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Consultants tell council city needs financial diversification

By Staff | Nov 20, 2012

City Manager John Szerlag brought a pair of consultants to the City Council’s workshop meeting on Monday to discuss the city’s need for financial diversification and how the city can best achieve its goals.

Szerlag said the two must be married because just one won’t be enough to bring the city toward solvency.

“We can’t best practice our way to economic sustainability. We’ve balanced our budget on the back of capital improvement,” Szerlag said.

Szerlag brought in two consultants to look at both sides of Szerlag’s equation.

Mike Burton of Burton & Associates showed the council how it could achieve financial sustainability through the use of a computer program that showed where the city would go financially by utilizing different revenue diversification models.

The more diversification methods included in the model shown, the lesser the financial obligations over a 10-year period shown.

“You can look at different scenarios, you can look at new assessments and other revenue sources,” Burton said. “It puts a telescope on budgeting decisions. It allows you to have vision and see the consequences of your actions.”

Councilmember Chris Chulakes-Leetz asked if the program could fix problems such as the 35 percent of ad valorem taxes going toward pension liabilities. Burton said they weren’t experts on that.

Szerlag said that by experimenting with the program, the city could find ways to lower future financial burdens, thus be able to do best practices.

“If we do nothing, we’ll have to lay off 90 people per year. That’s not best practices,” Szerlag said. “We can feed the numbers that show savings and what it will do over time. We’ll show sustainability if we do certain things.”

Szerlag said the best thing about the software is that it takes into account any idea staff or otherwise may have to achieve said sustainability and get an answer in minutes instead of hours.

“If you have a good idea, you have to spend hours on it. Now, you can take someone’s idea and put it in the system and see what impact it has over 10 years,” Szerlag said.

Wanda Root told council the consultant would cost $50,000, which meant technically Szerlag could make the procurement order without council’s blessing. However, he chose not to go that route.

“They have to buy the methodology. If they didn’t buy it, I’m wasting time and money,” Szerlag said.

Paul Zucker, owner of Zucker Systems, based in San Diego, talked about his company’s qualifications regarding planning, building, engineering and best practices and how the city can achieve that, as well as a reputation as a great place to do business.

“Our methodology starts with picking the brains of city staff. We also talk to customers, economic development people, policymakers and use our consulting experience,” Zucker said. “If we do a good job, the customers and staff will know it.”

Zucker said he can start in December and bring in the team in January. A draft report could be finished in late February.

Zucker’s price tag of $70,000 will require the blessing of City Council, Root said.

Mayor John Sullivan said if they’re going to spend money on consultants, they might as well use their input.

“If we shoot down their ideas, we’re wasting money. We need to give them a chance,” Sullivan said.

Councilmember Marty McClain’s big question was why it took so long.

“Eighty percent of municipalities in Florida have some type of diversification. We can’t continue to provide basic services through property taxes,” McClain said. “We heard diversification and what we thought was tax increase. We didn’t hear much from people when taxes went down.”

“The salient objective for the community is long-term financial sustainability. No one benefits if we’re not sustainable,” Szerlag said. “You need to have reasonable expectations to have people come in who do this for a living. Staff will tell council what will happen if we do nothing. We can’t have that continue.”

Szerlag will bring the consultant plan to a vote next week.