Focus on Finance: Fort Worth’s Budget Balancing Act

Susan Alanis is the Assistant City Manager of the City of Fort Worth, Texas. Appointed by the City Council, Alanis helps manage vital city operations and services regardless of who has been elected to office. Alanis has also worked in leadership positions in Fort Worth’s Office of Planning and Development and Police Department. In 2013, she completed the Harvard Kennedy School program for State and Local Government Executives. Alanis also holds a MPA from the University of Texas at Arlington and a BA in Political Science from Texas State University.

You previously worked as the Assistant Director for the Fort Worth Police Department. How has that experience, if at all, influenced how you go about your current job as the Assistant City Manager of Fort Worth, TX?

Well, because it’s such a large department, I think it gave me a really close-up perspective on the challenges of running an organization that’s so big. I think sometimes other parts of our administration underestimate the complexity of managing a workforce of that size – particularly in public safety and the things that they deal with.

As assistant city manager, I am in charge of labor negotiations as well. So the relationships I have with the police department commanders have been really helpful in my understanding of the organization and really helpful to me in those negotiations since I have a different perspective of what they do.

Fort Worth’s most recent budget proposed eliminating more than 100 unfilled positions. How did you go about making this decision? Why did the City select this strategy over other means of saving revenue?

 We’ve been at it about five years now, dealing with the fiscal downturn. Even though the economy is really great in Texas compared to the rest of the country, we had some real structural flaws with our budget. We weren’t investing enough in infrastructure and we also had the same pension problems that everyone else had. We’ve been redirecting a lot of our dollars there.

Over the course of five years, each year we’ve had budget reductions. Personnel costs are 70 percent of our budget and so it’s very hard to tackle budget shortfalls without impacting the workforce. Each year we ask every department to come up with a targeted percentage of their budget and we try to set it high enough to cause them to be really critical not only about their personnel issues but also with their contracts and everything else. We allowed them to come up with the proposals of how they would contain costs.

The other piece of it, too, is that we’ve been very deliberate about filling positions and we’ve got a little bit of a process where if people want to fill a position, they do so in terms where their efforts are justified – they do process improvements, rearrange other job duties, and those kinds of things. Our goal was to avoid having very many people directly laid off. We didn’t want to take on new personnel when we’re going to be displacing others. It’s absolutely necessary to look at your personnel costs.

The cuts on street maintenance in the 2014 budget have been criticized by some, one of whom is Councilman Sal Espino. What is your response to this criticism? How, in your opinion, does a city balance providing services and reducing governmental costs?

 He’s not wrong. He represents a very fast-growing portion of our city, so he gets beat-up a lot about the conditions of the streets. A lot of the area that he represents is former county area where there’s old county asphalt roads where they built big subdivisions and then annexed them into the city and they don’t have the normal city streets and so on. The criticism is justified.

However, we’ve invested most of our bonding capacity over the last three bond programs and then a CO [Certificates of Obligation] issuance that redid the streets. So we’re starting to get to the point where street construction is allowing us to catch up so we won’t be spending as much on the maintenance and the upkeep because we’ll have newer streets. We’re trying to balance new construction through the bond program with ongoing maintenance costs that hit your operating budget and we think that we’re going to be able to maintain the quality of what the citizens see.

In many ways, and you’ll find this with elected officials, he has to say that every single time we talk about the budget – that’s what his constituents expect of him – but I think that he’s fairly satisfied by the end of the day of where we ended up in terms of the budget.

In 2010, the Super Bowl was hosted in the Dallas-Fort Worth area and the city was later reimbursed for some of those costs. The Economist recently argued that cities actually lose a significant amount of money from hosting major sporting events, such as the London Olympics, and that they do not necessarily generate a significant amount of new revenue for the host city. How do you view these claims and how did Fort Worth benefit in a financial sense from having the Super Bowl in the area in 2010?

 I think it depends on the event and on your perspective. Unfortunately, our event was hampered by that horrible ice storm.

Aside from that, we actually have a state fund in Texas that is intended to attract big events like that that will reimburse municipalities for hosting large scale sporting events. So we as a city actually did get reimbursed for all of our excess costs associated with it. Now, what the economic analysis looks like at the state level is probably another question.

When you look at the sales tax and hotel occupancy tax revenue that we received during that time period, [hosting the event] would have been described as a boon – we really did get significant value out of that. But again, we weren’t having to prepare for the risk of it not paying off with the expenses.

We spent a lot of money – the city never looked better, downtown never looked better – but a lot of the money was also the police efforts. We even had the opportunity to replace kitchen facilities in our convention center because of events they were going to be holding. For us, it was good. Again, on a state level, they ended up reimbursing us through that tax increment for our costs so their analysis may prove a little differently, but I haven’t seen reports on that occurrence.

Since the event here today is called the Municipal CFO forum, I have to ask about the departure of former Fort Worth CFO Lena Ellis last February. Why did you mark that it was her time to go since she was once rated as a “distinguished” employee? And why did you see Horatio Porter as the appropriate replacement, as opposed to someone outside the administration?

 As far as Lena goes, all I’ll say is that we parted amicably. As far as Horatio goes, at the time, he was leading our budget office and I had long had it on my mind that we needed to merge our budget and finance functions because there was a real disconnect. They are different disciplines, no doubt, but there’s been some lack of education information across those disciplines that I think has hindered our financial management in the past.

I really wanted to solve that, combined with merging our operating and capital teams, too. Horatio actually had the perfect pedigree for that because he was a CPA but he also had the budget experience and he had significant communication skills to manage our council.

Unfortunately, about the time we were making that change is when he got offered a job that we couldn’t match the salary on, so that’s where he ended up going. We’ll be interviewing in the coming weeks for a replacement.

Editor’s Note: Aaron J. Bovos, the Deputy County Administrator and Chief Financial Officer for Gwinnett County, Georgia, was announced as Fort Worth’s newest CFO in December 2013.