BALANCE SHEET BLOG – HOLLYWOOD, FL


Balance Sheet In The Crosshairs
March 25, 2013, 10:35 AM
Filed under: Budget, City Staff, Taxes

A comment submitted last week by Hollywood resident Jeff Brodeur rails against the City’s treatment of our employees (salary cuts, pension cuts, outsourcing, lack of overtime pay, and more).  He deplores the departure of valued staff for better jobs elsewhere “because they are overworked, underpaid, and not appreciated” here in Hollywood.

His comment also nails the Balance Sheet as a “mouthpiece” for the City, an about-face from what he saw as our former role of challenging the City. His entire statement can be found here.

We agree the current state of our City is distressing.  City employees have been subjected to abrupt salary reductions and pension cuts.  In addition Hollywood has way too many dilapidated buildings and litter strewn, pot-holed streets. The City’s infrastructure is badly in need of repair or replacement.  But it’s one thing to rail against these conditions and another to come up with solutions.  The fact is the City has very little money.  Why?

City Finances

The compromised financial situation the City finds itself in today was foreseeable years before the economic downturn.  A long state of official denial and refusal to take hard steps on pensions in past years brought us to the huge and ongoing painful consequences of Financial Urgency in 2011.  The Balance Sheet’s efforts to sound the alarm about this looming problem started back in 2004 and continued right up to the point of Financial Urgency in 2011. Our record on these issues is summarized in the attached document:  Balance Sheet History With Cartoons

To say that the Balance Sheet has changed from critic to mouthpiece is to ignore both our record and the fact that the City has changed from years of denial, possibly ignorance, about the consequences of its actions.

By 2011, the City had overspent its budget in mid-year.  Then, there was no choice but to take hard steps to address the problems that the Balance Sheet had been urging the City to fix for at least eight years.  Had the City done so earlier, the results today would be far less painful.  However, there’s no way to go back and do things differently.  Hollywood is now in the process of digging the City out of a huge self-made financial hole.  The necessity of digging out is obvious to anyone who has paid close attention

The hard truth is that without significant increases in property taxes and fees, the General Fund is inadequate  to substantially improve employee salaries and pensions at this time. Additional ways to increase the General Fund in future years include  proposed development such as the Walmart Shopping Center at 441, suing for the WiFi shortfall guarantee if that’s the only way to get it, and possibly either capping the Beach CRA or removing the Diplomat from its boundaries if future beach development would allow such a change.

Some have suggested borrowing from the City’s Water and Sewer Enterprise Fund to make up for salary and pension cuts.  As many of us know, Hollywood residents already pay disproportionately high water and sewer fees and we don’t hear anyone offering to pay more. Note:  The City recently did borrow $2 million from the Water and Sewer Fund to purchase and outfit police vehicles.  This money is supposed to be repaid with interest.  We view this transaction as a highly questionable practice. The City normally would have bought these vehicles with a lease-purchase agreement — a form of financing now unavailable to the City because of its low fund balance.

Other Matters

Mr. Brodeur also criticized the Balance Sheet for ignoring “inconvenient facts” by not disclosing the returns of the Police and Fire pension funds.  Both of these funds post investment returns on their websites for all to see.  We did review them before writing our article.  It is important to understand that one year’s returns do not stand in isolation.  For example, the Police Pension Fund earned about 17% this year, and about 2% last year. A great many more really good years would be required to significantly reduce the City’s pension obligations that the City Commission was still voting to increase as late as 2010.

While  Mr. Brodeur’s comment raises important issues for Hollywood, we object strenuously to his charge that the Balance Sheet heaps “more garbage on the men and women that protect us every day.”  Everyone agrees that our City employees are hard working professionals and we all deplore the current situation that has caused them so much hardship. They are victims of more than a decade of overly generous promises that the City is unable to keep.

Finally, Mr. Brodeur correctly notes that the Balance Sheet does not cover many important City issues that residents should be informed about.  We are such a small volunteer operation that there is no way our coverage could be comprehensive, nor have we ever claimed it to be.  We would welcome Mr. Brodeur and any other residents so inclined to try their hand at their own blog, researching and writing about City issues of concern to them.  A clear analysis of difficult issues can be a force for progress.



13 Comments

Comment by Charlotte Greenbarg… If you really don’t think we’re all in this together, I guess there’s nothing anyone could say to convince you otherwise.

As an employee it is very difficult to trust anyone who says “We’re all in this together” while at the same time they are pointing out what part of the salaries and benefits are or were unsustainable.

To put it very bluntly, Management tried to treat the employees as an ATM machine and, from our point of view, the residents turned against us claiming we were the problem. You will have to excuse us if we seem a little hesitant to join hands with anyone just because they say “we all in this together.’

Comment by Charles Kerr, Resident and Employee.

I see that there’s no other choice but to work together and get the salaries up as the economy improves and tax revenues rise.

Comment by Charlotte Greenbarg

This post may be somewhat fragmented and unorganized… I apologize in advance.

I don’t think the current state of our City is distressing. I believe the current state is one of improvement. Like almost every other municipality in the great US of A, we hit a down cycle recently. Property values dropped, sending the city into unexpected financial turmoil. The “overly generous” benefits promised to employees didn’t really seem that excessive when property values were more robust, private sector employment was secure and lucrative, and the stock market was providing returns that had percentages that looked more like the drinking age than the terrible two’s. Once the recession hit and private sector employees saw their life savings evaporate, their attention shifted from their portfolio to the pay and benefits of public sector employees. Private sector employees went from the ‘haves’ to the ‘have nots’… and everything changed. The City wasn’t saving for a rainy day… and neither were private sector employees. Public sector employees have typically been united and fought tooth and nail for their compensation. Private sector employees haven’t. As a result, you’ve seen your defined benefit plans disappear and become 401(k) plans. At the same time, the CEOs of your companies have seen their compensation packages and net worth increase exponentially. Rather than focus your efforts on securing a bigger portion of your company’s net profit, you have decided to attack the public sector portion of our middle class and eviscerate them. Sounds like a great plan. You’re definitely going to see a drastic increase in your retirement fund with the $300 you saved on your property taxes.

The dilapidated buildings… shouldn’t the OWNERS repair them and not the taxpayer? What does this have to do with the budget problems?

The pensions may have been increasing in cost, but they certainly were not the main reason the City had to declare F.U. in 2011.

The City’s revenue was tight.. but property values are climbing again. Home sales are also increasing. This should help with the shortfall.

How about you do some research on the high value properties in Hollywood that don’t pay property taxes or have a very reduced rate. I looked up the COSAC on Federal HWY. The property is worth $1 million, but it only paid $322 in taxes last year. They use up a LOT of the City’s resources…. just saying.

I looked over the 2011 CAFR tonight. I have noticed something interesting… the budget outlines what the City spends on employee health insurance and pension benefits. However, I don’t see where the CIty lists what it recovers from employees to subsidize that cost. For example, I contribute 8% of my salary to my pension, and about $300/month for my health insurance. The budget only discloses what is spent… but not how much of that cost is recovered from employees. The Balance Sheet says that about $0.77 of each tax dollar is spent on employees. I don’t think that is an accurate depiction of what’s actually taking place. Employees subsidize a portion of those costs.

The pension obligations/liabilities are going to be reduced because our pension benefits have been gutted. So, the combination of better returns and worse benefits will help the City reduce its liability. And… The Commission had to vote to increase the pension benefits in years past in order to qualify for the State 175/185 insurance premiums. Those rules have changed though.

The Balance Sheet isn’t capable of reporting on all of the City’s issues… but it seems as if the focus lately has been on issues related to employee compensation. Just an observation.

Comment by Brian Wilkie

Salaries and pensions make up the bulk of the expenses of a city, so we have to concentrate on them.

Yes, the City overspent, and now we live with the results. We’re all in this together, so let’s work together to find solutions and make sure it never happens again.

Comment by Charlotte Greenbarg

In 2012 I paid $932 in property taxes. Of that amount, only $383 went to the CIty of Hollywood. What portion of your property taxes went to Hollywood? Have you checked?

You indicate that salaries and pensions make up the bulk of the city’s expenses. Let me ask you this… what SHOULD make up the bulk of a City’s expenses? Your taxes cover the cost of services. Who provides these services? PEOPLE! What would you like to see this money spent on instead? And how much lower would you like your tax bill to be?

I don’t agree that we are all in this together. As an employee, I will see a much bigger reduction in my salary just so you can see a savings of about $300 in your annual property taxes. Trust me, I know from experience. The City took over 15% from me, just to save you a couple hundred bucks a year. The way I see it, I spent a few thousand dollars of my HARD EARNED pay to subsidize your property taxes by a couple hundred bucks. YOU’RE WELCOME!

You think the City has overspent… you have to live with the results…You want to make sure it never happens again. I’d love to know what value you place on me and the services I provide the residents of this City. Because I’ll tell you this much… I know that spending time with my son is priceless to me, so I won’t be happy about spending time away from him to provide a service to people who think the City overspent on paying me.

If your solution is to cut salaries and benefits even more… I hope it falls on deaf ears. I’ll save you $30 a month ( that’s $360 a year). Fire your lawn guy… I’ll do your lawn for you just so I can make sure my kid doesn’t have to go to school in a ‘D’ school district because I have to relocate out of my home due to another reduction in my salary of several thousand dollars.

Comment by Brian Wilkie

We are NOT speaking of cutting salaries more. Just the opposite.

Comment by Balance Sheet Blog

Let’s begin with the understanding that we’re not talking about cutting, we’re talking about raising salaries as the money comes in from property taxes. The prices homes are fetching are rising.

The bulk of tax receipts is of course spent on services; that’s what a City is supposed to do. But spending can’t be more than income. And a city can’t take from one fund to pay for the shortfall in another. That practice is why the infrastructure is failing. It was ignored for about 30 years by prior administrations.

Guaranteeing an 8% return on pension funds was obviously unsustainable when the crash came, but the 8% stayed.

What the City did wasn’t saving anyone’s property tax bill; they go up every year either 3% or the cost of living, whichever is less. It’s the amount of the increase that had to be dealt with. If the tax rate had gone up to keep the expenses the same, everyone would’ve paid more, and the problem would never be faced.

This is a poor city with a large percentage living below the poverty line, and more just hanging on. Raising property taxes to keep the status quo would push these families over the edge, losing homes.

If you really don’t think we’re all in this together, I guess there’s nothing anyone could say to convince you otherwise.

Over one third of your property taxes went to the City. That’s
not “only.” That’s a lot.

Comment by Charlotte Greenbarg

We may be in this together in some fashion, but the ‘solutions’ won’t be felt the same way by everyone involved. That’s what my main message was.
Personnel costs do not exceed income. The guaranteed 8% isn’t a benefit available to most active employees and all new hires.
I realize that many residents of this city are struggling. I see A LOT of then on the calls I run. I’d say that these people appreciate the services I provide, as well as the services provided by the other employees… But they couldn’t care less about a city Wi-Fi system, pavers on the beach, or an art deco water tower. If the city has poor residents and has a revenue problem, then should it really be approving expenditures on such frivolous items?

Look, I’m not saying the compensation packages of government employees haven’t gotten haywire at times. And I support a salary/benefit package that isn’t a huge burden on the taxpayers… But I have grown very weary of taxpayers calling for more reductions. I see comments with that tone on the Sun Sentinel very frequently. In my opinion, the employees have done their fair share to get the City back on track financially. Your post seemed to try to bring the focus back onto employees. You stated that the bulk of the budget is personally costs and that the City has overspent. I addressed those statements. I don’t think the focus needs to remain on the employees. We aren’t the problem, in my opinion.

By the way… Less than $40/month of my taxes is a GREAT deal for the services available to me in Hollywood.

Comment by Brian Wilkie

Please everybody understand that the Balance Sheet is not calling for more employee salary and pension cuts. We believe that salary increases for all who received reductions should be a high priority for the City.

Comment by Balance Sheet Blog

“Please everybody understand that the Balance Sheet is not calling for more employee salary and pension cuts. We believe that salary increases for all who received reductions should be a high priority for the City.”

I’ll give you an AMEN to that. It’s what I’ve been trying to get across to anyone who will listen.

Comment by Charlotte Greenbarg

Most of us think the balance sheet is controlled by City Hall Staff and some select elected officals. Sorry but it is fairly obvious.

Comment by jeff Marano

It appears that there have been so many mis-steps over the last ten years. Focus on salaries and pensions seems to get us no where. There has to be more to managing a city than pensions and salary increases. When the suggestion is made to increases taxes, I have to ask: “for what”? More money to the Beach? More money to the Police Department for equipment?

I appreciate the discussion.

Comment by Rosemary Sabino

“… Everyone agrees that our City employees are hard working professionals and … are victims of more than a decade of overly generous promises that the City is unable to keep.”

I believe this is what is called a Left-Handed Compliment. We agree that the employees are worth it, but the City gave you too much.

Which is correct? Employees are hard working professionals? Or employees are receiving too much and, by implication, part of the problem?

Comment by henchmannumber2




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