Got the opportunity to listen to the interview
the Southern conducted with Mayor Cole on Nov. 17th before he presented his set of proposals to the city council. The first five minutes or so set up the scenario. Due to the reliance on a sales tax for funding city services, the city has no control over incoming revenues. City costs are going up, especially due to pension requirements, so that the city is short about $1.3 million per year.
At about the 5 minute mark, Mayor Cole lays out options A, B, C, D and F. Reinstating the property tax would generate about $1.3 million, while raising the sales tax would generate about $1 million, leaving about $300, 000 to be made up through job cuts. He points out that option D, privatizing refuse collection, is an option that many communities in the area have already adopted.
At the 13 minute mark, Cole starts discussing Option E, privatizing water and sewage. This would reduce pension liabilities by 65%, allow the city to play cash for the proposed fire and police stations, save approximately $2 million per year in debt service, and allow the city to cut sales taxes by 1/4%. Though city employees in the affect departments would lose their jobs, the city could negotiate with the buyer a requirement to hire all affected employees at similar wage and benefit level, though not with the same pension benefits and also negotiate a freeze on water rates for 1-2 years after the purchase, with any future rate increases having to go before the Illinois Commerce Commission. Water rates would probably rise after the freeze expires by 10-20% but the city already has to raise rates anyway, with a 5% increase this year and another 5% increase coming next year.
At the 26 minute mark, the mayor turns to option F: leaving all taxes alone, not selling the water system and balancing the budget through staff cuts. He estimates that of the 266 full time equivalent positions, 21 would have to be cut. Police and fire department employees are off the table, so that would require a 12.5% cut in other city staff.
At the 28 minute mark, he then comments that city council members are focused on a tax increase, while he is focused on not raising taxes. He believes there are lots of examples where Option E has worked to the benefit of the cities that have privatized their water but that opponents will find one bad example to rally around. He has been working about 6-8 weeks on developing Option E. The city manager and staff proposed option b, raising the property tax. something has to be done by the start of the 2011 fiscal year. If the property tax, it would need to be voted on within the next month, if the sales tax, by April. Privatization of the water system would take 3-6 months to do.
AT the 31 minute mark, one of the interviews comments that, as the mayor, he has no preference for any of the option. Mayor Cole comments he's in favor of option E, to avoid raising taxes or cutting services. It accomplished the goals of relieving debt, funding the safety centers and funding pensions. About 30 employees would be affected. Water quality would be maintained and the city would retain the rights to Cedar Lake. The city would likely guarantee a certain level of water provided to the new owner and sell them water needed over that level.
At the 38:30 minute mark, the mayor says that there isn't much left to privatize besides water and sewage. There are areas that could be cut but most of the cuts that could be made would be so small they wouldn't do anything to balance the budge. Since Cole was elected the city has eliminated 11 full time equivalency positions and there may be a few more positions that could be cut, but not without reducing services. He believes the city is at a good staffing level now as most of the departments are flat and pretty efficient. There aren't a lot of extraneous positions to be reduced. At the 43 minute mark, the Southern asks about council's reaction and he comments he hasn't told them yet, the Southern's editorial board is the first people to whom he has presented it. He then says there are probably two council members who will be opposed to it and that it will require a supermajority, 5 votes to approve the sale.
At the 45 minute mark, the conversation returns to pension obligations and savings from the sale.. With pensions, the city is paying for the equivalent of 2 people in every position. The option of not eliminating the sales tax after the privatization is also brought up and the mayor says that is also an option, which would leave an additional $2 million a year to spend on services. Privatization would also reduce workman's compensation payments by about $250,000. At the 52 minute mark, Mayor Cole comments that he wanted to have a chance to explain the proposal and have a chance to answer any questions, since he wouldn't be able to answer any tonight. When asked about the reaction he expects at the meeting, he comments that half the people will be in favor of the proposal, half will be opposed and the other half won't care. When all is said and done, people leave it up to the council to figure things out for them. People want to be safe in their homes at night, they want to have the services they need and they want to be able to pay their bills. There's an overwhelming resentment towards government right now and an overwhelming resistance toward taxes. People are looking for leadership and they're not willing to pay more in taxes. we have to be creative. It's not thinking outside of the box, the box is gone and there are no other alternatives. We all have to solve these problems. The armchair quarterbacks can gripe and complain but they aren't coming up with ideas. Option E is an alternative that doesn't involve taxes. We don't have to do it but we need to look at all options.
At the 57 minute mark, the property tax is brought back up and mention is made that it has to be voted on by the Dec. 17 council meeting so time is important. Trash collection privatization is brought up again and the mechanics of how it would work are discussed and the conversation ends with a return to the long term savings of the water privatization proposal.