The Richardson City Council held two days of meetings to hear City Manager Don Magner present his recommendations for the 2024-2025 City budget. I've had concerns about what impact a recent collapse in sales tax revenues and the cleanup costs from the May storm might have on the City's financial outlook. Magner listed high interest rates and lingering price increases from past inflation as additional concerns. Still, Magner pronounced, "I think it's a very good budget considering all of the factors that are working against us." I'll add, Whew! We escaped a budget catastrophe.
Councilmember Ken Hutchenrider had a lot riding on this escape. You see, some people (and by some people I mean me) had fingered him as the person responsible for pushing last year's budget into dangerous territory where it couldn't afford any downside surprises. So I was pleasantly surprised to hear him defend himself during the budget workshop for his handiwork a year ago.
Councilmember Ken Hutchenrider: "I think myself and a couple other council members have pushed to increase salaries for City for especially Fire, Police, and for everyone. At the time, we all felt that it was very needed and I think you [City Manager Don Magner] at the same time felt as well and felt that it was something that we could take on and that it was an appropriate position to take. And from what you said tonight, I feel like you said that that's an absolutely true statement, and that we've not affected the nature of the city negatively in any way, shape, or form or had to make major major cutbacks or anything along those lines because we did, I believe it was an additional 1% [salary increases]."
In May I wrote a series of blog posts about the risk Hutchenrider had put us in:
- Council Recap: The Case of the Missing Sales Tax
- Council Recap: The City Manager's Curious Statements
- Council Recap: Where was the Mayor?
Hutchenrider pushed for 6% raises instead of the 5% in the City Manager's original proposal. Everyone quickly agreed despite comments from at least a couple of Councilmembers that should have served as clanging warning bells (e.g. Justice: "I'm a little bit cautious about wanting to make sure that we continue to budget conservatively the way that we always have. We don't know what the property rolls are going to look like or what our sales tax is going to look like.") Still, she went along with Hutchenrider. So too did everyone else, including the City Manager. Then a year later in May, sales tax revenues plunged.
That brings us up to date, when, in this budget workshop Magner said, "Honestly, you know, six or eight weeks ago, I didn't think that I would be presenting this budget. We've very fortunate in my opinion to be able to approve a budget that is...able to provide the departments with all their highest priority items. Not every item but all their highest priority items."
Councilmember Joe Corcoran added, "I think we got thrown a lucky break there at the end with the property tax for sure."
Councilmember Jennifer Justice added, "You know, four, six weeks ago, I think we were all sort of sweating a little bit. You know, we were really worried our property tax was going to be a lot less than it was."
Hutchenrider still insists calling his push for 6% raises instead of 5% to have been an "appropriate position to take." The budget was saved by a "lucky break there at the end," not by conservative budgeting that Hutchenrider and others have talked themselves into believing Richardson engages in. It's discouraging that no one seemed to rethink that claim or draw any lessons learned from it.
Councilmember Dan Barrios: "Wow. I wanted to put that in perspective."
Barrios is referring to sales tax revenue (shown in the graph above), which the City's budget for 2024-2025 is 3.1% less than the 2023-2024 estimated revenues. Is that budget conservative enough? We'll see. That current 2023-2024 estimate is down 9.1% from what was budgeted for last year. Wow is right. If that miss doesn't reset everyone's confidence in our own ability to predict economic performance, I don't know what will. That's why conservative budgeting is important. That's why maybe we shouldn't push for 6% raises after the City Manager presents what he thinks is a conservative budget of 5% and ends up missing the sales tax revenue forecasts by so much. That's why the City Manager shouldn't be so quick to agree when his bosses ask him to go along with bigger raises for him and his staff.
Hutchenrider is correct that we avoided disastrous harm to Richardson's budget...this time. He's wrong in his takeaway from this near disaster that it was "an appropriate position to take." We got lucky. We might not be so lucky next time.
"Six percent raise sought,
Warnings were lost in the cheer,
Luck saved budget's fate."
—h/t ChatGPT
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