Greetings, and welcome to ZacCast, your official podcast for local government nerdery of all kinds. I'm Chad, that's Patrick. Uh, off the air, you just missed a great Kristi Noem joke. I'm not going to, uh, repeat the context of it. Uh, so anyway, how are you doing, Patrick?

It's good. It's good. I'm sad that your-

It's good

... your, every- everybody- Chad's dog is okay. Don't worry about it.

My dog is fine.

Yes, so-

He just has really bad allergies.

Yes.

Keeps scratching himself while I'm trying to record-

I mean-

... this podcast.

Talk about a way to take you out of the political calculus so fast, right? Write a book, and then talk about killing your dog in the book.

Not just talk about it, brag about it.

Yes. Wow!

This is the thing that's been interesting to me about politics over the past eight to 10 years, is the things that politicians say that seem absurd, but they're saying it for a reason. And I think what's more telling is why they're saying it than what they're saying it, 'cause it's like playing to a base.

Yeah, but whoever-

Is not very nice

... the political science grad who came up with, "This is a good idea," should be taken in the backyard and shot. Like-

Like, a cricket.

I, I just... But, I mean, the, the reality of this is, is like, people generally in the United States are pet lovers, of some type of pet. I mean-

Yeah, like, across the political spectrum.

It doesn't matter.

Yeah, like, rural, urban, mmm, Democrat, Republican, like, everyone loves dogs, for the most part.

Everyone loves dogs-

Or cats

... or like some kind of animal.

Yeah, some kind of an- I don't like cats, 'cause I'm allergic to cats. But I mean, man, my boy Tucker, he's my boy, you know? I just, I don't know. I just can't imagine that. It's terrible.

Yeah.

But, yeah, let's not get too far down that rabbit hole.

Welcome to the podcast for local government nerdery. We're gonna move on to local government issues now. And first thing up, Chad, let's talk.

Let's talk, what? Inflation?

Let's talk inflation, yeah.

All right, let me, let me start the counter here so we don't go too long today. Ready? Set-

Oh, yeah, yeah. We're gonna try to put ourselves on timers here, people.

Ready? Inflation, go.

Go. All right, here we go. So this is not gonna take us 12 minutes. Now, so inflation-

If you keep stalling, it will.

I know.

You're stalling like my eight-year-old before bed.

That's true. My bad. So we posted an article to the new Zach news.

Zach News.

Uh, Zach News. New news! Uh, if you know that reference, uh, y- you should send a shout-out to me, if you know the new news reference. Anyways, on, um, the Zach News side, we posted an article that talked about, uh, inflation just won't quit as wholesale prices continue to rise. It's an article on Fortune, so if you subscribe, you can-

Fortune-

... go jump

... or 4chan?

Fortune. Fortune.

Okay, like Fortune Magazine?

Y- yeah. Wow!

Okay.

You're, you're on a roll today. Yeah, cool there. Uh, does that count against my 12 minutes? I feel like it shouldn't. So anyways, moving on, um, so we, we've got two conflicting articles. Uh, really not a lot of conflict, but this is actually talking about specifically wholesale prices. So wholesale manufacturing, uh, prices are usually an indicator of what inflation is going to be three... You know, it's, it's the input inflation, right? So it's gonna be the final product inflation is going to, y- you know, see some impact three to six months down the road. Um, and obviously, we haven't seen a letup. Uh, the annual rise in producer price was up 2.2% in April. It's the largest increase in a year. Uh, economists believe the, uh, upward trend producer's cost is solid and could spur inflation projections. Uh, high household, uh, spending continues to contribute to inflation. Consequently, the Fed may maintain its high interest rate longer than expected to keep inflation close to its 2% target. Now, speaking of that 2% target, the inflation number was released today, uh, by the Fed. The core inflation number, uh, specifically was released by the Fed, and it came in at... Now, first off-

Drumroll

... let's talk headline. Let's talk headline, right? Headline is, "Inflation eases for first time in 2024." Good job, WaPo, Washington Post. Will it be enough to cut rates? So how much it- what was inflation? It was 3.4% in April, and-

Down from-

... do we know how much that- down from 3.5% in March. That's a big headline for one-tenth of a, of a drop there.

One-tenth of a percent?

Yes, one-tenth of a percent. So once again, we're- we continue to see just, you know, inflation that is being stubborn. It's sitting at stubborn levels, uh, and it, it seems like it, it... It's almost like we were one rate increase short of where we needed to be. You know, obviously, it's down-

Like six months ago

... from like the 6, 7% number. Yeah. Um, but now we're in this position... Sorry, door closed in the background there. Uh, now we're in this position where, is it-

That was weird. I thought there was some kind of ghost in your house. Like, I saw it move.

You saw the door move?

I saw the door move. I was like, "Someone there?"

I don't think so.

Anyway, go ahead.

Yeah. So, uh, on that, uh, since we're just all over the map, I watched the movie Twister with my kids this weekend. It was, was good.

My wife really wants to do that. I'm afraid that my kids will be terrified, 'cause we get a lot of tornadoes up here in DFW.

Y'all have a storm shelter?

We do.

Yeah, okay.

I mean, used it twice in, like, seven years.

Yeah, I've used it zero times since we bought it. And, you know, in my last house without a storm shelter, I got hit by a tornado two times, so lucky, lucky me. So all that being said, back to the inflation numbers, they're stubborn, and we're not seeing a lot of, uh, of things coming down, and it's a really rough spot to be in because inflation right now is outpacing revenue growth in a lot of our communities and a lot of our cities. Um, and in order to spur revenue growth again in those communities, we're probably gonna need to see a rate decrease, but the indicators are not really feeding the Fed and the policymakers what they need in order to put that decrease in place.

... Yeah, so I think the 3.5% is obviously higher than the target of 2%, but the target of 2% is completely arbitrary anyway. I think 3% is manageable. The problem right now is it's stuck there.

Yep.

And so lowering rates is probably gonna lead it to g- start going back up, which is the opposite of what everyone wants. Um, but I don't think they're in a position where they can increase rates again. They've been pretty firm on holding the line and letting inflation start to come down or keep coming down. So I, I don't think we see any kind of- like, no one has been talking about a rate increase. Everyone's been asking, "When are we gonna get the decrease?" I'm not sure it's gonna happen this year. Uh-

Yeah, and, and it's probably not gonna happen before the presidential. I think that- that's the thing is, like, the data is not showing a downward enough trend to do it before the presidential.

Yep.

And so, um, yeah-

O- one problem with the rates being so h- or being so high is that, well, they're alone having the, uh... They're having some inflationary pressure, too.

Mm-hmm.

Because the federal debt, like, the interest payments on the debt is over a trillion dollars now.

Yep.

Like, it's a huge portion of government spending, and we're taking out debt to pay that. We don't have that revenue coming in, so, like, federal spending is going up significantly because it- the interest rates are high, right? So there's, like, a dual pressure on those rates, those-

But don't worry. It doesn't matter who you are running for president right now, you're gonna cut taxes. So I mean, I don't know if you saw any of that, but it's like, it's tax cut, tax cut, tax cut. You know, I don't think Biden says it like that, but Biden technically has been a net tax decreaser in his presidency, so it's a-

Yeah

... very, very interesting.

We'll see how that works whenever the 2017 tax cuts come up for expiration.

Yeah, which is 2025.

Yeah.

Right?

I don't think they're gonna get renewed.

24 is the last year. The big one's QBIT, um, which is the tax reduction that you have on LLC and S corps. That makes a big impact for small businesses. Uh, so it's gonna be interesting to see. That one's gonna go away. That's a 20% reduction of overall profit that doesn't get taxed in the QBIT, uh, flow through. So I... You know, look, I- the concern that I have is, you know, and you made fun of me. I'm gonna say this out loud. You made fun of me last week for making the reference to, um, stagflation, the 1970s reference.

Mm-hmm.

Don't lie. You made fun of me on both LinkedIn-

On LinkedIn, yeah

... and outside of LinkedIn on our personal chat.

No, I'm not sure I l- made fun of you as much as I just questioned whether that was a bit-

The only indicator, the only indicator for stagflation missing right now, the only one, is unemployment.

Right.

And did you look at the unemployment numbers last week?

Which, by the way, is trending up. Well, it's trending up in, especially in California, which is a harbinger over the, you know, previous, uh, unemployment spikes. But I mean, inflation is still only at 3.5%.

I mean-

Like, if we had 7% rates and 6% inflation and then infla- and unemployment was going up, then I'd, I'd be more sympathetic to your view, and maybe we'll get there. But I think there's a, there's a order of magnitude difference between the '70, late '70s stagflation and kinda where we are right now.

I don't know. Go ahead and buy your Ford Pinto, people. You may need it, so-

I wanna buy one of those Japanese trucks.

The ones that they ship?

Yes.

And, like, put in a box.

The tiny ones-

Yeah

... that cost, like, two grand. You can buy them and ship them here.

Yeah.

They have the same bed size as my F-150, but the truck is tiny. You could actually park it.

Is it legal to drive?

Yeah, it's street legal.

Oh, okay. Like, in... Like, it's, it's, like, certified to drive on a, a road?

Yeah.

Oh, interesting.

Yeah, you can drive them.

Sorry. To be honest, I just- I wanna stop being Negative Nancy. Like, I am not a negative person, right? And for, like, the last nine months, I have been the biggest cold, wet, negative person out there when it comes to economic data, and I just-

Yeah

... I wanna see something that gives me encouragement. Sorry I watched the post.

You're generally a positive person, but-

I'm, I am generally very positive.

And we're also very slow to overreact-

Yep

... as much as we can, can, uh, avoid it. But yeah, we've been kind of negative for the past at least six months.

At least, at least. I, I, I feel like I probably started a little earlier than you did on the, "Man, this just feels different," in, in-

It's weird, because a- around this time last year, we were doing a m- the monthly or weekly polling.

Mm-hmm.

So we use Basecamp for our project management and really all of our internal communications, and they have this thing called automatic check-ins. And so the economy is kind of shifty, and inflation was super high, so we started this, I think, weekly or bi-weekly check-in, and it just emails us and says, "What percentage odds do you give to a recession over the next 12 months?", right? And I wanna say September-ish, I started to really tamp down my projections.

It-

And then three months later, it's like, oh, wait, sales tax is really kind of slowing down quite a bit, and no one's-

Yeah

... really talking about this yet. Comptroller's kind of blaming it on random, uh, occurrences, and now they're finally openly talking about how retail is slowing.

Yeah.

Did you see the Home Depot news yesterday?

I did not, but I've, I've seen them.

Speaking of the interest rates.

Yeah. What, what's the Home Depot news?

So Home Depot released their report, their quarterly financials-

Mm-hmm

... and same-store sales were down 1%. Um, they've l- I think, lowered their projections for 2024. I think they're still projecting same-store to be around 1% for this year, uh, but they blamed a lot of it on high interest rates affecting consumer spending.

Mm-hmm.

And their argument was, which I don't really buy, their argument was, "Well, people aren't buying houses, and hou- uh, house purchases are a big driver for shopping at Home Depot."... but if you're also, because you can't move out of your house, making a decision to stay there for three, four more years while you wait on rates, like, that's also a decision point that would lead people to go ahead and use some cash to do some projects around the house.

You mean build a pool house and then accidentally flood your bathroom and have to redo your master bath?

Yeah. Well, well-

Welcome to, welcome to my world

... retile the bathroom, or, like, even-

Yeah

... even small projects. 'Cause they're not arguing that people are not taking out credit or using credit to do projects. They're saying that they are not buying homes-

Yeah

... and then in that process, doing remodels.

Yeah, technically, for clarity, I did not flood a bathroom. A PEX inside of a wall flooded a bathroom, but yeah, love that.

You didn't, like, leave the bathtub on-

No

... overnight?

Just no.

Okay.

No, no. Yeah, so that probably would've been easier to deal with than a hot water PEX pipe breaking in a manifold in the middle of a wall where there was no access to it. You know, all those great things, with custom cabinetry and all those... Yeah, just a fantastic job. So I will say something positive, though. I actually do think there's a light at the end of the tunnel. I-

There's always a light at the end of the tunnel.

I think that light is... Yeah, but I think it's-

Just a question of how far it is

... a little further than people want it to be, but I, I, you know, I, I think within a year we're gonna be having a different conversation. That's- think in a year we're gonna be talking about, "Okay, we didn't really have a recession. We saw some decline in revenues. There's some rebalancing post-COVID that has to happen within those revenues, too." And I think that's one thing in that Home Depot conversation that was really important to talk about, is a lot of people did so much home remodel work during COVID, and we're-

Mm-hmm

... two years out, right? Three years out from that. What else do you have to do-

Four years

... right now, right?

Well, it depends.

I, I don't know. I'd say we're full-

COVID in California or COVID in Texas? Because I mean, even so, 2020 is-

It was, like, six months one year

... when people were really doing a lot of stuff, 'cause they were stuck at home-

Yeah

... and like, "Oh, my house is kinda aging. Like, I should fix some things." I think four years is a pretty good window for people to start doing more projects if they have... if they've decided, like, "I did a bl- I did enough during COVID. Now I'm gonna wait a while."

Yeah, did y'all do a COVID project?

Yeah, we remodeled the kitchen.

Oh, okay. That's right. Interesting.

So-

Yeah.

Yeah.

Well-

That was, that was a disaster in its own right, but... I mean, it looks fine now-

Yeah

... but it- we had to fire two, two contractors. So-

How many days a week do y'all cook right now? That's the question.

Uh, right now, almost none.

Yeah.

Because, uh-

That's a really interesting number as well, though, like, the how many people are eating out versus not eating out, and at what, um, what economic level, right, those, those folks are happening. So, you know, you really have had no change, like, I would consider in, like, the top 5% of the economy. Um, you've had a, a little bit of change in the middle class, but in the l- in kind of the middle to lower class, you've had significant changes in spending habits. Uh, even at, you know, drive-through fast foods, you're seeing reductions, which, to be fair-

Part of that's 'cause McDonald's has increased prices, like, 50% in the past year.

Chick-fil-A. It's crazy, some of these-

Mm-hmm

... some of these number- I mean, I, I can eat at a lot of sit-down restaurants now-

Chick-fil-A meal is, like, 15 bucks now.

Correct. I can eat at a lot of sit-down restaurants with my four kids and a kids' meals, right? My two kids, sorry. Didn't have...

I have four kids, yeah.

I do, yeah, sorry.

Four people, two kids.

Uh, yeah, I was accepting all of Chad's children there for a minute. But, um, you know, you could do that. I mean, Chick-fil-A is 50 bucks out the door for us now. It's wild. I can't even imagine what it is for you, so it's-

It's, it's about the same, because the kids, they all get kids' meals, and they're cheaper-

Okay

... like, five, six bucks.

Yeah. So my kids are not small people. They eat lots of food.

My kids barely eat anything.

Yeah.

I don't know how they survive.

Yeah, I wish, I wish. All right, next topic. Are we done with our 12 minutes?

Uh, 13. Actually, yeah, we're at 14, so-

Ah

... it's not too bad. That's not bad.

Okay, let me, let me hit the lap here. All right.

Do you wanna cover Greensboro first?

Uh, uh-

We can do that really quickly.

I'll make-

We can make up some time on Greensboro.

Yeah, go for it.

Okay, stopwatch reset. Okay, so, uh, saw an article last night, uh, someone that I follow on Twitter posted it, made a couple comments. I wanna read you the headline, and then I wanna read you a quote from, uh, from one of the staff members, okay? Okay, headline: Green... This is North Carolina. "Greensboro, uh, receives okay to issue almost half a billion dollars in bonds to improve water and sewer infrastructure." Okay. Uh, wow, so that's good. They got the go-ahead. They're gonna fix 3,000 miles of water and sewer lines. Okay, so 3,000 miles, half a billion dollars. Here's the h- here's the money quote, as they say: "The city said its biggest liability is its decaying water and sewer infrastructure, according to a press release." How's that terminology strike you there, there, Patrick? Their biggest liability... 'Cause it's funny, I, I actually went to their financial statements, their AFFERS-

Yeah. Yes

... uh, and just looked through the balance sheet, and funny enough, they have infrastructure listed as their biggest asset.

Yes, it's, it is, it is very interesting.

Even after, even after depreciation-

Even-

... like, something like $450 billion, uh, $450 million worth of, uh, net assets for infrastructure in the utilities section, the business fund, business type enterprises.

But they're taking out-

About 100 and... $230 million in assets, uh, for infrastructure in their general governmental funds.

Yeah, I mean-

Which, you know, tho- I mean, those streets are worth a lot of money, so ...

I, I, first off, I, I don't... I do not believe we should book anything as assets that's governmentally owned. Like, I just don't, I don't-

Not even buildings?

... I don't like the way... Not even buildings. Um-

I mean, you can sell a building.

I, I prefer the way that we do general fund accounting versus enterprise fund accounting. Um, you know, I believe, um-... Cost of services and cash flow is a much more important measure than depreciation and, uh, asset, uh, just in, in my opinion. I think you need to track assets, don't get me wrong, I just don't think they should be taken into the actual equation. And if you look at enterprise funds, you know, basically you have a P&L statement, right? Your profit and loss, and then in that profit and loss statement, you have a depreciation number that removes from that. So you could show, you know, and many cities do, many cities show negative cash runs that occur, and the reality is it's not, it's not real cash, right? It's not real fund balance because depreciation is taken out, and depreciation's not a real thing. And so, uh, in the city world, right, uh, depreciation in the public sec- or in the private sector is kind of a real thing 'cause it, it has an impact on taxation and some other things that occur because that asset is no longer taxed. So you have a loss in value-

Right, you didn't get the full value of the expense upfront, right? So it affects your taxes long term.

Yeah, one of the worst things about owning a software company is that, you know, just the way the taxation side works. Physical assets are a little bit easier to deal with. So, but from a city perspective, I just think cash flow and future liabilities is a much better way to look at it than trying to look at what your assets on the ground are now.

Yeah. There definitely needs to be some way to show... I don't know what it is. I've talked to Doug a lot. Doug and I have different opinions about this. You have to be able to show what that liability is for the aging infrastructure that is depreciated to zero, but actually is not just a zero-dollar asset. You're gonna have to spend half a billion dollars to replace it, and I don't think just a capital improvement plan is sufficient. I think it needs to be somewhere in your financial documents about what's going on.

Well, yeah-

'Cause otherwise, it just shows a zero, but it's not a true-

Yeah

... portrait of what's happening.

And, and a CIP plan, not every city uses them, and then also, they don't- there's no interaction between a CIE- CIP plan and the actual AFR, right? So it's almost like the reverse. So instead of depreciating, we should be looking at how much money should be set aside to pay for this line-

Yes

... whenever it's due for replacement.

It should be treated like a pension liability.

That, it- very similar. Yeah, I think that's a really good example, actually. It should be treated as a pension liability. Um, we need to-

Or similar to, not as a pension liability.

Yeah, correct.

Similar to.

It should be one of those things that we look at and we say, "Okay, I've got this infrastructure, and I need to look at it." And, and so you, you ask yourself, "Well, will that change things?" Well, what did Jackson, Mississippi's, uh, AFR look like before they went through their major water issues, right?

Sure.

I mean, it's-

Positive-

Yeah

... positions.

Correct. And the entire time, they had entire infrastructure demands and needs that had to be replaced, and none of that was shown at all in their financial documents. Um, so that puts us-

And we know we're, we're not keeping up with our road maintenance.

No.

I mean, we talked-

No

... last time about how Houston had reduced the number of lane miles resurfaced from, like, I don't remember what it was, like, 600 to 120 miles a year-

Yeah

... over the past decade.

It, it was a lot. It was a big reduction, but at the same time, like, you can't live without fresh water, right? Like, legitimately, you can live with a few potholes on a street, but we don't look at cities from that standpoint. We, we don't... You know, water and sewage and those type of things, and the way that we use them in an accounting system, in my opinion, is even worse than the way that we deal with roads in, uh, the financial documents. So at least with roads, the right of way is there, and it's gonna stay there, uh, and it's just gonna be a nasty drive. With, um, water and sewer infrastructure, like, legitimately, service stops.

Right.

Right, you just-

And then, so-

You have no operational ability.

So many things happen, right? Service stops, revenue stops.

Mm-hmm.

Right, and then you get into all kinds of other regulatory issues. Like, having a service interruption on a water system can be catastrophic financially, and not to mention just the impact on the actual, like, livelihood of the people that you're serving.

Right, and, and I'm not calling out professionals here, saying that, you know, there wasn't anybody in Jackson that was saying out loud, "Hey, we, we need to replace this infrastructure." I'm not saying that at all. I'm saying that there was a, a political head in the sand that occurred.

Yeah.

"We're gonna focus on other things."

Part of that-

Because they-

Part of that is because it's not shown, like, it's not a true picture of the financial health of the city in the documents that get audited and certified.

Absolutely.

As, "This is the true picture of the city's finances." It's not a... If, if it was shown, then we would all be like: "Oh, wait a minute, this is a problem."

Yes.

Like, "We need to actually plan for addressing this in a comprehensive way, not just over a five-year CIP period."

Well-

But the other thing-

... one of the only common threads between cities, though, is in all states, in all cities, one of the most common threads is, is that audit process, right?

Mm-hmm.

The internal controls audit, the financial audit, and the presentation of that audit, and acceptance of that audit by a governmental body, like, that pretty much happens everywhere, and it should happen everywhere. Um, it doesn't always happen on time, uh, but it does occur, and some of that is because there's debt markets and other things that rely on those documents, and, and so forth and so on, like continuing disclosures and things like that. But I think, you know, we don't really standardize the way that councils ought to operate off of those documents. So if we're gonna hold people accountable, we actually have to show them the information to hold them accountable, right? So as crazy as Jackson was, it never was held accountable because the information was never placed in front of them maybe the way that it should have been or at a point of culmination.

So the interesting thing about treating those- treating these infrastructure re- replacement schedules as similar to how we account for pension liabilities is-... you'd have to do the actuarial calculations to figure out what you're going to owe, not just today, but when you actually have to ig- you know, m- make that expense or, or, or engage in that activity, right? So you're looking at, "Okay, I've got a new set of pipes that will last me for 50 years. Well, in 50 years, what is my estimated cost gonna be then?" Not, what is the replacement cost today, right? So if you had a section in your financial documents that showed what that actuarial estimate was over the next 50 years, I mean, A, it would help you plan financially. Like, am I gonna actually have capacity to do this? Am I gonna have... In a, in a utility system, am I gonna have enough ratepayers who can afford these costs? Um, on the general fund side, it's different, 'cause you're just talking about pretty much debt, right? Just debt that's paid for by property taxes and taxes. Um, are you gonna have the tax base? Are you gonna have the actual debt capacity to make all of these repairs when they're needed? If you actually had to do the actuarial calculations and look at what the inflationary costs of concrete, and, and road materials, and steel, and things like that, I mean, it would be ugly.

Well, I'm, I'm laughing inside, because any city manager who's ever done a CIP plan knows that you get, like, this initial number of all the infrastructure that needs to be replaced, like, right now, and it's always a laughable number.

We can't do that.

Yeah, it's like, "Wow! No way!"

Let's scale that back.

Maybe... Yeah, maybe if we hit, like-

It's only gonna get more expensive, but that's okay

... 5% of that number every year. Um, so but that's the reality is we, we don't... Because we don't look at things that way, we're not fiscally driven in our decision-making either when it comes to adding new infrastructure. It's like, "Ooh, there's a developer. He's gonna put in a 12-inch water line. Super cool, he's handing it over to us, and it's now gonna be an asset on our books that we didn't have to pay for," right? Well, if you had to pay for 1/40 or 1/60 of that every single year on your finances, would you make sure that it was gonna have the proper level of customer flow on it in order to put that water line in? I think it would just be a different conversation, and that's the conversation-

Mm

... we probably should be having.

Yeah. I think you could also extend that, although it would be more difficult. But, I mean, you think about, like, the, these infrastructure obligations that we have that we don't actually show anywhere. We al- we also have operational obligations, and, um, if not obligations, then at least... I'm trying to think of the, the right word. Maybe, like, requirements or desires or things like this. So, like, you, you put a budget document together, and it's sort of like the tip of the iceberg of all the things that were asked for. And I know, 'cause I've done budgets many times, departments will try to game the system, and they'll just ask for everything they can, and hopefully you'll approve some of them, right? But there is some amount of items that we don't fund every year because we can't fund them, and some of them are things that we actually do need to do. They're just not maybe the highest priority right now, and they're probably gonna get more expensive if we delay them in future years. So, like, even in our budget, it's balanced. Revenues match expenditures, but there's still a whole bunch of stuff underneath that, that we're deferring and not doing, um, that we're also not- we don't really show. I got- I, I've looked at a bunch of budget documents recently, and there's no, like, decision package summary of all the things that weren't funded. Um, and you even see things like, "Oh, we're adding, you know, $500,000 to street funding." Well, what, what, what's the gap that you didn't fund, right?

Yeah.

You went from, like, 2 million to 2½ million. That's great, that's a 25% increase, but how much do you actually need to keep up with maintenance? That's not anywhere in anyone's budget documents. Maybe you'll get, like, a big binder that's part of the council packets when the budget's proposed, but, uh, I don't know. It's just, there's just so much missing from, um, from our budget and financial documents about what our true obligations are versus what are we spending today.

I'm not sure the city managers want people to know what they didn't fund in their budget proposal. Just throwing that out there. I like where you're coming from, from a measure standpoint, but I think the politics of showing all that information could get-

Yeah

... really complicated for people.

It could, and there's a lot of opportunities.

Yeah.

Like, if, if a police department could... If they had- there was somewhere in the budget document where, like, the hundreds of things that they asked for were shown, uh, you know, all the things that didn't, didn't get funded, like, that would be potentially problematic.

The hundreds? I mean, the hundreds of things in a city of, like, 2,500, right?

True.

Like, the 5,000 millions of things in a city of 100,000. So I love you, my police officers, but wow, y'all's budget requests are always so much fun. So yeah.

This is not a problem we're gonna solve today, but-

I used to always lo- I used to always love the budget request that would come in, that was like, "Okay, here's my request one, and... or request A," and it would have, like, 100 things in it, right? It's like, "Well, if you're not gonna give us A, then here's request B with, you know, 50% of those things, and then, like, C with the other 25," and you know, it's like they'd give me, like... "Well, I mean, what's more important to you in there?" And I'm like, "No, no, what, what's more important to you?" I would always go back and say-

Interesting

... "Hey, this is how much money I have. What is it?" Yes. "Well, what's, what's more important to you, and what's gonna meet the metric at the end of the day? Like, I need you to do these specific items. What do you need to make these things happen? Does that mean that you need new ARs? I don't think so. Those are pretty new."

No, it means they need an armored personnel tank-

Uh, the carriers?

... for, like,

Yeah

... the one SWAT call that they get, that they go on with the county, you know, every two years.... Yeah, but that thing-

That's really cool.

That's, that's not coming out of general fund, that's coming out of SEAS fund, so there's no reason-

So I'm gonna, I'm gonna call out Parker County here for a minute. So every time we have, like, an educational foundation event or something like that, the sheriff's department, as like a, a silent auction or open auction item, does this thing where they will take you to lunch in the SWAT vehicle.

Such a waste of money.

Nothing makes Chad more obsessed.

It's outrageous.

I wish we showed video, 'cause Chad, your face when I said that was ghostly.

I don't think our police departments should be quasi... They shouldn't look like an army. Like, I understand from an operational structure, there's, like, a paramilitary aspect to it. I heard that word so many times.

And folks, we've hit our 12 minutes on this item, so we're gonna move it big time.

But I, I don't think... Like, they're peace officers, right? They're serving, they're serving a community, which many of them live in. Sometimes they can't afford to, sometimes they just don't. Like, sometimes they don't wanna live in their community 'cause of the antagonism that can happen. Like, I've talked to police officers who said that, "I don't, I don't wanna live in the city that I work in." I understand that, but it's still a community of free citizens, and I don't think that our police officers should resemble an armed military force.

Can't city managers say the same thing? "Why do we have to live in the city that we work in?" I mean, it was always awkward when one of my neighbors would walk down the street, ticked off at the city, and try to walk into my garage while I was working on something, building a shelf or... It's like, come on, guys. Like, this is... You know, I work 8:00 to 5:00 at City Hall, so-

And no more.

No more. And no more.

Yeah. Um, follow this way-

Yeah

... 'cause I think, uh, I, I've been thinking a lot about budgets and finance recently for reasons that I'll be able to talk about probably in three, four weeks. But when I was in Fort Worth, we, we hit a budget problem a year before the recession because we had a huge fund balance gap. Like, our financial documents and, and audits were very delayed, and so when we hit a certain tipping point, we realized, hey, we have, like, I don't remember what it was, like, 10, 15, $20 million shortfall from what our fund balance requirements are. So we actually went through a bunch of, like, mid-year cuts and budget cuts the year before the recession happened, and we did this program, we called the Resource Allocation Program. The thing about government entities is there's always an acronym, right? So, like, this is the RAP process.

Uh-huh.

But w- what we did is we tried to, we tried to allocate every activity and cost to one of the strategic goals that the city council had set. So, you know, we had, like, direct costs, then we have, like, indirect administrative costs, and then a third level of s- like, super overhead costs. So, like, in a city that big, you know, your department director is not focused on any one particular thing, so it's kind of... You have to kinda allocate those across all the activities of the department. Um, but as part of that, we asked the city council, "Like, here is a $100 bill, and here are the, you know, five strategic areas and all the sub-goals of those areas. How much should we be spending, in your mind, to accomplish each of these items out of this $100 bill?" And so we compared that with what we were actually spending, and the gap was so, like, outrageous, right? Like, when, when they had $100 to allocate to all the priorities, we had, like, 20% to the public safety-related ones versus, like, 60% of the budget to public safety ones.

Yeah.

So I, I... It was a useful exercise to do. It wasn't probably the most accurate accounting for all those things, but, like, how c- how, how close can you get, right? If you can get 80% of the way there, at least it's, it's, it's in- informational, directionally useful. Um, but yeah, I, I don't know. We go through the- all of these planning processes and these budget processes, I don't think we think really about how much we're spending towards each goal versus what the priority of that goal is. And so when you, whenever you ask the department director, like, "What is your priority?" That kinda made me think about that.

Well, I, I think there's a, you know, I would say, like, like, there's a new way of governing in the last, you know, 10 years or so that is more strategic in its nature with city councils, and that's why you have strategic services departments that have popped up in cities. Um, we're starting to see that a little bit more than just, like, the general governmental nuts and bolts management side. Um, you know, I would say really good city managers do a very good job of understanding what the strategic vision of the city is, and then having a very driven path to achieve those strategic goals, right? Um, when I talk to city managers that struggle, most of the time it's because they don't have a set of priorities in line. It's they're there just to run a city. They're like a, uh, I would, um...

It's a custodian role.

They're just kinda like... Yeah, they're just like a custodian. I think that's a really good way to say it. A- and the reality is, the managers who are, what I would say are the high flyers, are people that are really trying to drive with their city council members what the community wants, and then achieving those goals through some type of strategic management system that they put in place to do it. There are lots of different options, and I could give you lots of different managers in lots of different cities that do it differently and do it well. Uh, but ultimately, you know, there's just this budget-driven strategic movement that goes there. Uh, and, and a lot of cities don't like managers like that, as in the employees sometimes don't like managers like that because it does take away from the way they've always done it.... right? So, you know, if parks aren't a strategic goal, um, you know, typically parks are, are gonna get less funding in that process than they would have historically. Like, there's not, like, a historical stop point of parks have always gotten this much money, and so they're gonna continue to get that much money. When you're in that environment, you start to fund things differently, and so it, it creates a, a different, you know-

Yeah

- mental approach to the game.

Which what we do- what many people do now is, "Here are the strategic goals, but we're already spending what we're spending."

Mm-hmm.

Right, so like, if we can incrementally add a little bit to this or to that, but, like, we're already spending 60% on police and fire, and so we're gonna kind of fit those into the- like, these are the goals that they're achieving, but there's not a broader strategic reallocation.

Yeah.

But in Texas, we can't do that anymore-

Yep

... uh, unless we can find some additional revenue sources. But yeah, it's, it's a tough nut to crack.

Yeah, I think it's extremely difficult. All right, are we gonna get to this next item, or are we gonna have to save it for the next one?

We're at 41 minutes, give or take. What do you think?

Probably save it.

Let's save it, yeah.

Okay, cool.

Okay, 'cause I have a feeling it could either go like a five-minute conversation or it could go like a 30-minute conversation.

Yeah.

So-

It's gonna be, like, 30, I think. I actually like the conversation.

I think it's-

We gotta get-

I think we gotta get a little bit philosophical.

You're getting into Wilsonian, Wilsonian politics.

Well, yeah.

Are you gonna use that term?

We're gonna get into Wil-

Yeah

... we're gonna get into Wilson and Taylor, and it's, to me, it's an, it's just an interesting conversation because how much of it is embedded in our profession, like, in our, how much our profession owes-

Yeah

... to it. But then again, how many problems? Let, let's just, let's just save it.

Okay, cool.

Yeah.

Right, now, now you-

That was a very cryptic teaser.

Yeah, now you gotta-

All right, man, well, that's good. I, we, I think did... We achieved our goal here of keeping this reasonably short, uh, even though we ran long on the two items we did talk about, but hopefully, good conversation. Felt like it was a good conversation. Um, so yeah, two weeks from now, we'll pick it back up. We'll see you then, uh, and we'll talk to you then. And you anything, uh, leave a parting thoughts here, Patrick?

In two weeks, I hope to be positive. That's what I'm gonna leave with.

You know, it's just a mindset. It's all about how you view things.

Thank you.

You can choose, uh, as, uh, if you're familiar with the YouTube family, um... What are they called? The Fun Squad.

Yes.

Are you familiar with this family? So the first song, like, the first video they came out with, was a music video of a song called, like, the, it's called, I think, well, Here Comes the Fun Squad or Come Join the Fun Squad, right?

Mm-hmm.

And one of the lines is, "You can choose to be happy," which I, I agree with.

Yes.

And I always threw back in my kids' face when they were upset. I'd be like: You know what? You can choose to be happy. And they'd be like, "Hmm!" Never worked, but-

Which, by the way, big issue here, is this the end of Bluey?

What do you mean?

Uh, have you not heard the, like, the rumors that maybe Bluey is, like, wrapping it up?

Oh, well, I mean, they have, like, three, four seasons.

They're moving, right? Like, Bluey's moving from his town.

Oh, he's moving.

Have you not watched the most recent... Yeah.

No, we have not watched the most recent season.

Okay. This is a, it's a big issue.

Listen, Bluey's a good show.

Bluey's a good show. It's very-

It's a very high-quality kids, family show.

It, it is, it is not a bad show.

I would recommend it.

Yes, I like it.

I think it's one of those that'll, like, it'll last.

It's like, uh, Mr. Rogers. ♪ It's a wonderful neighborhood. ♪

Has Mr. Rogers lasted?

Yes!

I mean, it did for a long time. Is it still, is it still the sort of cultural-

Daniel Tiger is

... force that it was?

Daniel Tiger is-

That's true

... still a crazy good show

Daniel Tiger is maybe like the-

Yeah

... the, the, uh, descendant-

I don't like all the whining-

... as it were

... in Daniel Tiger 'cause there was not near as much whining in Mr. Rogers, but-

That's true. I've heard that same critique of Peppa Pig, about how she's kind of a brat.

Yeah.

A bad example-

I'm not-

... for kids.

N- nothing is worse than Caillou.

I don't know Caillou, and we never watched Peppa Pig-

Caillou

... really, either.

Nothing is worse than Caillou. That's, like, the worst show you can watch with your kids, in my opinion. So sorry if I'm being judgmental to anybody who loves Caillou, but... All right, we're gonna wrap it up there. That's it, folks. We'll see you later on the next episode of Sidcast.

Thanks, Patrick.

See ya.