Budgeting for unpredictable outcomes

Hope everybody enjoyed the budget show last Tuesday.  It sure did sound dramatic.

Landrieu: "Hand in hand we have run toward the fire. These are difficult challenges ... We will find a way or make one."

I have no idea what that could mean but it seems very exciting.  It could be that we're running toward the fire because we no longer pay firefighters to do that for us.  But I'm still waiting for the movie to come out so don't spoil it.

@nataliemiller @NolaCPP The flick will be called "Zero Sum Game" Will be shot entirely funded buy #HollywoodSouth tax credits.
— skooks (@skooks) October 15, 2013

Anyway the budget proposals are available for you to read here.  Council hearings begin this week.  As you look through the budget.. or at least follow other people's summaries of what's in the budget.. keep in mind how fluid and changeable a document it is, and can continue to be even after it's adopted.  This can be for any number of reasons.

For example, NOLA.com highlights $20.3 million in the capital budget set aside for converting Charity Hospital into the new City Hall.  But, obviously that contribution (actually a combination of state capital outlay and FEMA funds, according to the budget) is just one small portion of the estimated cost of the job.

The entire project is expected to cost $270.1 million with $100 million theoretically coming from the state, $33 million from historic tax credits, $18 million from new market tax credits, $11 million from FEMA, $30 million from recovery dollars and nearly $78 million from city-issued revenue bonds.

Also it isn't clear that any of that is going to happen. At least not in 2014. 

Then there's this passage in the operating budget that acknowledges some unfinished business.

The City is currently in litigation with the OPSO, the U.S. Department of Justice and the Southern Poverty Law Center related to the conditions in the Jail. The litigation has resulted in the approval of a consent decree that may supercede prior consent decree provisions related to the level of City funding for the jail. In addition, the City is working with the Sheriff to effect additional changes – such as the population of the jail, the number of non-City inmates housed at the Jail – that will also have an impact on FY 2014 funding.

What that's saying is the OPSO consent decree could leave the city with a 7- 22 million dollar obligation this budget doesn't account for outside of a 4 million dollar reserve.

When The Lens asked Landrieu how much he had budgeted for the jail consent decree, Landrieu did not name a figure. He noted that U.S. District Court Judge Lance Africk, who approved the agreement in June, has yet to set a dollar amount.

“The conversation is ongoing,” Landrieu said.

Another ongoing conversation is taking place in civil litigation where the city has just won the preliminary battle in a struggle to control the lucrative Wisner Trust property.

So the budget contains outlays that might not happen, acknowledges costs that it doesn't quite cover, and projects revenue estimates that it doesn't have a firm handle on... as well as some that seem a little absurd.

The city also expects an additional $1.3 million in sanitation fees from the Sewerage & Water Board, resulting from a soon-to-be introduced ordinance allowing the utility to shut off water service for customers who fail to pay the $24 monthly trash fee.

They can't possibly believe people who can't afford to pay their whole water bill each month are sitting on an extra $1.3 million.  Or if they do, I've got some sub-prime mortgages they might be interested in buying.

All of this is perfectly normal.  Municipal budgeting is complicated stuff. And yet the Mayor insists that we're faced with a "zero sum game" when we put together the budget and so must make some "tough choices." He calls it a "moral document." If that's the case, it's a morally ambiguous document and one that is very much shaped by the Mayor's sense of what is important.

Mostly, though,  the capital budget looks promising.  This is thanks in large part to the continued availability of FEMA recovery funds.

Repairs to streets all around New Orleans, a new 2nd District police station, improvements to two dozen parks and playgrounds, renovations at Louis Armstrong International Airport, projects at both Audubon Park and City Park, a new coroner’s complex — and meantime the FEMA money keeps rolling in, to the tune of more than $1 billion since Hurricane Katrina.

Presentation of the capital budget — often seemingly just an afterthought compared with the headlines produced by the city’s operating budget — sounded almost like the reading of a Santa Claus wish list last week as Mayor Mitch Landrieu’s administration outlined to the City Council what it expects to spend next year on infrastructure and other capital projects.

Deputy Mayor Cedric Grant said the 2014 capital budget totals $247.4 million, with the lion’s share — $152.9 million — going to the Department of Public Works for street projects.

It's a good thing too, since some of these potholes are starting to get a little out of hand. If we spend the money fixing it now, maybe we won't have to add the ghouling fee to everyone's water bill next year.