'What Are Our Core Services?': City Manager Reflects On Wichita's Budget Crisis
Wichita started off 2020 "in good financial condition," says City Manager Robert Layton.
"Then, COVID-19 hit."
The city was in the early stages of preparing the 2021 budget when the coronavirus pandemic began, Layton says, forcing the entire country — its businesses, its schools and its economy — to essentially shut down.
"The city situation is probably similar to what our citizens are going through, what our business owners are going through," Layton says.
Now, city leaders are tasked with filling a massive budget deficit that could impact Wichita's finances through at least 2023.
KMUW's Nadya Faulx spoke with Layton about the unexpected crisis, the city's philosophy on public services, and what the budget could look like when it's presented to the city council next month.
This interview has been edited for length and clarity.
Wichita’s financial situation
We've had to spend a lot of time looking at how do we need to change our business models and business practices, and then make the appropriate cuts to offset the projected deficits. In 2020, the existing year, we believe we have a deficit in a budget of about $11.5 million, about $17 million for 2021 and possibly a little larger in 2022. … We're spending some time thinking through when will we get back to where we were originally financially, right. And it's, you know, it could be as late as 2023 before we're where we were before COVID.
Cutting budget vs. increasing revenues
We have to remember the environment we're in right now. So if we do increase revenues, that may be through increased taxes, increased fees, and this is not the right time to be doing that in this community, when we have the significant unemployment that we do, we have businesses that are fighting just to keep their doors open. The last thing they need is additional burden from us.
So what the council has said is they want us to spend most of our time and attention on looking at changes in our spending and maybe changes temporarily on our service levels in order to balance the budget. There may be some revenue adjustments, but they're … not going to be significant enough to make a difference in the budget.
What’s been done so far
What we can do are immediate tactical actions in order to address the budget deficit in this year. For instance, once we knew we were headed into COVID-19 [and] it was going to have a significant impact on our economy and our budget, we went into a hiring freeze. So every vacancy that comes up, we freeze it, unless it's an essential position. And we have an analysis that we do for every position that comes up … in that context. That saves us probably at least $600,000 to $700,000 just coming out of the chute. So that helps.
We've also had to go and use our rainy day funds, you know, what we call “fund balances,” in various parts of our budget. We had positioned ourselves to be able to get through the next recession. We had anticipated it was going to come a little later. And we never thought there'd be something catastrophic like this.
How this compares to the Great Recession
The 2008 recession was, I won't say it was predictable, but it phased in over a period of time. Now, we did have to still make significant cuts to the budget. I think over a three-year period, we cut more than $20 million out of the general fund. But we weren't faced with that all in one day, or in … a three-month period. And so that's, I think, the difference here, and we didn't have any time to plan for this, where at least with the recession, you could see it start to happen. It was happening on the coasts. It got to us a little slower. We were slower to get into the recession, slower to get out of it. It ... gave us a chance to reevaluate how we provide services to the public. Now, this is so quick, we’re doing what all businesses are doing and that's reevaluating, you know, what it is that's urgent that we have to provide.
It's one of many factors. We're refining our input process or engagement process every year. And what we've tried to do is frame the issues that could make the most impact on the budget, where we have some concerns. For instance, a good example — a small example, but a good one — is our splash pads.
So we know we're not going to have the pools open this year. The council hasn't formally adopted that, but we probably ... won't open the pools because part of it's a COVID-19 concern, part of it's a financial concern. But also we had plans for upgrading several of our pools and also building new splash pads. And the council decided to go ahead and advance the second phase of that work. So this summer and fall, we'll be doing improvements for phases one and two. So we've accelerated the project, decided let's take advantage of this time and actually look at it as an opportunity instead of, you know, a problem. And so we're going to go ahead, not open the pools.
Share your budget priorities using the city's budget simulator
Splash pads, that's still up in the air, but because of financial issues and still ongoing concerns about COVID-19, it would make sense not to do that. But we're asking the public as part of the simulator and part of the budget social media town hall to weigh in on that. There are some really hard decisions. This isn't incremental changes to the budget, you know, and just tweaking here or there. And I know that we have a good number of users for the splash pads, but at the same time, we're down to really, what are our core services? What is it we have to maintain going forward? I hear all the time, "Don't take money away from street maintenance." ... Well, when you have deficits like this, there are certain things you try to protect and that's one of those core services. And if that's the case, then there are other things that you're going to have to say, well, temporarily we'll discontinue those or significantly modify the way we provide those.
Whether the pandemic will permanently change the city's philosophy
We have spent the last three years on what we call a "zero-based budget" process ... we broke it down to each discreet service and we said, "Is this a service that's considered to be essential to our public? Or is this something that we've been providing for a period of time and has a certain group of users, but maybe is not part of our core?" So we've been challenging that, but probably have not been forced to make some really hard decisions on the trade-offs until now.
So I'm going to say that in some [ways], what we're doing is tactical, just get us through the next couple of years and we will expect to see services come back, right? Splash pads, for instance, they'll never be permanently closed. There's a reason that we have splash pads and we provide that service. But we're making some modifications at Century II that probably will be long-lasting. And we're looking at changing our business model at the animal shelter. That may be long lasting as well. It's hard to tell. We'll see how it goes, but those are things that are necessary now. And time will tell on whether or not they'd return as part of ours, our services.
What the budget crisis means for the Riverfront Legacy Master Plan
Just my opinion, I've not had any discussions with the City Council and they'll determine where we go from here, but I think there's a reason to pause because of the significant change in the economy and the importance of providing essential services, or the "untouchables." It's going to reduce our ability to be able to fund large projects, right? So that's one reason why I think there needs to be a pause on that. But also, this is a good time for us to recognize that ... I think we're at a pivot point for Wichita and really for the country, and that is, we need to start looking at things more through an equity lens. When we talk about the redevelopment of the riverfront, is there an expense that comes with that where we're actually spending money in one area, and neglecting other areas of the community?
So we need to have that discussion as well. How do we best allocate our capital dollars, our public and private dollars, cause there's a lot of private money that goes into the redevelopment of that area as well. And let's have greater community discussions about that before we just agree to a large capital campaign. As I've talked with some business representatives who, you know ... have been supporters of that, they agreed that we ought to pause for a second and have conversations ... where everybody's at the table, that are more inclusive and we can talk about community-wide priorities, not just what we do on redevelopment along the riverfront.
I think there were people that were saying, "Is this the best use of public money?" But we weren't looking at it through an equity lens [before]. And we weren't looking about who could be left behind if we made our public expenditures as significantly in that area. And also, who shares in the use of those amenities, you know. You have to have a bold vision and provide the kind of quality of life that everybody wants, but you have to do it in a way where people don't feel left out. And I think that what's gone on in this country in the last few weeks is making everybody rethink how they look at big public projects.
Not waiting on federal aid
The biggest part of all of this is that this is playing out this way across the country, right? And there's been some talk at the congressional level about the possibility of getting some funding to backfill the revenue losses for cities and states and counties. I don't know if that's going to happen. If it happens, it won't probably be in time for the approval of our budget. So we have to assume the worst at this point. And there will be a noticeable service change in some areas, like ... in forestry. We've talked about even lengthening the mowing cycles possibly in parks and along our streets, you know, the right of way. We'll look a little shaggy, but those are things we have to do.
Overall, I'm anticipating that we'll, on our staffing freeze, that we'll have probably about 150 positions that will be frozen over a three-year period that won't be filled. And then we'll probably eliminate another 50 positions, some out of the services ... that are COVID-19 hit right now. And some that we ... if we make those adjustments probably will not come back and restore those and not have the ability to restore those. So people will see a difference in what they're going to receive from us, but I think they understand that. And I think they would much rather us make those temporary adjustments instead of raising the tax burden on them during such a difficult time.