Published: October 31, 2009 11:01 pm      

Financial transparency long overdue

Through the hard work of interim city manager Jimmy Howard and finance director Mike Broyles, the Richmond city government and its citizens now have a realistic picture of the city’s financial crisis, but more importantly a clear and honest assessment of the challenges they must address to return the city to a healthy position.

Howard and Broyles did a good job arriving at this point in the process and presenting the magnitude of the financial crisis. They sought out input and expertise from many fronts to get a grasp of the situation and understand all the pieces of the puzzle. They involved all the department heads to create realistic revenue and expense projections based on current city services.

The city commission, as well as the citizens of Richmond, owes them much gratitude because through their presentation, they put all the cards out on the table for all to see. That’s called transparency. If this had been done in the past, the city might not be facing a financial crisis of this severity. I commend Howard and Broyles for their commitment to transparency.

The public’s business should always have been completely transparent regardless of its impact on the citizens. Howard and Broyles demonstrated transparency with their presentation and explanation of all the changes regarding revenue and expenses, especially the city’s current debt service. Until now, the majority of the debt service in the budgeting process and financial reporting was hidden, presenting a false picture of the city’s health. This more than likely contributed to the financial crisis and makes it difficult to find an easy and quick solution.

Ironically, the total debt service listed in the working budget document is $2.63 million, while the current budget deficit is $2.66 million. It’s apparent that our revenues have not been able to offset the debt service, caused by misguided projects and growth. However, it is what it is and Howard and Broyles know their work is not finished; the real difficult part lies ahead of them and that is presenting a balanced budget to the city commission on Nov. 10.

Then, it will be up to the city commission to evaluate their recommendations, which more than likely will impact payroll and personnel expenses. That’s because there just is not enough dollars available from non-personnel categories to make up the deficit. Non-personnel expenses account for only 33 percent of total expenses, with over half of that committed to retiring the debt service and other items, such as insurance or other fixed costs.

That’s why personnel services will be impacted through initiatives that are routinely used in the business community to shore up the bottom line, which is the city’s goal. Plans to reduce the deficit will affect all employees without a doubt. The question is how many and for how long.