By Katie Logisz
June 23, 2003

The Membership Standing Committee met on June 7 in Denver at the 71st Annual Meeting of the Conference of Mayors. Burnsville (MN) Mayor Elizabeth B. Kautz, Committee Chair began the meeting with comments before setting the agenda. "As mayors, we all are confronting tough choices as fiscal conditions decline across the nation." Kautz continued, noting that revenue shortfalls are the result of numerous causes, ranging from "the 9-11 terrorist attacks, a struggling economy, lack of support from state and federal government, and rising security costs." As the chief executive officers of cities, mayors' agendas are dominated by fiscal issues. Kautz stated, "We must make difficult choices on how to manage our fiscal crises, which many of us have done through cuts in services, fee and tax increases, or deferring costs to later years." The current fiscal crisis has caused mayors to reevaluate budgets and spending priorities.

Kautz explained in light of this current climate, the agenda for the committee's meeting was designed to provide mayors with a chance to learn from other mayors about different ways and means for dealing with fiscal challenges. Mayors heard presentations about the fiscal problems faced by cities and states, and then shared "best practices." According to Kautz, "We know, now, more than ever, mayors are looking to each other for innovative ways to provide the best services to our constituents with less resources."

Presenters were Margaret Browne, Director of the Office of Finance for the City of Denver, and William Pound, the Executive Director for the National Conference of State Legislatures. Browne highlighted three stages of city responses to fiscal crises. According to Browne, officials need to ask themselves, "what are your core service enhancements — what can we let go?" Furthermore, Browne stressed financial focus on the long-term as opposed to short-term fixes. In Denver, Browne says reductions have come across the board to balance out salary, benefit, and operating cost increases. "Agencies were required to reduce budgets by 4-7 percent".

Pound examined the fiscal crisis in terms of how such an economic climate affects states and the abilities of states to pass funding on to local government. Pound explained that, "an economic shortfall of $130 billion has affected 42 to 44 states in some way." Of those states not affected, virtually all have a natural resources tax base. A reason for the shortfall is in part due to a decline in income tax revenue, and "the response of states is budget cuts." Pound shared with mayors a breakdown of state dollars, citing that 30.6 percent funds K-12 education, 11.7 percent funds higher education, Medicaid takes roughly another 14 percent, and around 6 percent is allocated to correctional facilities. According to Pound, state aid to local governments is part of the "disappearing 37 percent." However, state aids shares this percentage with many other core functions of state government. Many states have had to dip into special or "rainy day" funds. Much as Browne had discussed long term fiscal planning for cities, Pound struck an identical cord for states. Reserve funds are a "one time fix." States need to plan for the long term. Pound told mayors that planning for the long term for states might likely involve tax reform, as state sales taxes are not accumulating to meet original estimates. Pound pointed out that the current tax system relies on the consumption of goods — not services. The tax system needs to "capture an economy that is information and service based." According to Pound, such changes will help to improve the fiscal reality for state and local governments.

In sharing "Best Practices," several mayors reiterated the presentations' focus on reduction and cost efficiency during an ailing economy. Freemont Mayor Gus Morrison shared cost cutting measures, such as contracting out emergency dispatcher and even establishing an outside contract for all of the city government's printing and copying needs. Morrison contended that there is "opportunity riding on the wings of danger — crisis is opportunity."

North Little Rock Mayor Patrick Hays conveyed new practices in his city. Three years ago, his city passed a new sales tax, and consequently this has alleviated some financial difficulties. Hays said that his city has been able to "reduce overall capital costs but maintain a reasonable level of services." Hays also highlighted reorganization in maintenance responsibilities of city vehicles in order to cut costs and increase efficient spending.

Finally, Cleveland Mayor Jane Campbell tackled her city's deficit with a hiring freeze excluding specific initiatives. Campbell also highlighted a fee adjustment package, stating many of the city's fees had not increased in decades. "By ordinance the fee covered a service but that just wasn't happening." The city was left with the difference. Mayor Campbell encouraged her colleagues not to "subsidize private business for municipal functions." By raising fees to reflect decades of inflation, Cleveland is no longer picking up unnecessary costs, yet remains competitive with the fees of suburban governments.

Kautz reported to the committee on the progress of recruiting and retaining members during the past year. Kautz released a report detailing a slight drop in membership. The losses were, "all due to budget cuts," according to Kautz. Despite this news, the Conference has managed to continue to attract new members and retain existing members. Kautz closed the meeting by challenging mayors to recruit new members, highlighting cities that have displayed potential in joining the Conference. She reiterated Mayor Morrison's assertion that "crisis is opportunity" further noting, "pain is shared." Kautz encouraged the Committee to embrace the "wonderful and challenging opportunity" of reaching out to potential members, urging these cities to join in the "large, united voice in Washington."