Birmingham leaders ignore financial crisis

Let me be as clear and to the point as I can. With a few exceptions, no one at Birmingham City Hall understands the significance of the financial straits the city is in, nor is the leadership there competent enough to solve the city’s problems if it understood them. Without an outcry from the public and severe pressure from Birmingham’s business community, the city’s finances are headed nowhere good.



Here are the most recent numbers, as the acting mayor, Roderick Royal, released them to the Birmingham City Council on Monday.

Since the beginning of the fiscal year, the Birmingham City Council has passed $21.5 million in amendments to the city’s budget. In plain English, since July the council has approved $21.5 million of spending above the already deficit-laden 2010 budget.

The 2010 budget included $13 million of spending from fund balance, the city’s savings.

Of the $20.8 million of immanent expenses former Finance Director Steve Sayler left out of the 2010 budget, $11.3 million is truly unavoidable, Royal told the council Wednesday.

Add all that together and you get $45.8 million of spending above what the city projected in revenue for its 2010 budget. That’s the deficit according to the current mayor’s own projections.

Royal has responded to this problem by proposing about $8 million of spending cuts. You don’t have to graduate from elementary school to realize $8 million of cuts won’t get you out of a $45.8 million hole. Nonetheless, you can still serve on the Birmingham City Council.

Royal presented the council with three options the Finance Department had presented him. The first option would have cut spending by $23 million. The second would cut $32 million. But instead of those deep cuts, Royal is pushing the council to choose door number three.

It’s a fair argument that some cuts are better than no cuts at all, but even so, the city is only dealing with half of the problem. Yes, expenditures are much higher than projected revenue, but projected revenue is also too high.

On his way out the door, the former finance director, Sayler, projected the city would end the year $15 million short of the revenue projected in the 2010 budget. There’s reason to believe that number is optimistic. With the budget it has, if the city misses its revenue projection by just five percent, Birmingham will end the year with a $20 million hole in its budget — a hole it will have to patch with its savings.

On Monday, interim Mayor Royal told the council that the city’s budget projections had been “a little too rosy.” However, nothing he told the council indicated what the city’s real numbers would be.

In a sensible world, there would be easy answers. The city should have the information it needs to make an accurate projection. All the mayor or any city councilor needs do is ask the finance department to run the numbers. A year-to-date comparison of budgeted revenue next to actual revenue should show where the city is headed.

Instead, the brain trust in charge of the place wants to wait on two waves of cash. The first is Christmas sales taxes. The second is business license fees, which are remitted to the city after the beginning of the year. The argument is that the city can’t project where it will be financially until each of these sources of revenue is accounted for.

In effect, though, the city is hoping for a Christmas miracle. Look under your tree this year. Are there more presents there this year than last? Are the packages there any better than what was there a year ago?

As for business license fees, those are predicated on the businesses’ sales. If sales taxes are down the for the year, it’s a fair assumption that business license fees will be too. Does anyone believe there are more businesses out there now to pay taxes than there were this time a year ago? The city’s banking on an influx of cash, but who’s going to come through in the end? A Wonderful Life, this ain’t.

It’s worth noting that Jefferson County has held the reigns on its budget for the very reasons the City of Birmingham is now ignoring. When Jefferson County is more fiscally prudent than you are, you have a real problem.

Regardless of the prospects, there is absolutely no sense of urgency at Birmingham City Hall. When interim Mayor Royal presented his three options to the city council on Monday, the budget and finance committee, now chaired by Councilor Steven Hoyt, was more eager to dispense with the rest of its agenda than to deal with these problems.

The only councilors who have shown any understanding of the financial problems facing the city are Valerie Abbott and Carole Smitherman, both of whom have been relegated to the brainier-but-powerless minority and excluded from the Budget and Finance Committee altogether. When the two people with the most experience on the council and the most attention to detail have been banished from the Budget and Finance Committee, that’s evidence enough the new council majority is more concerned about political gamesmanship than having competent leadership.

In fact, in its first meeting two weeks ago — an unpublicized meeting which itself was a violation of the Alabama open meetings law — the Budget and Finance Committee was more concerned with how Abbott had gotten access to public documents than it was the actual financial problems it has to deal with.

Over the last two years, I’ve gotten used to letting history prove me right in the end. On Monday, I asked interim Mayor Royal who should be held accountable if the city’s finances are screwed up at the end of the fiscal year next summer.

“I won’t be mayor then,” he said.

War on Dumb is a column about political culture. Write to kyle@bhamweekly.com