Mayor Steve Connelly’s 2018 State of the City Remarks

This week, Berea Mayor Steve Connelly addressed the state of city government, touching on issues related to finance, personnel, infrastructure and local politics. Remarking that Berea is on sound footing, both from a financial and operational standpoint, Mayor Connelly warned of challenges that confront local government. His statement before the council was as follows:

“To satisfy part of my obligation to report on the conditions and needs of city government, I will speak briefly tonight on the financial, operational and political state of local government in Berea at the end of 2017.

Berea’s finances, as you know, are sound. Our last three audits show a steady increase in net financial position—assets reduced by liabilities—$57.3 million in 2015; $61 million in 2016; and $63 million on June 30, 2017. This past fiscal year, General Fund revenues increased by $1 million (including an increase of $326,000 in occupational license fees and $503,000 in net profits revenue) and expenses were reduced by $321,000.

As of January 31, 2018, the City had over $22 million on deposit with local banks (including all city accounts). The City had over $7 million in checking, over $4.7 million in CDs, plus over $2.1 million in capital sinking fund CDs. Utilities had over $7 million in CDs, and Tourism had over $874,000 in CDs.

The operations of Berea’s local government are strong and extensive but face growing challenges.

The City employs 140 full-time and 20 part-time people. It owns 136 vehicles and 20 buildings, and insures 93 structures. The nearly completed Operations Center will contain 44,000 square feet and provide better parking and access to services.

The City has an active parks program situated on 80 acres of land with a pool, sand volleyball courts, baseball, softball, soccer and football fields, concessions, picnic shelters, basketball courts, a skate park, an intergenerational center, and the Russel Acton Folk Center.

The Parks and Recreation Department offers 100 programs, and in 2017, held 13 tournaments, rented the Folk Center to 7,500 people, rented picnic areas for events that served 4,200 people, and hosted 1,805 participants at pool parties.

Our utilities provide sewer service to 5,800 customers, water service to 4,300 customers, and electric service to 5,300 customers.

The Public Works Department maintains 113 linear miles if streets. The police department has 30 sworn officers, and the fire department has 25 firefighters.

Since 1993, the City has completed 59 projects costing over $20 million and since 2005, Berea Municipal Utilities (BMU) has completed over $34 million in projects. Lists of these improvements are on our City’s website.

The operation of our government is performing well, but it is challenged at many levels.

General Fund revenue could drop by as much as $896,000 in fiscal year 2017-18 and expenses could rise by $1.3 million, including $519,000 in regular CERS retirement payments, $104,000 in new health insurance costs, and $265,000 in salary increases.

BMU continues to need access to more raw water. The City has worked for the past several years with the U.S. Army Corps of Engineers to raise Owsley Fork Dam and to obtain a permit from the Kentucky department of water to reuse 1 million gallons of the 3 million gallons of treated waste water that BMU currently discharges into Silver Creek.

The pending debate over the City providing special retirement benefits to its police and fire who occupy jobs classified as “hazardous” could become an existential challenge. If council votes to enter that program, the City will have limited flexibility to manage an unknown but likely exponentially expanding financial burden remarkably similar to that which the jail has placed on county governments across the Commonwealth. Voluntarily embracing that virtually unmanageable obligation could lead to merging our fire department with the county like we did with 911 dispatch service, and ultimately, merged government.

And finally, the politics of Berea’s local government is divided.

Berea operates under the mayor-council form of government which grants executive authority to the mayor and legislative authority to the council with the admonition that it not perform any executive functions unless assigned by statute.

This separation took effect in 1982 and has developed into a divide probably exacerbated by the public’s acceptance of the talking points that government is the problem not the solution; and that government should be run like a business.

This attitude was exemplified by Ronald Reagan in his 1981 inaugural speech when he said:

“It is not my intention to do away with government. It is, rather, to make it work with us, not over us; to stand by our side, not ride on our back. Government can and must provide opportunity, not smother it; foster productivity, not stifle it.”

You too may agree that business should trump politics. But more recently, a consensus has developed among scholars that a successful governmental enterprise requires more than just business skills. That is why universities offer courses in business administration and public administration.

Here are six points to elaborate on that distinction:

Government serves the “public interest.” Business tends to focus on shareholders and customers. Therefore, accountability is much broader for government, and it is harder to ignore particular groups or people.

Business performance is measured by profitability. Governmental performance is measured by outcomes and the public good. Not everything that is profitable has a social value, and not everything of social value is profitable.

Compromise is often fundamental to governmental success. No one owns a controlling share of government. The notion of separation of power between legislative and executive authority is fundamental to government but absent from business.

Efficiency is one of the paramount values in business. But government often has to weigh competing values, and the most efficient plan may trample individual rights or disadvantage particular groups.

Government is often faced with a timeline determined by the next election which may cause politicians to seek quick results. Businesses may be more patient and take a longer view.
Government action must take place in public. Businesses rarely explain decisions except to shareholders or regulators.

Government and business may share many traits, but local government must be open, accountable, fiscally prudent, visionary, courteous, lawful, service-oriented and responsible. And to imply that local government is a problem and should be run like a business is equivalent to saying that Tom Brady was a poor quarterback because he didn’t hit enough home runs. He was not supposed to. Such a test applies the wrong standard.

Where does this misunderstanding leave Berea? Our local government has many strengths and significant challenges. We must work to heal our divisions. Probably, the first step is to focus on the values and goals that we share rather than joust over our differences. We need to stop counting the separate trees that we see around us and look at the forest in which we live.”

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