Phoenix City Budget

Feb. 24, 2010

Transcript:

Ted Simons: A budget recommendation that includes $140 million in cuts was released by the Phoenix city manager's office earlier this month. Since then, the city has held more than a dozen public hearings on the plan. Tomorrow, a revised budget plan will be released with a final council vote expected next Tuesday. In a moment, we'll hear from two members of the Phoenix city council. But first, David Majure shows us a couple of city services that are bracing for the final budget.

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The proposed Phoenix budget makes deep cuts to virtually every city department.
This is a priority case for us.
Even vital services like public safety.
The impact obviously was pretty horrific initially.
Phoenix police sergeant Trent Crump said the initial cut was going to lay off 286 sworn police personnel and transferring another 70 or so. That's a 12% cut to a department of 3200 that's targeted to operate with about 3600 employees.
The food tax has helped save a number of those jobs and so have the concessions by the employees that work for the city who are clearly saying that we want to do something to help keep our employees here.
A 2% city food tax is expected to soften the blow. Trent says it looks like it will help limit anticipated police layoffs to somewhere between 60 and 100 people.
I think that you're going to find a lot of fans on the police department and in public safety who are for the food tax for our organization is saving hundreds of jobs.
From public safety to the arts.
It's visual arts, it's performing arts, it's a culture program, it's guest lectures.
Stacy Holmes is visual arts coordinator of the Phoenix Center for the Arts. It's located in downtown Phoenix in a building that used to be a church.
And then in like one little area make it sort of --
Oh, this center provides world class arts instruction and that's something that I think some communities may be lacking, but we offer here at the Phoenix center for the arts. Not only do we offer it, but we offer it at a very reasonable price. We are one of the most competitive arts program in the valley.
The center may be forced to close, eliminating three full-time employees and saving the city about $153,000. The visual and performing arts may not be a vital service, but more than 16,000 people use the center, and for many inner city kids, it may be their only access to art.
And today a lot of the schools unfortunately don't have really rich arts programs or they have programs that are very limited, call it art on a cart. So as arts hub in the middle of the city of Phoenix, we're able to step in and bridge that gap that schools can't make and provide high-quality arts education to our youth.

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Ted Simons: Joining me now to talk about the Phoenix budget are Phoenix councilman and vice mayor, Michael Nowakowski. And city councilman Sal Diciccio. Good to have you both on "Horizon." Thanks for joining us.

Nowakowski & Diciccio: Thanks, Ted, for having us here.

Ted Simons: Is there a problem with how much the deficit the city faces and how much needs to be cut?

Michael Nowakowski: I think so.

Ted Simons: What are we looking at right here?

Sal Diciccio: 139.5 million. But we're in agreement.

Ted Simons: What do we do? What should the city of Phoenix do?

Sal Diciccio: I've been promoting a structural change in the city of Phoenix for sometime now. I got put back on the council last year. One of the things we identified is that there is a structural problem. When you have nine of your last 11 budget years, you have a crisis and you have a problem that needs something to be fixed, that tells you something internally needs to be done, Ted?

Ted Simons: Do you agree with that?

Michael Nowakowski: : you know, Ted, I believe first of all, we're looking at the first time in the history of Phoenix that we had to cut 153 officers, 140 firefighters, 298 parks and recreation people and all the different programs that go along with that. This is the first time we were actually cutting public safety. So we looked at a pragmatic way of doing it and we've been talking about food tax. That's why I believe the mayor basically put the food tax up for a vote and that's why I voted for that.

Ted Simons: If there's been a history of budget problems, culminating in a big budget problem, does that not suggest that structural problems should be looked into?

Michael Nowakowski: I think we've been looking into it for the last three years. We've cut $615 million from our budget. Our top management has been taking 7% cuts. This year the unions all came together and agreed to take a 3.2 cut on their -- the next coming year. I believe that we're all looking at it and we're doing our best at eight.

Ted Simons: Is it fair to say there's a structural problem when we've had the great recession as it's being called and municipalities everywhere, the state, national, everyone seems to be having problems right now balancing a budget?

Sal Diciccio: Well, Ted, I mean, this is where Michael and I will disagree. The fact of the matter is when you take a look, I've got the documentation, this is done by budget and research. This isn't my numbers, it's their numbers. If you take a look at the budget, the city of Phoenix budget has been increasing every single year, but we've been basically paying more as taxpayers and receiving less service. If you look at what happened in the last five years, the city of Phoenix added $270 million more in additional labor cost into the budget within the last five years. Your average cost per employee is $100,000 a year. That's everything. That's your compensation, salary, your benefits, the whole package. That tells me we have an internal structural problem that needs to be addressed, otherwise we'll go back to the public this year and the year after that and I would like to stop that.

Ted Simons: What do you think?

Michael Nowakowski: Ted, I'm here to set the record straight. I think the morale of our employees is really low. We have individuals out there saying they're making $100,000. That's not true. Half of the employees are making about $40,000 and that's what they're taking home. All of these inflated numbers and all of these scare tactics that are out there are really hurting the morale of our individuals. I had a young lady from the parks and rec at one of my public budget hearings last night saying they had people throwing coke cans at them saying, how are you making $100,000 when I'm only making $33,000 a year? It's hurting. It's hurting our employees that are probably the best employees in the nation and they're great. So I think that we need to set the record straight and let people know that the average is about 40,000.

Sal Diciccio: Michael, I agree. We have great employees. I think they're fantastic. I love our employees. But the fact of the matter is, when we're talking about average costs, this is what the taxpayer pays. It's not what they're taking home because salary, benefits and the whole package. You know, you're in the private sector. You look at what your unit cost is, how much does it cost a taxpayer. From a file clerk all the way up to the city manager, we have a triangular organizational chart, the taxpayer pays $100,000 per employee. That's all costs included in that. If you just look at salary, we're right at 57,000 is the mean, which is still above the average. The average cost per employee in Maricopa County, benefits, salary, the whole package maids to executives is 74,000. I believe there are certain things we can do. I have an entire list for the city of Phoenix to take a look at, how to restructure government and what we can do to change the course we're on.

Ted Simons: Sounds like most of your ideas involves outsourcing to private businesses, correct?

Sal Diciccio: it's a good chunk of that. That's true. There are efficiency studies we can do internally to find out if we can handle it internally as well. There are certain functions in government that we do right now -- we have the largest vehicle repair shop in the state of Arizona. We spend $34 million year repairing automobiles internally. Is that a function that can be better done in the private sector or is that something we as government wants to do at a high cost?

Ted Simons: Is it time to get the public sector more involved in the city of Phoenix?

Michael Nowakowski: If you look around the whole state of Arizona, we're the leaders when it comes to privatizing it. I mean, in our council meetings we have about three or four pages of private businesses that we allocate funds to from streets to landscaping to fixing roofs and stuff like that. So I think we're doing a good job. Can we better it? Yes, we can. But I think that's what we really need to look at, an outside committee, oversight committee to look at what we're doing right and what we're doing wrong. We are the leaders when it comes to privatization looking throughout the state of Arizona.

Sal Diciccio: We do some privatization. But a lot of it, if you look at our council packet deals with, products for purchasing. Buying pens and pencils is still not the same as manufacturing pens and pencils. That would be the worst thing for the city of Phoenix to be involved in. There are functions that we do right now, Ted, that we ought to be looking at and say is that the same way we can deliver the service that is more strategic without worrying about the expense of it? It's a long-term expense. It's not what you pay today. The way the city of Phoenix benefit structure is set up for the retirement package, not only do you have to pay for it now, you have to pay for it 20, 30, 40 years into the future. Is there a better way for us to operate today than we're doing now? I believe we can.

Michael Nowakowski: You talked about the mechanics. I think out of that 30 million, 7 million of that is actually going out to outsourcing or privatization. But you got to look at it. 71% of our budget is public safety, so that's fire, truck, police cars and all of that. Would you want a private sector person to change your oil that just happened to get a D.U.I. that's mad at our officers that can actually work on the brakes? No. Do you want that person to have access to the computer. We have workers that are certified that had a background check that can work on the brakes. There's a safety issue when you tack about privatizing.

Sal Diciccio: The computers wouldn't be. Bottom line, other counties have done it. Maricopa has done it. They get a pretty good low unit --

Ted Simons: Other cities do food tax and others way of revenue. I know you were against it. Why?

Sal Diciccio: Because we don't need it. We have enough funds internally. We have more money in now and we're spending more money today than we've had in the last five years. Every year the city of Phoenix budget has gone up but service has gone down. The reason why is we have a labor bubble within the city that needs to be addressed. It's the white elephant or 900-pound gorilla that we need to talk about.

Michael Nowakowski: I think it's a great idea. All the cities surrounding Phoenix has food tax. It's something I've been hearing 95% or something approval rate. Even in the budget hearing that I went to that you had in your district, Sal, people were in agreement of a food tax. It's saving all the libraries. It's saving our youth centers, our senior centers and the quality of life that people live today are going to be saved, right?

Ted Simons: can't something like a food tax go along with increased attention toward privatization? Is there a mix there, a blend that would work?

Michael Nowakowski: I believe that's what our goal is. I believe that I like to see my colleague, Sal, with that champion in that and to show us how to privatize. I would like to see, Sal, you take one of your centers and privatize that and show us how we can privatize. Show us how you can be that champion in teaching us how to privatize.

Sal Diciccio: Let's take something even easier than that. Let's work together, Michael, with automobile repair or printing. We ought to be looking at things we already done. If you pick up a yellow pages, that's what we ought to be looking at because it's being done in the private sector. More than saying we're going to privatize everything, we ought to look at what's competitive and what's the best thing for the city of Phoenix to do. We ought to be looking at all functions of government and whether or not there's a better way of delivering the same service better for the public.

Ted Simons: We'll stop it right there. Good discussion. Thanks for joining us, gentlemen.

Michael Nowakowski and Sal Diciccio: Thanks, Ted.