Friday, September 11, 2009

Development of the first Budget of The Woodlands Township is now history

We have our first budget now. It is finished. The board listened to the concerns of vocal citizens in The Woodlands and altered the staff's proposed budget plan to bring forward the new policing plan to the beginning of 2010, instead of implementing it in two phases over two years. That impacts the budget by a whopping $2.5mm! However, the 32.8 cents per $100 of assessed home value was retained. That means some programs and projects will have to be deferred. One program to be terminated is a contract with Shenandoah and Oak Ridge for policing the boundaries of The Woodlands. That program was cut in half so that a transition could be made between the old and new policing contract with the Sheriff department. Six months of patrolling the I45 corridor will be displaced with Sheriff deputies after the transition is complete. Unfortunately, the board chose to continue to spend more money on those contracts than what I and others believe is necessary, even with the knowledge that inadequate service level information had been provided. Lack of information should have generated a "insufficient reason to retain the contracts". Our board should spend money for value, not political rationalization nor unknowns, which appears to be the case with these contracts. There are other projects where this money would produce better value. The budget process seems to be lacking  value-driven input. One can formulate numerical value to anything. Corporations do that, I would think a government could also. But this is the first budget.  

All in all, I would rate the budget as excellent, missing the very excellent grade because of a few issues,  such as  the one above. This being the first budget for the township, it appears that all the operational necessities have been accounted for and we will receive no loss of value as a result of the new government.   In fact, we gain considerable value. We will have lowered annual costs through operating efficiency, derived  from the sales taxes, which we pay through local business purchases. We also continue to build valued assets. Although I believe the 2010 budget continues to retain some fat, having some discretionary money will not hurt for the first year. The township will have to prioritize what they spend, not just spend what they have budgeted. Already, the board is planning to tap financial reserves where they should be planning to create reserves at this stage of budget planning. Tapping the reserves was the solution to not raising the tax rate to 33.5 cents. There are various projects being deferred in order to accommodate the police acceleration plan. Deferring some other items was also considered, but the board voted to keep everything still remaining in the budget. There were several proposals to balance the budget but in the end, they all failed to get a majority vote.

The budget reducing process apparently is new to the board. Generally, it is more acceptable to cut across the board (usually consistently across organizations) and not to differentiate capital project spending. There is no means that I can see to balance project deferrals among the Town Center and the villages or whatever other competing projects that  may exist (e.g., between villages). There was a clear statement by some of the board members that projects in Town Center seemed to be prioritized over village projects since village projects were deferred and there was not a clear rational reason some of the Town Center projects could not be deferred.  That appeared to be the case, but perhaps some were cut from the Town Center that I am unaware.  Other board members believed those concerns were unfounded and not taking the entire economic picture into account, favoring the villages, a "dangerous" view. It was late in the process, and it really does seem to me that the process was lacking. This conflict will be a challenge going forward. The Township Finance organization might be able to help in the future with an agreed process for cutting the budget. That should have been established long in advance, but with the complexity of just getting the budget together, it probably was not feasible. The debate on what should and should not have been deferred was avoidable, and hopefully, contingency measures can be facilitated by such a predetermined process in the future, facilitated by the township staff.

The adopted tax rate of 32.8 cents was a bit high in my opinion. It should have been capped at 32 cents, but that is not far from the adopted rate. I am hopeful that the township will attempt to drop it to 32 cents next year, seeking ways to lower the tax burden on the residents in subsequent years. Visioning a fixed rate of 32.8 over many years does not seem appropriate to me. The tax rate needs to be driven by community requirements, not by a continuing target strategy. The target strategy should seek a cap but promote minimizing the cost to the community. I will have more to say about the budget in a separate article on the bond election. The board did squeeze the budget twice and made significant improvements as a result, aligning the budget to the wishes of the residents.  I do not know how many unemployed residents exist in The Woodlands, but there is likely a higher number than usual who will have difficulty paying their taxes this year, as the result of economic stress in this recession. Every penny helps. After the next election, hopefully the board will be even more sensitive to resident issues about the tax rate. Some members of the board expressed the thought that we have a low rate and should not be tightening our belt so much, but when you look at the remaining fat, one wonders.

It is clear that The Woodlands must remain The Woodlands. We should not take away amenities nor service levels, unless of course their existence no longer makes any sense for us to remain a highly respected community, where we pride ourselves to live and have the services we need. Service levels are already generally minimized in order to keep the values of our community in place. It is debatable whether some of the contracts can be negotiated down and I have to assume that will be done as discussed earlier. We need excellent metrics from the Township in order to understand what the amenities are and how they are perceived to affect our lives. As we move forward, we likely need to change the way we measure amenities relative to our needs, measure  services relative to cost and benefit, and measure our government's role as it affects the community.

Hats off to board members for asking questions and exposing some of the issues in the budget. Hats off to the staff for their hard work and pursuit of excellence in building the budget.  I am pleased that we have a plan now to get on with the new policing organizations. This will help the community to be more unified and know that police staffing is aligned with normal police staff levels and with expected service levels. I was also pleased that the new fire station for Indian Springs has been accelerated and the dependency constraint on waiting for the Creekside Village fire station has been removed. Indian Springs' residents have to wait an additional year than previously planned, but the project is now on the books to be operational January 2012, only one year later than we had previously hoped. Now we have to move on to a budget dependency - the bond election. Without that, this entire exercise must be altered.  

Resources
1.  Township Budget Meeting Videos 

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