The City of the Future?

Oklahoma state law requires municipalities to have balanced budgets. The dramatic cost cutting now underway in Tulsa, both in the media and reality arises from that fundamental dictate.

Whatever side of the political aisle you are on, the financial picture is not comforting and the future seems far from "shining city on the hill" status Ronald Reagan ascribed to America. The largest controllable cost item in the city budget is salaries. A seemingly humane idea in good times since as an employer you want to invest in people and families as best you can. We are now seeing the second edge of the money sword, as this hopefully humane item is also the only one big enough to close the budget balancing gap of over $10,000,000.

Tulsa's 2010 operating coxt budget is $519,361,000, a decrease of $4,257,000 from the previous year. Out of that total, $248,000,000 goes to public works and $186,000,000 to public safety. All remaining city operations get $85,316,000. Further, city revenues are were expected to decrease by $5,600,000 from previous year. The city is falling short of what was a tighter budget than last year.

The city employee base is divided amoung three separate unions. Police, fire, and city operational people all serve one employer, Tulsa, but separate masters, their union. We arrived at this situation by free market means. The employees voted on joining unions and the majority ruled. These unions bargain on behalf of the members with the city for wages as well as represent their members in situations like the current budget shortfall and negotiations.

In previous years, Tulsa sought to enhance sales tax revenues by capital projects geared toward entertainment, the BOK Arena and the new ONEOK baseball stadium. Both require police presence for security, spelled manpower, which means payroll dollars. Also came a move to a city hall with tranparency, not the O'bama kind but the glass kind, with relatively higher operating costs as well as a vacany rate. All these items impact the general fund budget that supports the payrolls.

No one could have foreseen the economic meltdown at the time the arena was built. The ballpark and City Hall?????? We now find outselves in the position of trading public safety payroll dollars for monuments. To be sure, in a budget as big as Tulsa's, one could argue other things could have been cut to protect our police and fire staffs. But it could also be argued that many of those things were cut from the previous year's budget to balance it, before the current year problem arose.

Stay tuned for the remaining five months of the fiscal year.

Outside the ballott box -

The unthinkable happened last night. The senate seat held by Edward Kennedy was lost to the GOP by a 52% t0 48% vote in a special election. That put the senate makeup at 59 Democrats and 41 Republicans. One vote from Democrat dominance. One vote away from where it was two months ago when Kennedy could have voted. One vote and two months separated the Obama administration from having health care uncompromised. Was it really that important for the Democrats to get eveything their way?

The 60-40 split was required to shut down debate and get the Senate bill to a vote. Why did they wait? For one thing, it took the Democrat majority that long to get its own majority in order on the details of the bill. How great can this bill be if the deal making within the Democrats was as time consuming as it was?

The shere size of the bill was daunting. Thousands of pages of verbiage, more government spending. A well publicized deal with the Nebraska senator to exempt his state from taxation supporting the bill damaged credibility. Added government spending and the oddity that the taxes start four years before the coverage does. All of this was supposed to be to leave a monument to the late Massachussets Senator, who held his seat since 1962. Forty eight years of votes, deals, compromise.

The irony of the situation was that in Senator Kennedy's term of service, he undoubtedly horse traded and dealt with the best of his peers. His repeated election indicated he was certainly reverred by his constituents but also able to stay attractive to the demographics of a changing electorate. A sort of dealing in itself. Yet his great legacy fell victim to a failure on the part of his party to compromise on his legacy piece of legislation. Whose legacy was this really? Kennedy's? O'bama's?

Note from the amiss

What's wrong with this picture?

The government allows us to save money, tax deferred, toward our retirement. It's called a 401K and most of us babboomers have been doing this for various lengths of time. Currently we have 10% plus unemployment, causing some of us to have to tap state and federal umenplotyment funds, in to which we have payed for years. We now discover (media reports) that up to 40 states have ballooning budget deficits and some may be close to bankruptcy.

Some part of the baby boom generation are now unemployed and not all have glitzy severance packages. Some got no warning and no severance at all. That means using the above mentioned unemployment funds for daily living. Some have a 401K to which they have contributed for years.

What would be the affect of declaring a moritorium on the 20% penalty on 401K funds withdrawn before age 59? The owner of the 401K would still have to pay taxes on the money withdrawn. Would the money withdrawn help relieve pressure on state unemployment funds? Would it not increase the income tax collections realized by the individual states (those who have a state income tax) and therefore reduce deficits? It would also relieve some of the pressure on the states unemployment funds. I realize this would put a little more control of our savings and investments in to our hands, but on the other hand it just accelerates a tax we would eventually have paid anyway.

Something for your consideration with the morning coffee.