(Previously: Mayor Landrieu's presentation)
New Orleans Deputy Mayor and Chief Administrative Officer Andy Kopplin's budget speech from October 17.
All of Kopplin's presentation slides (PDF): 2012_CAO_Budget_Presentation_Final.pdf
"Good afternoon. It is my privilege to be here presenting with the two Grant brothers. I want to particularly thank Cary Grant and his staff at the budget office, who don't sleep much this time of year, but, as you all know, he still looks good. Mrs. Grant believes so as well.
Again, it's a privilege to be before the Council presenting the mayor's 2012 budget. And as the mayor said, we look forward to a productive six-week period in which, together, as we did last year, we work in partnership to address the priorities of this city.
The mayor illustrated some of what's going on around the country. I won't reiterate that. But again, we could be in many other jurisdictions, which are facing much more significant budgetary challenges than we are. Nonetheless, ours are significant, but we will together work through them. Because of increased productivity we've seen in the last year, we're going to be able to meet the challenges that we face.
(Continued after the jump)
"Again, to illustrate some of the points he made, if you look at the recurring money and the expenditure level in 2009 to 2010, there's a nearly $100 million difference in that now that we've had the audited numbers from 2010 [Click for a Sept. 30 story on the audit by The Lens]. We've made some slight modifications, but it's a significant gap between the $528 million of expenditure levels and about $431 million of recurring money.
[More context: A Times-Picayune story by Bruce Eggler looks at Kopplin's figures, external audit]
Our first step was to change the spending trajectory, which was on a steadily upward course. We announced spending in the current year at about $40 million less than we spent about two years ago. We've got $8 million less than we spent last year.
And again, with your help, we put together a budget last year that increased our recurring revenues so that we are reducing our reliance in the budget on one-time money and are on a much more sustainable course. Hence, we are now living within our means in the City of New Orleans in the 2011 budget and in the 2012 budget, which is presented. It will be structurally balanced to live within our means. Again, without reliance on one-time money, without reliance on CDLs, which are no longer here.
Again, the 2011 budget was challenging for a number of reasons. One was the $7 million in increased pension costs that we had to absorb. Another was $12 million in costs for health care that have been absorbed by every department in the city.
We have built those into the budget projections for 2012, so we do not anticipate that problems like that will impair our ability to move forward with all our initiatives as they did this year. But those costs are real, and the offsets in terms of reductions in other expenditures that we made this year, many of those have to be sustained in order for us to live within the proposed budget.
This is an illustration that shows that $22 million which had to come out of our operating expenses, for the most part, in the current year.
In terms of key initiatives for you all, Madame President you said to me, 'Collecting the revenues that we're owed is important and making sure that we manage towards performance outcomes is important, and all Council members accept that.'
I want to highlight the role of two organizations that you all funded last year — the Office of Performance and Accountability, which produces all of our 'STAT' programs as well as the quarterly ResultsNOLA program — so we have a transparent picture of how each department is doing relative to their goals in the budget. Every quarter you get that ResultsNOLA report. We're going to continue to produce that.
In areas like blight, revenue collections, quality of life initiatives, we have cross-departmental staff meetings, where we know ahead of time what's working, what's not and how departments solve problems around performance.
Additionally, our Service and Innovation team is focused on two things: Increasing revenues and decreasing costs. So they've helped us in our efforts to increase efficiency and savings.
A couple of things, you all remember the Electronic Contract Routing System that the city had. We spent well over $1 million in the prior administration building a customized software program to track contracts. Unfortunately, when we performed our contracting process, the software didn't serve us well in terms of managing that new process. We looked at rewriting that program, and it was going to cost hundreds of thousands of dollars. Instead, folks from the innovations team looked at an existing program we use called BuySpeed. It turns out it has a contract tracking process with it. And for $63,000 we started using an existing component of Buyspeed that we've had for the last ten years, that we've not implemented to track contracts. So that's just one example of the kind of savings this team has produced for us.
We get [unintelligible] results in the Mayor's [unintelligible], a dramatic increase in demolitions, a dramatic increase from 7 to over 1,000 blight foreclosure sales. In terms of parking enforcement, a 20 percent increase in the number of cars booted.
In terms of collections and EMS, with your help, we changed the fees to make them better for attracting the right prices from Medicare, Medicaid and private insurance, and we put a lot of pressure on our vendor
to increase EMS collections. ABO violations, again a priority in every council district, 32 ABO prosecutions in 2009, over 200 this year alone, a 418 percent increase. In terms of NORD, again, 140 percent more summer camp registrations this year, and again, I'm very impressed with Job One summer program.
In terms of revenue collections, again, part of the additional effort on parking enforcement, around booting, we also hired additional tow truck drivers. You remember at the budget hearings last year, we had folks who said, 'I've got folks parking in my driveway illegally and yet we don't have enough tow truck drivers to man all the tow trucks.' So we hired 14 tow truck drivers and have significantly increased the number of tows.
We've focused on collection. And so, sales taxes, you funded an initiative in the Finance Department to increase the number of field staff auditors and external auditors, and you've seen that pay off in terms of increased collections in that department.
Hotel-motel tax. We sent a letter out to every hotel in the city, following the inspector general's report about compliance. And we've seen an increase in hotel-motel tax payments in the current year.
[22 page PDF: OIG report on hotel-motel tax compliance from December 2010: Final_Hotel_Motel_Draft_with_Transmittals_2.24.11.pdf]
Interestingly, this is one of my favorite slides on occupational licenses. The Finance Department proactively sent every occupational license holder in the city a renewal notice early in the year. And what it did was increase compliance, and we got money from folks earlier in the year as you can see from that red curved line. So again, revenues are up and we got the money sooner because of that little bitty effort, which I think many folks would describe as good customer service as well.
So overall, all the revenues across those categories are up in the current year. We focused on collections. There's still a ways to go. We're still committed to doing more. But again, you see a marked increase in compliance and collections. And again, all tax payer types were up. This slide's EMS, which is a 31 percent increase in revenue collections.
A couple quality of life issues that are important, we have bandit signs. And it's not just the number of bandit signs that are collected, but quality of life meaning last week we met with our quality of life officers in the Sanitation Department. What they said was because because of drawing the line in the sand on this amnesty period, but now we started prosecuting folks in municipal court, the biggest bandit sign violators have reduced or eliminated their use of bandit signs because we've threatened to take them to municipal court and fine them, because those are illegal.
ABC prosecutions are way up. Potholes being filled, we're way above goal for the year. Streetlights fall at 86 percent of our year-to-date goal. We're closing the gap on that goal, and have over 10,000 streetlights repaired in the current year.
In terms of savings, the Take Home Car policy through June had already saved us about $600,000. Every time the price of gas and diesel goes up, that saves us more money. By changing our health care plan to make sure that those who are Medicare eligible among our retirees use Medicare as their primary insurer, that's saving us about $5 million a year on our health care plan.
And, as the mayor said, 32,000 people have now signed up for and are receiving recycling as a new service here in the city.
So, in terms of the budget proposal for 2012, we want to make sure that all of those initiatives continue, and the strategy the mayor described in terms of cutting smart, reorganizing and investing continues to be what guides our work.
So, some highlights. In terms of cutting:
—Reducing reliance on contractors. Renegotiating this year's landfill contracts go along with the hauling contracts for the garbage contractors.
—Phasing out of the health care business.
—This year, a new cut in your budget is to decrease the reliance of the Capital Projects division of this city on General Fund. This will make it more challenging for Deputy Mayor Grant's team, but most of their charge is going to be allocated to FEMA or CDBG or some other source of revenue like bond funding. So we don't need to have General Fund being used in that department to the extent that we have in the current year, as long as we account for people's time properly.
—Police retirement system at the state level worked with mayors across the state to make some reforms to the police retirement system this year. We're working with Council on some modest proposals for the city retirement system. Those will help us make sure that those pension systems are sustainable and honor the commitments made to our retirees.
In terms of reorganizations:
—Of course we've made significant changes in how we do code enforcement in the last year.
—We are also, as the mayor said, co-locating the VCC, HDLC and CPC together so that they don't have to have separate purchasing agents, separate phone answering folks, separate real estate contracts, so that they can all work together.
—We are working with Accenture and IBM on a volunteer partnership, part of the mayor's strategic initiative to get more help from philanthropy. In this case the private sector, Accenture, has been helping us on a consulting basis identifying cost savings opportunities in the city. We're going to continue to work with them around consolidating purchasing opportunities and other ways to make sure we can squeeze every penny of efficiency out of city government.
—We will have a one-stop permit office over the next year. Last year, you all funded, at the $300,000 level an initiative to create a one-stop shop. Because of budget cuts and a downright shrewd use of resources, we spent half that much money. $150,000 developing an initiative led by Deputy Mayor Thomas which will be coming live next year around one-stop permitting.
—We will also launch the 311 center in the first quarter of next year, at the end of the first quarter next year, April 1. That's something that because of budget pressures this year we had to slow down, but the legwork in developing that system is well underway. It will be launched next year.
In terms of investments:
—Our percentage of budget going to public safety increases in the current budget. We will be launching a strategic command to fight homicide that Commissioner Carter is leading.
—Maintain NORD and Job One investments.
—We will continue the pre-trial initiative from the federal grant when it runs out late next year, to make sure that that pre-trial initiative, which will assure that we're saving money within the jail, so it is able to be sustained.
—We are also proposing that the Strategic Match Fund program be maintained next year. This is the one that generated $67 million in non-city funding from competitive grants. Having that to match those efforts is important in making sure those grants were given.
—We're also fully funding the supplier diversity initiative to keep a priority of the mayor's and the council's. We're going to make sure that Norman Roussell has the ability to have a robust supplier diversity staff in his office.
So the proposed budget by mayoral priorities you see is roughly similar to last year in terms of our priorities. Public safety is number one. There's a 3 percent increase in terms of the budget allocated to public safety. A little bit less to open and effective government and to children and families. A little bit less to sustainable communities.
Again, this is the allocation, $494 million proposed except for the debt service which is not part of these totals. We didn't budget debt service into any of these categories. It just happens to be about $38 million that we have to pay.
If you look at the line items in the budget by budget categories, the mayor said there's reductions across the board in almost every department outside of those involved in public safety.
A couple of these are initially misleading, so I want to highlight those. We had a small, General Fund appropriation for the library last year for a one-time initiative that's not being recurred this year. I think that was about $175,000. So they are sustaining a cut. The HDLC and the VCC both are being funded at the levels that their staffing presently requires. So they have been short-staffed because of the hiring freeze. And the HDLC had in its budget that $300,000 for one-stop permitting. It's a little bit misleading because that $300,000 was meant to be one time. So it increases the percentage by which their reduction appears on paper.
Additionally, the City Planning Commission's staff will maintain all of its currently funded positions in this budget.
With regard to traffic court, they passed legislation up in Baton Rouge that increases their fees. And so, because they have external sources of revenue they're generating, the amount that the city needs to fund the traffic court can be reduced just to that which is legally mandated for its present salaries.
In the Criminal District Court, they've got a 10 percent cut. But they also, we're asking that they take from their fund balance the additional $400,000 that we seem to need every year to give the sheriff to provide court security. So, every year, the sheriff expects $400,000 more than is appropriated for court security. Last year we asked the judges to help us make up that shortfall with their fund balance. And we believe it's time, at least in this particular budget year, to continue that practice. So that's an explanation for that particular change in funding.
And again, if you look at another version of the proposed 2012 budget by particular departments, you'll see an increase in appropriations from last year to fire, to police. Then, for the most part, reductions in those major categories everywhere else.
Some highlights: You've heard about the new class of police cadets. Starting in January — I want to call out the creative work of Parks and Parkways and NORD to make sure they're able to manage their budgets appropriately — a partnership between Ann McDonald and Vic Richard to make sure that we have Ann covering the traditional Park and Parkway neutral ground, Lee Circle and all those areas, and have NORD cover the cost of maintaining its actively used recreational facilities. It seems to be a good partnership to have them both maintain their resources and meet their needs.
Again, there's the General Fund decrease for capital projects.
I want to compliment the fire department for some very entrepreneurial work they've done to develop a partnership with NASA in New Orleans East. It will generate $1.2 million for the city for the prevention of fire/suppression services.
We've left the DA's pledge stable, but as you may know, the DA does not contribute to the employer's share of health care in the city. So what we've asked him to do is over the next two years phase in that increase. We've got $375,000 in this budget they're going to have to contribute this year and double that in 2013 if this proposal is accepted.
Modest increases in the coroner's funding and the Youth Study Center, which is under court order. And as requested, the public defender. Many of you on Council have spoken to me about this. We have taken the administrative cap that we have been imposing on the public defender's ability to increase, to collect the $5 per camera ticket. We capped it at $500,000 for the past two years. That is something we want to remove this year at their request. It should generate probably about $300,000 more than is present. We have maintained the $750,000 appropriation approved by Council in last year's budget.
We talked about one-stop permitting and 311. Another area that we've slowed down the implementation of is the [Enterprise Resource Planning system], but we've worked very hard at the staff level preparing a [Request for Proposals] for broad ERP services. We've gotten consulting advice, and they said the number one and number two areas for us to launch and ERP work-in are for payroll and sales tax collections. So we have an RFP out on the street for outsourcing payroll as part of our ERP process. We also have and will shortly issue an RFP regarding a sales tax revenue collection system. That will help us better collect all the sales taxes in the city. A broader ERP RFP will be issued next year based on the work we do this year.
So, as we move forward, our commitment to you all is to make sure that the goals that we've worked to articulate in this budget document get met. We'll be monitoring their performance every step of the way and continue to perform our STAT programs and our quarterly ResultsNOLA efforts. We'll continue to look for cost savings and efficiencies enabled by our partnership with IBM and Accenture. And we will do regular budget reviews and monitoring through the course of the year just as we have this year. We will publish data to provide transparency on performance and budget at www.data.nola.gov.
We've brought a cross-disciplinary approach to revenue and expenditure forecasting this year. We're pleased to be very confident that we've identified the liabilities the city faces. We've identified the actual costs of each of the depatments' personnel costs, their other operating costs. And we've also identified, and accurately projected to the best of our abilities, the full revenues of the city, whether it's sales tax, property taxes, fines, fees and forfeitures or parking tickets.
We think that the approach that involves departments, the revenue office, the Finance department, the independent audits, the revenue estimating conference, we've got a handle on these things and continue to monitor them and continue to stay on budget."