Trying to discuss the Norman Forward budget with City officials is sort of like Calvinball where the City gets to make the last rule: if they don’t like the way things look, the game gets changed.
Here is my attempt to get out of the Norman-Forward-finances-are-whatever-City-staff- wants-them-to-be zone.
Let me start on the revenue side, because it is the easiest.
Apart from Norman Forward, the City has to make sales tax projections in all of its basic budget documents. The basic assumption in both the FYE 2018 Budget Book and the FYE 2018 Capital Improvement Budget is that sales taxes will grow by 2.5% in FYE18 and by 4.0% in FYE19 and after. Honestly, this strikes me as on the high side, but let’s use those numbers as a starting point. It is lower than the 4.25% assumed for FYE19 through FYE 31 assumed in the latest City budget for NF projects.
We know - from actual collections - the FYE16 and FYE17 NFST numbers, so we can just calculate out the numbers for FYE18 through FYE30. FYE31 is slightly more complicated, in that it reflects only 8 months of tax collections: May 2030 through December 2030 (May taxes are remitted to the City in July, etc.). Luckily, I had already looked at the the data on how each month contributes, on average, to the yearly tax take when I started this blog (see the discussion of method 2 here). May through December collections, on average, contribute 67.91% of the yearly total, so I calculated an entire year’s worth of taxes for FYE31 and then multiplied that by 67.91%.
I’ll spare you the calculations, but the total NFST revenue number turns out to be $188,661,604.
The revenue side also involves borrowing and interest on held funds. To keep things simple, I will just assume what the City assumes, which means $108,310,000 in borrowed money and $370,189 in interest.
The expenditure side is more complicated - lots of programs, lots of borrowing costs and interest. The City has released (at least) 3 different estimates of project costs: one in 2015, the Implementation Plan in 2016, and the latest 2017 budget. (It is worth noting that none of these expenditure estimates puts a penny toward any Senior Citizen Center. That would add a cool $10 million to the expenditure column.) Interestingly enough, the cost estimates keep going down as time goes on …. Rather than worry about the details, I will just assume that the cheapest one is correct - $158,138,285 spend on NF projects. Of course, we are financing much of this, so there are borrowing costs, interest costs, and principal repayment. Again, I will just assume what the City assumes when it comes to borrowing.
The net result of all of these calculations is shown in the following table.
Revenue
|
|
NSFT collections
|
$188,661,604
|
Interest
|
$370,189
|
Bond sales
|
$108,310,000
|
Total income
|
$297,341,793
|
|
|
Expenditure
|
|
Project costs
|
$158,138,285
|
Principal repayment
|
$108,310,000
|
Borrowing costs & interest payments
|
$31,577,626
|
Total expenses
|
$298,025,911
|
|
|
Net Balance
|
-$684,118
|
This, of course, is not a Nostradamus-like prediction; rather it is what you get when you take the City budgeting numbers seriously rather than trying to rationalize a set of expenditures. Conclusion: the Norman Forward money is very tight. There is a pretty good chance we won’t be able to afford all of the budgeted projects, much less find money for something like the unbudgeted Senior Center.
We are pretty early in the Norman Forward Sales Tax period … do we really need to worry so much about the budget now? Unfortunately, the answer is yes. Because we are selling Bonds early in the process, almost all of the program spending in Norman Forward is front-loaded into the first few years.
Focusing on program expenditures, we see that over 80% of all of the money will be spent by the end of FYE20.
What all of this means is that programs that are funded early are likely to happen and programs that are put off bear all of the risk of not-unlikely budget shortfalls.
This is not at all comforting if you are a fan of a project that has been put off (e.g., a Senior Center, a Canadian River Park, Park Improvements). More generally, however, the issue is one of fairness and accountability. The City has steadfastly refused to prioritize projects in Norman Forward, so the de facto priorities are being set by City staff rather than by any sort of open political process. At a minimum, the City Council of Norman needs to look into the budgets being spun out by Financial Services to see if they comport with what the citizens of Norman want to do when faced with fiscal uncertainty.
