With receivership more than two months gone, and higher parking prices here to stay, it’s time we addressed an important question: where will Harrisburg’s prophets of doom direct their relentless cynicism?
One likely candidate is the 2014 budget. On Wednesday, during a City Council committee hearing, Mayor Eric Papenfuse announced a temporary hiring freeze, estimating that this year’s budget was more than $1 million out of balance. Given that the receiver’s Harrisburg Strong Plan projected a balanced budget through 2016, and that words like “hiring freeze” call to mind recent years of crisis, the announcement might have been expected to generate some carping about a failed recovery.
The important thing to remember about a budget, though, is that it’s only as good as its managers. The “balanced” 2014 budget, for all the expert advice that helped craft it, is really a mixture of educated guesswork and wishful thinking—revenues may or may not come in as predicted, and surprise events might add unexpected costs. There was also some amount of fudging, as with the $3.9 million “negative expenditure” tucked away on one line item towards the bottom, representing hoped-for personnel savings and as-yet-unfilled positions.
With respect to the revenues, there’s not much the city can do except hold its breath. As Councilman Ben Allatt, the budget and finance committee chair, explained, raising taxes isn’t really an option—residents are already feeling the pain of last year’s hikes. Steven Goldfield, a financial advisor to the receiver, also noted that two important revenue streams, the earned income tax (EIT) and parking system revenues, have been slow to arrive. In the case of the EIT, the problem largely seems to have been that small businesses failed to withhold properly under the new rates. In the case of parking revenues, a long winter, postponed installment of on-street meters and a delay in the consolidation of state parking contracts meant the city didn’t see its first payment until May 1.
Goldfield remained confident that the city would see its full $2 million payment, though he said he’d feel better once the second installment arrived. But in the meantime, the city must decide how to manage the possibility of a shortfall, which is where the expenses come in. Bruce Weber, the city’s finance director, explained that the city can really only control personnel costs: the other major expenses, health care and debt service, can’t be adjusted, at least in the short term.
That’s where the hiring freeze comes in, and it’s a choice that, in a sense, the original budget predicted. Most of the $3.9 million “negative expenditure” consisted of positions the budget hoped to fill, but which the mayor could leave empty at his discretion. It’s true that the city could use more staff (Weber and others have called current staffing levels “skeletal”). But it’s also true that, in the face of slower or lower revenues, it’s important that city officials not make promises they can’t keep.
The city’s budget may not be perfectly balanced, but it’s a vastly closer matching of revenues to expenses than Harrisburg has seen in years. And, Allatt said, one of his takeaways from Wednesday was that elected officials are “working together” to manage the budget as it goes. “Hiring freeze” has a ring of crisis about it, because it sounds like the fiscal distress of prior years. To capture the difference between then and now, a better word might be “prudence.”
