Milhaven: We need to look out for essential workers

Is the sky falling? While we are dealing with the personal challenges and hardships of the current pandemic, your City Council is working to understand the economic impact of the shut down on our local economy and on city revenues.

The honest answer is that we have very few facts and lots of opinions.

We have March data that includes two weeks of shutdown. Local sales tax revenues were down $3 million, which is 26% less than March of last year but less than 1% of the total current year’s revenue budget for the General Fund.

The City’s financial performance YTD through March (which reflects sales tax revenue through February) was delivering a surplus of $37.5 million. Expenses are running less than plan and revenues were ahead of plan.

Even if the sales tax decline for April and May is double March, we are far enough ahead to absorb the decline in the current fiscal year and carry forward the remaining surplus into next year.

So then, we need to look at the next fiscal year that begins July 1 with limited information.

What do we do when we have limited information? We listen to experts and then calculate the worst, the best and the most likely scenarios AND hedge our bets.

A recent panel of ASU economists opined about what the recovery will look like --- V, U, L or W. In the report it says “The key is to note that despite the different scenarios, at the end of 2021, we’re back pretty much to the same place.”

So, considering all the options, we need to look at potential impacts over the next 18 months.

As we consider our budget, most of the conversations about the city budget has been about what to cut. I think we should have three categories --- what to cut, what to pause and what investments we may need to make.

For some, the first thing on the list of cuts is staff positions and staff increases. In considering this, we need to recognize that staffing has been relatively flat since the significant staff cuts that we made during the Great Recession.

We also need to recognize that almost all of our employees are essential workers --- including police, fire, water treatment, trash collection --- who have been working to keep us safe. To allow employee salaries to remain uncompetitive is irresponsible.

When other cities are keeping salaries competitive, why would anyone work for the City of Scottsdale if we don’t recognize the value they provide and fairly compensate them?

I support the city manager’s plan to pause, rather than cut, staff expenses.

To support a pause, the city manager proposed delaying increases for six months to save money in the upcoming fiscal year and then included the remaining six months of increases as a contingency budget expense and included it in our maximum spending limit.

The City Council sets the maximum spending limit and the city has a legal requirement to stay within that limit. Contingency budgets, unlike other line items, require additional City Council approval before the money can be spent.

To cut these expenses out of the budget completely eliminates any possibility to provide increases. If we put this in contingency and we recover quickly, and the City Council approves, then staff can get increases. If we recover more slowly, we can hold off.

Maybe the sky isn’t falling. As always, we should be containing costs.

We must also closely monitor our economy, continue to build on our history of fiscal responsibility and build in maximum flexibility.

While we do this, we need to pause not cut critical expenses. One way to do this is to follow the city manager’s recommendation to include critical expenses like staff increases in our contingency budget so that if revenues allow we can take care of the people who take care of us.

Editor’s Note: Linda Milhaven is an elected member of Scottsdale City Council.