While the City of Davenport struggles to find $1.7 million to balance its budget, the City of Bettendorf and Scott County aren't having crises, even though they're dealing with a similar state cut. The Iowa legislature in its spring session passed something called the Reinvention Savings Bill, which cut $60 million to local governments. The legislation cost Davenport $1.7 million (more than 5 percent of the city's general fund), Bettendorf nearly $550,000 (2 percent), and Scott County $450,000 (less than 1 percent).

The cut from the state is permanent, meaning that local governments can't just solve the problem with a one-time cut or influx of revenue. And in the case of the county, the mechanics of the cut mean the loss of revenue will be greater next year - $760,000. Add to that the possibility that the state will reduce money to local governments again next year - "I'm not at all convinced the legislature's not going to do another cut," Bettendorf City Administrator Decker Ploehn said - and the financial picture is bleak for Iowa cities and counties.

But only Davenport is fighting to balance its budget in the short run.

Davenport City Administrator Craig Malin has put forth a package that combines cuts, reorganization, and new revenue to make up the shortfall, but the city council has reacted coolly to the largest component: a $7-a-month ($84 a year) garbage fee that would generate $1.5 million annually, and $864,000 - about half the current shortfall - this fiscal year.

Malin's package is the de-facto starting point for any discussion about plugging the $1.7-million hole, but it appears that the garbage fee is off the table for the time being. That's a big deal, because the city council is expected to consider a package at next week's meeting.

"I think it's dying," said Alderman Steve Ahrens of the garbage fee. "What we're hearing loud and clear ... is that a leap ... to the garbage fee is problematic to a lot of our residents. ... It only becomes a more viable solution if consensus can't be garnered" on another proposal.

Alderman George Nickolas has said that any alderman who votes for a garbage fee will be bounced from office in this fall's city election, and that type of political consideration can't be ignored.

Malin understands that there are political considerations. But he doesn't see that as an excuse for not dealing honestly with the budget problem. "We can't take every other year off" because of city elections, he said. "Could we draw down fund balances? We've done that for the past 10 years."

"We don't have the luxury of not balancing our budget," agreed Ahrens.

Although aldermen have criticized a major component of the plan, Malin said last week that no alternative presented thus far would have enough votes to pass. "I have yet to hear any package of expense reduction and revenue addition that has any consensus," he said.

One of the challenges Malin has created for himself is taking public safety - which accounts for 58 percent of the city's general-fund costs - off the table. Malin explained that the city needs to continue to civilianize the police department and pursue strategies to allow officers to community-build - which means they spend less time answering calls and more time working with citizens in neighborhoods. "Public safety is not just how many officers you have," Malin said. "Our officers need more uncommitted time." And the fire department is being forced to cover an ever-expanding area as the city grows, but its budget hasn't kept up.

With public safety not in the mix, Malin doesn't have much to work with in terms of cuts. The package needed revenue, and that's one reason the garbage fee came into the picture. The city administrator understands politics well enough to know that the city can't pass cost increases onto citizens without first showing that the city's belt is tight. Some of the cuts - such as an estimated $7,400 in energy conservation - are so small they're almost laughable, and Malin admitted they're somewhat symbolic. "Our citizens have to understand we're down to that," he said.

Ahrens, Nickolas, and other alderman seem to be leaning toward an option beyond the garbage fee to deal with the cut.

Nickolas favors asking voters in November to approve a referendum that would dedicate three-tenths of the 1-percent local-option sales tax to the city's public-safety operating costs. That would generate roughly $3.3 million a year.

But it's not a no-cost solution for taxpayers. Dedicating a portion of the sales tax to the general fund would mean either cutting things from the capital-improvement budget or increasing the city's debt-service property-tax levy. Nickolas' proposal would possibly mean raising the levy by $1.38 to offset the operating-budget transfer. For the owner of a $75,000 house, that would mean a property-tax increase roughly the same as the proposed garbage fee.

That's why Malin doesn't see it as a solution. "The biggest challenge there is that it's not adding any money" unless there's a tax increase, Malin said. It's just shifting revenues. In addition, there's uncertainty whether the referendum would pass.

Nickolas has other ideas for cost savings, but in terms of solving the city's short-term budget problem, the local-option sales tax is all that would be needed. "If they say no," Nickolas said of voters, "we slap a garbage fee on them." Ahrens agreed. If voters reject shifting local-option sales-tax revenues, "then you've got the people's permission" for a garbage fee, he said.

One major benefit of the local-option sales-tax approach - to aldermen, at least - is that it would probably not hurt any of them on Election Day. But the flaw in this either-or thinking is that it neglects other options.

Other possibilities for cost savings include consolidating services with Bettendorf or the county, starting "performance-based budgeting" (in which departments start from scratch each year in crafting their budgets instead of basing requests on previous years' funding), creating a system in which not-for-profit groups make a payment to the city in lieu of property taxes (from which they're exempt), implementing a fire-inspection fee, and charging households or businesses for false-alarm or excessive emergency calls. Those first three are long-term strategies, however, and likely wouldn't provide any monetary benefits to the city this fiscal year.

Alderman Wayne Hean is interested in shifting some of the local-option sales tax, but not as much as Nickolas has suggested. Hean wants to dedicate 10 percent of the local-option sales tax to the general fund, but he also wants to make enough cuts and revenue enhancements in the city budget to offset the resulting increase in the debt-service levy. In other words, he wants the city's $1.7-million solution to be property-tax neutral for citizens. And he supports Malin's plan with some changes and without the garbage fee, meaning that he's looking at a budget hole of only $864,000 - the estimated revenue for the garbage fee this year.

With 10 aldermen, there are at least 10 preferences on the city council at this point, and no consensus has emerged. The situation is "pretty fluid right now," Ahrens said.

All this budget shell-shifting is partly the result of Davenport's general-operating tax levy, which is at its maximum of $8.10 set by the Iowa legislature. Because of this, the city can't just raise the property-tax levy to cover the shortfall.

That's the main reason that Scott County and Bettendorf have found less-contentious and -painful ways to make up for the state cut; they have room under their caps to raise their operating-fund levies, and are generally in better financial condition.

"We reacted to our revenue problem last year," said Bettendorf City Administrator Ploehn. "I think that put us in a little better position. ... We sent six people out the door."

Ploehn said that while Bettendorf did not anticipate the state cut, it saw revenues falling last year and made some adjustments, including cutting 11 positions and six jobs and raising the property-tax levy by 37 cents.

Even with those cuts, however, Bettendorf's city council has signed on to a five-component plan to free up money both in the short and long term, including:

• Delaying funding for a planned Bettendorf arts center for at least a year, saving up to $1.2 million;

• Drawing down the general-fund balance;

• Continuing a hiring freeze implemented last year;

• Exploring increasing user fees citywide; and

• Studying a solid-waste-fee increase.

The city council will probably get studies on the last two items in late fall, with the goal of implementing changes at the beginning of the calendar year.

For Scott County, the timing of the state cut was fortuitous. The county is in the middle of its every-other-year Financial Initiatives program, in which staff and the county board explore ways to cut costs. Scott County Administrator Ray Wierson said that in the past, the process has saved the county $200,000 to $300,000 a year - which would go a long way toward the county's $450,000 hole. That process should be finished in September.

In addition, the county recently found out that it received a $220,000 federal grant for a jail substance-abuse-treatment program that was going to be paid for through the general fund. "That's over half of it [the cut] right there," Wierson said.

Still, the county might be delaying some capital projects because of the cut. The county has typically transferred $450,000 a year from its operating budget to its capital budget, but it might not contribute that much this year. As a result, the county might defer renovation of the second and third floors of the courthouse for a few years.

And if worst comes to worst, the county can always raise its property-tax levy. "The county is in a much better situation" than Davenport, he said.

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