Fuzzy Math

I was looking at the budget figures toady and I noticed something a little odd. Now in the interest of fairness and full disclosure I did not get my degree in accounting or finance, I am not a CPA , and I am not exactly John Nash so I would encourage all of you to look at the numbers for yourself. They are linked on the blog as Mayor’s letter on property tax.
City Hall states that we have decreased the budget 44% in the last 3 budgets. This includes 4 groups of money; Capital Expenses, Capital Reserves, Operating Expenses and Operating Reserves. So the city budget is made up of 3 basic categories, Expenditures, Revenue, and Reserves. The expected revenue is not listed in the budget numbers that were included in the letter from the mayor so we will look at the other two categories. Here is a quick run down.
Capital expenditures 2007-2010 down 28% 2009-2010 down 51%
Operating expenditures 2007-2010 down 2% 2009-2010 down 3%
Capital reserves 2007-2010 down 50% 2009-2010 down 63%
Operating reserves 2007-2010 down 18% 2009-2010 down 2%
I am glad to see that our capital expenditures are down but we all expected that because we built Main Street last year and we are not building one this year. I am also glad that our operating expenditures are down but part of that is because we had to lay people off last year so we no longer have to pay their salaries.
The two concerns I have are the huge drop in the capital reserves and the operating reserves. The reserves are our like our savings accounts. We depleted over 50% of our capital reserves over the last 3 years and 18% of our operating reserves. We are clearly spending beyond our means. It appears that the city wants to put a happy face on these numbers saying how they reduced the budget. But what they really have done is reduced our reserves with unchecked spending and by governing with the I want it now attitude rather than the prudent approach attitude. This doesn’t work for my budget and I don’t think it will work for the cities.
As Thomas Paine once said “A long habit of not thinking a thing wrong gives it a superficial appearance of being right.” Let us rethink the way we do things so that one day we can look back and see that we have gone right.