Matrix study. Attrition would achieve the downsizing of regular officers. Other cities have rerouted up to 30% of calls to civilian employees.
• End the practice of banking holidays eligible for later payout, as now done in the Police Dept.

· Retiree health insurance costs would rise by 13.7%, so rework retirement benefits to lower taxpayer funding. The unfunded actuarial liability is about $300 million now. The largesse bestowed on early retirees persuaded many more than usual to take early retirement, so the city is paying premiums on more retirees plus their replacements. Remove the incentive for early retirement.

• Require city employees to work additional years before qualifying for retirement pay. Police and firefighters can retire at age 45 with full benefits.
• End cashing in payoffs for sick and annual leave balances carried from year to year to increase pension benefits.

· Pension systems for union employees seriously are underfunded, so employees should pay more into this fund.

· All retiree employee benefits would increase by almost 11%, so rework these benefits to lower taxpayer funding.

· Parks and Recreation dept. expenses would rise by almost 10%, Public Works dept. expenses by almost 18%, an incentive to begin privatizing these depts.

• Privatize public works assignments to stem dept. increased expenditures, specifically on street improvement and restoration. More privatization means less spent on health care benefits.

· The Sundawgs program plays a vital role in our community, under a category of parks/recreation services historically provided by urban government. However, we oppose increasing its funding by $24,000 or placing its services under control of OTOC, which we believe would use this program to propagandize its leftist viewpoints to children. Much of Sundawgs funding comes from the private sector already, and additional funding could come from same.

· Urge the Convention and Visitors Bureau to solicit funding from the private sector, particularly from businesses benefiting from bureau publicity and advertising.

· Delete funding for Women Against Violence, saving $50,000.

· Delete funding for county violence coordinating commission, saving $25,000.

· Delete funding for Downtown Celebration Lights, saving $10,000.

· Delete funding for the Latino museum, saving $2,500.

· Delete funding for Omaha by Design, saving $50,000.

• Concentrate on funding basic city services. The budget shows that the percentage of expenditures returned by Riverfront Marina revenue is steadily dropping. Similarly, the percentage of operating expenses of the city parking facilities covered by revenues has dropped since 2006.

· Incoming revenues from the Riverfront Plaza and parking garages have fallen drastically, so privatize these services with private lease arrangements guaranteeing revenues.

· Restrain spending on projects funded by Community Development Block Grants, because federal funding is decreasing, and local property taxpayers should not face picking up the funding slack. In the Planning Dept., CDBG grant funding has decreased by $300,000 already.

· Lock in lower costs over a longer time in fuel contracts.

· As the city soon will abandon Rosenblatt Stadium, delete the $50,000 for minor ballpark renovations there.

· Delete funding for homeless day services, saving $100,000.

· Spend the $$ that the Mayor earmarked for homeless assistance on expanding city library hours, as citizens want to use these facilities more hours and additional days. Libraries historically are a necessary function of city government. Private entities already fund homeless shelters, e.g., Alegent contributed $1 million to programs that aid the homeless (Omaha World-Herald 7-23-07).

· Lobby state and federal governments to fund or end unfunded mandates on local governments.

• Add several hours to firefighter shifts.
• Save $700,000 by reducing top-heavy managerial staffing of the fire division, as recommended by the Matrix study.

· Increase EMS fees to reflect the current Medicare allowable rates for this region, adding $182,950 in revenue, and implement an electronic patient care reporting system to save $49,000-$64,000 annually (Matrix Study p. B-8).

• Reduce travel costs of city employees.
• Reduce the number of city dept. vehicles that employees take home at night or on weekends.
• MECA has failed to attract the projected number of conventions and other events to the Qwest Center, leaving property taxpayers the duty to pour in additional funding in future years, yet its operating budget grows. Allow a private company to publicize our entertainment centers and solicit conventions, sports events, etc., with a stipulation that it garner a minimum number of events or forfeit a percentage of its contract payment. Terminate the annual MECA subsidy.

• Decrease or end dues paid for Chamber of Commerce membership (p.376).
• Solicit nearby communities to join together in a larger workers compensation pool.
• Establish additional interlocal agreements with neighboring government entities, e.g., sharing equipment, training, ambulance service, and building inspectors. Follow the example of the Printing Services & Graphics Division.
• Place paid advertising on police cruisers and public works vehicles.
• Privatize services to access expertise and technology resources available in the private sector for savings and more efficient delivery of services. After opening provision of services to the private marketplace, with competition, cost savings and increased responsiveness will occur.
• Increase use of computerization. Computerized services for police can allow them to enter information from vehicle accidents and traffic tickets to reduce time handling paperwork and reduce clerical staff time. Citizens could more easily access city information and services.
• Such increased computerization usage could bring collaborative agreements with other municipalities to share specialized equipment and software, jointly purchased software, and shared networks and software specialists.
• Outsource management of this computerization. Private companies in Minnesota developed GovOffice to allow cities to administer their web sites easily, post information on city services, and provide easy ways for citizens to submit information feedback, which would save Omaha citizens the hassle of trips downtown and finding parking spaces.
• Double fines for traffic tickets paid late.
• Fees levied should equal the total cost of providing a service, e.g., overhead, salaries, time, equipment.
• Use community service organizations and non-profits to help deliver services or administer programs.
• Encourage volunteer groups to help, such as handling paperwork at the Police Division, thus allowing officers to spend more time on the street.
• Hold citizen forums to ask people to set appropriations priorities to help city government make budget cut decisions.
• Terminate the services of city lobbyists, saving over $126,000. The mayor and councilmen can lobby.
• As your homework assignment, read The Resource Guide for Dealing With Budget Cuts: Strategies for Cities 2004.

NTF Issue Paper: Ccwatchl8. 3-07.

NEBRASKA TAXPAYERS FOR FREEDOM ISSUE PAPER:

LOCAL GOVERNMENT SUBDIVISION AND QUASI-GOVERNMENTAL PAID LOBBYISTS.

CITY OF OMAHA. The city has one staff lobbyist and contracts out for 2 others. Omaha paid its lobbyist $88,081 in 2007 in salary and fringe benefits. He represents the city in establishing and maintaining contacts in municipal, county, and state governments and in public and private organizations like the chambers of commerce. He represents the city at the state legislature, to secure legislation favorable to the city, performing research, compiling statistics and reports, and providing the city council and mayor with budget information to help them make policy decisions. In January, 2007, the City of Omaha staff lobbyist lobbied the legislature to allow local municipalities to continue their ban on concealed handguns, though the Unicameral the previous year had passed a law permitting concealed carry statewide. Moreover, the city council voted to end the ban on concealed firearms within the city limits. This lobbyist also pressed legislation to permit creation of entertainment and tourism districts for economic development, another taxpayer burden. The 2 contract lobbyists received $19,400 and $18,000 respectively. One lobbies the federal government; the other lobbies the legislature. The City Council voted to pay $51,497 dues to the League of Nebraska Municipalities in 11-06.

These suggested cuts would help decrease the proposed $9.6 million hike in General Fund spending.

Research and analysis for this worksheet done by Nebraska Taxpayers for Freedom, with express prior permission granted for its use by Citizens for Local Control, Cherry County Taxpayers, Dawes County Taxpayers, and other groups in the Tax Freedom Network. 8-08. C