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Standing Ovation: Suisun City, CA

On May 5th, 2010 Channel 2 (KTVU) news reported, "Suisun City is operating in the black, and has none of the financial issues facing so many cities in California or the nation." That deserves a "Standing Ovation."

Suisun City demographics (www.city-data.com) reflect their estimated 2008 population at almost 27,000 with an average household income of almost $80,000. While it's a relatively small city within CA, their average household income is well above the 2008 estimated State average of $61,000. The City is located roughly half way between San Francisco and Sacramento, in a rural setting.

So how are they running in the black? They are using a little known and rare financial strategy called fiscal prudence and conservative investing. First, as reported by Channel 2, "during the bubble economy days, they were saving 40% into their savings or reserves." This is an astonishing number to say the least, which is so different than what other cities in CA have done for years. This accomplishment is worthy of praise.

Secondly, "They repeatedly avoided the temptation to buy risky investments, synthetic swaps and real estate back bonds." It's another amazing accomplishment of brilliance and prudence. If you can't explain your investment in laymen terms, you have no business making them, especially with someone else's money. It's that easy, and Suisun City leaders went the contrarian route, and I love that. Kudos all around to the leaders of Suisun City.

After seeing this Channel 2 news broadcast, I wanted to know more about what's working so well in Suisun City, CA. I emailed Suzanne Bragdon, City Manager of Suisun City, CA. And she provided some very interesting and thorough feedback to a few questions:

Question 1: Do you feel the city is managing staffing and compensation levels in a prudent manner? I ask this because your website has a position open for a police officer, and the starting compensation is less than those cities with payroll that is out of control.

Answer: The answer to your question is an emphatic "yes." For public agencies, salary and benefits typically comprise 80% or more of an operating budget. Face it; we provide services to the public and those services are provided by people. And people cost money.

The reason I can answer so strongly that we are managing these resources in a prudent manner is because we are able to not only use reserves to manage our way through the current economic crisis, but by June 30, 2013 - three years out and after experiencing revenue declines in the 25% range for our General Fund and 35% in our Redevelopment Agency - our reserves will still be at 20 to 25% assuming no changes in costs or revenues. That's pretty amazing when you consider that many cities, during these times, are happy to have reserves of 10 to 15%.

A significant part of our success is the stability of our City Council - three members have been on the Council for 16, 18 and 24 years respectively. That means for staff that our goals and objectives, as confirmed by the City Council, have continuity. We're not shifting gears and direction every two years with every new election.

Another part of our success is the working relationship with our employee organizations. They get what we've accomplished and they appreciate the hurdles and constraints that we have to work within. They also understand that the Council and management team appreciate the efforts and sacrifices that they all make - and that when we reap the benefits of our economic development efforts, they will be recognized.

And finally, we benefit from a volunteer fire department. Our 50 or so volunteers are trained and pull shifts at the Station just like any paid department. Their dedication is such that many contribute more hours to Suisun City on a volunteer basis then they do to their paid jobs. We are more than fortunate.

Ultimately, it's all about living and working within our means.

Question 2: Are you managing the amount of overtime pay to city workers? It's another issue that seems to be out of control at many cities with budget short falls.

Answer: Overtime is always a cost that has to be watched and monitored for any operation that is a 24/7 shop - like our police department. The Police Department has done an exceptional job at managing their overtime. In many instances, our overtime is tied to special services (like traffic or marina enforcement ) that are funded through grants. We also consciously incur overtime to cover vacant positions when it's less expensive to do so as compared to filling the position permanently.

Question 3: Are there any other things the city is doing to manage a fiscal budget well within expectations?

Answer: Big picture, we watch our reserves very closely. As the economy started tanking a couple of years ago, we analyzed every vacant position that we had to determine if there were other ways of providing the same service. These efforts have saved us a total of $475,000 on an ongoing basis. That's significant for a GF operating budget of roughly $10,000,000.

We also use one-time revenues from the strategic sale of property and other project related transfers to "bridge" operating costs until we realize the ongoing revenue from identified economic development projects - like our new Hampton Inn & Suites on the Waterfront that opened last November, and our planned Wal- Mart Supercenter that is expected to start generating revenue in the spring of 2012.

We are likewise positioned to have a two year window to reposition our operating expenditures to our operating revenues if designated projects are delayed or do not come to fruition. All the while, maintaining ongoing reserves of 20 to 25%.

Question 4: If you had to give advice to other municipalities managing a budget in this current environment, what would that be?

Answer: This is probably more of advice for the State: When you have reserves, protect them. Don't interpret excess reserves as over taxation or an opportunity to provide more services. Reserves are there to tide an organization over during the unexpected downturns that the economy takes on a fairly regular basis.

On this point, all you have to do is consider the downturn of the early 1990's when California went through a number of base closures. Then the early 2000's when we had the dot-com bubble burst. And then 2005/6, the housing bubble burst. It's a given that we live within an economic roller-coaster.

Related to protecting reserves, is the guiding principal of spending one-time monies on one-time things. The only exception if you are "bridging" for time with a known economic development project (i.e., like a new auto mall, a Target supercenter, a hotel, etc.) that WILL generate ongoing revenue. "Bridging" for a purpose makes economic sense; "bridging" in HOPE that the economy will turn around in the short-term, or that housing prices will recover their loses in three years, isn't prudent.

SUMMARY: All I can say is, "wow." I want to thank Suzanne for taking the time to respond to my questions. The entire world of municipal leaders should stand up and take note. They have a very different view of what reserves really are, and they're absolutely correct, everyone should protect and use them for tough times. They clearly understand that one time revenue sources should not be used in budgeting re-occurring expense items. They have a "voluntary fire department." Yes, this really can be done, and it has to be a huge cost savings. They actively manage a prudent budget. And, they don't have career politicians looking to make points with lobbyists/special interest groups, so they can jump to a higher office somewhere else. They have long term city council members with their city/citizen's best interest at heart. I want to thank their management team and council members for showing it can be done!

It's a no brainer; The Model City in CA is Suisun City, one of fiscal prudence and common sense, with the kind of political and city leaders we should all embrace and seek to manage the public's monies. They made "Hall of Fame Decisions", and most definitely and emphatically deserve a Standing Ovation!

Hope all is well.

...........Come see my new website: http://www.roseysoutlook.blogspot.com

Note: Standing Ovations are going to be a semi regular part of my website, as I want to recognize those who do great work, and positively impact our world in a financial or economic way. Should you believe someone, some organization, or entity of some kind is deserving of a standing ovation, I want to hear from you. It's easy, email who you feel deserves praise, and briefly explain why you feel that way. Also, you must include a link to data that supports the claim and provides background as to why. Please indicate if you want me to use your name in part or total, or a code name, as the recommending source, or if you prefer to stay anonymous. I reserve the right whether or not to write about and post a standing ovation. I look forward to hearing from you.

 

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