$2B or not $2B: That is the Question

The article title is a bit of an overstatement: however, like knowing you are going to be hung tomorrow, it does tend to focus one's attention.

The City of Virginia Beach is proposing that City Council adopt a $1.74B budget for 2011-2012, a $35M expenditure increase with a 2% increase in various taxes to cover these additional costs. The City  characterizes its budget proposal as necessary because “city employees have not received raises in two years, infrastructure and maintenance needs have been deferred, and the waiting list for city services is growing.”

While the City’s needs, from its perspective, are many, the City's needs are no different than those of the average Virginia Beach family. Using the City Council’s own budget proposal and publicly available data, a Virginia Beach family-of-four over the past two years has seen its annual disposable income decrease by $9,500 (14%) and its home’s value decline by up to 17%.

The majority of the City’s proposed $35M increased cost is driven by an increase in payroll ($20M), an increase in fringe benefits ($15M), and an increase in “Pay-as You-Go” capital projects ($6M). This is offset by an overall reduction in other operating expenditures and capital borrowing (-$6M). Payroll costs are driven by raises and not by an increase in overall headcount (a year-to-year reduction from 17,313 to 17,208 (-0.6%)).

So, it appears – just like the City – the citizens’ income is declining, our homes are in need of repair, and every government agency is lining up with its hand out. Maybe it is time for the City to make some tough choices: they work for us -- not the other way around -- and we are out of money.