Going bust

Monroe
County is in deep trouble — Marianus Trench deep. Staggering deficits,
crushing taxes, youth flight, jobs vacuum, partisan bickering, and a stagnant
economy spell a bleak future unless we start turning things around, and quick.

            How bad is bad? Business leader Tom
Richards goes so far as to say that the city of Rochester, given its current
direction, may not be able to survive. And he’s fully aware of the audacity of
that statement.

            “With increasing property taxes,
decreasing property values, and growing annual deficits, the city may not be
sustainable as an independent financial entity,” reads a passage from “Apathy
Is not an Option,” issued this month by the Rump Group — an organization of
20 area business leaders in Monroe County.

            “Apathy” is the third report to bear
Richards’ fingerprints. Widely respected and once considered a possible
candidate for county executive, the former Rochester Gas & Electric CEO is
one architect of the 2002 Blue Ribbon Commission report — an exhaustive
document that examines the county’s current and projected financial status. Two
more reports have followed — the first, a joint effort by the Council of
Governments and the Rump Group. The second, “Apathy Is not an Option,” is a
sole effort of the Rump Group. Released only months after the Rump-COG report
and similar in tone, the “Apathy” report is necessary, Richards says, because
special interests hijacked the first, trying to “spin” it for political gain.

            Cooperation, collaboration, and
consolidation — coupled with economic growth — is what’s going to help
Monroe County out of this fix, according to the “Apathy” report. “Apathy” is
not talking about metro government, per se, Richards says. The report does say
that it’s important to study in detail a city-county merger. But Richards says
he thinks “there’s all kinds of problems” with that. “My own view,” he says,
“is that I don’t think a lot of city people would like it.”

            That’s why it’s important to focus
on services, Richards says. The “Apathy” report names three areas where
consolidation can be explored to realize immediate savings: insurance coverage
purchases, water delivery, and fire protection services. The resulting savings
would be between $3.1 million to $5.7 million annually — a drop in the
bucket, Richards says, but a good start.

            The process is going to hurt, he
adds. Egos will be bruised. Some services may be lost. People will have to
agree to give up power, and understand that the old way of doing things can
lead to only two things: failure and an economic future mirroring Buffalo’s.
Facing a large and growing deficit, Buffalo’s finances were put in the hands of
a state-appointed control board in July.

            No one person or single policy is to
blame, Richards says, for the state of Monroe County today. But what is clear
is that it will take all of us — city, county, and community — working
together to right the course. And at the helm we need a strong leader willing
to make tough and politically unpopular decisions.

            In a September interview, Richards
talked about the county’s financial situation and what he thinks should be done
about it. Following is an edited version of that interview.

City: Since your original Richards report, the county has used
tobacco funds to solve this year’s budget crisis. Now it plans to sell portions
of the IOLA campus. What do you see coming ahead?

            Richards:
To
be fair, some of the things that were done at the end of last year will have
positive benefits. The county did reduce its employment substantially through
the early-retirement program and some other adjustments. They are working on
the social-services project; that’s somewhat of a mixed bag.

            Some things have happened since
then that, you’re right, patch it up, but to some extent set us up for a more
difficult long-term issue. We’re borrowing money to pay operating deficits.
We’re using tobacco money — that goes away. We’re selling off assets…

            We have a serious problem and you
can’t avoid it. We have poor economic performance exemplified by our job
situation. We have high taxes and we have growing deficits. It’s a bad
combination, and they’re related to each other. The first reaction might be:
This is just a problem of 9/11 or general economic recession, so if we just
pull our head down, we’ll be OK. Our argument is, that isn’t where Rochester
is. We got a problem here that is gonna take longer and be much more difficult
to solve.

            OK, how about we borrow some money
or do some one-shot deals? Well, even if you’re in favor of that, we just ran
the course on that. The third option is to increase taxes.

            In the original report that was
issued by the Blue Ribbon Commission, we said the county probably has to get
off this thing of freezing the levy. But what’s important to realize there:
it’s a red herring. The point is not whether we’re the second or the third or
the first worst taxes in the country. The point is, we don’t have a lot of room
there to generate a lot of revenue. And so the problem is sufficiently large
that we have to do some other things. The last thing people would argue is that
we have to cut services, which we’ve done and continue to do. That’s got its
limits. The capacity of the community to serve people and continue to maintain
its attractiveness as a place to live and work is affected by that.

            City: The title of the Rump Group’s report is “Apathy is Not an Option.” Who’s
apathetic?

            Richards:
I
would say the general population is apathetic. What gets your attention is
[when] it does something to you personally. In Buffalo, it’s personal and
there’s less apathy there. The problem with that is, it’s probably too late. Or
it’s very hard to fix because it’s such a mess. The point of this is, can’t you
see this issue and try to see if we can’t work on it before it gets to be
unmanageable?

            I think the politicians
underestimate the population, personally. I think they’re afraid to tell ’em
the truth. They’re afraid to say to them, “Look, we’ve got some serious work to
do.” I can understand why. I know a lot of people who got elected on the “bad
news” ticket. You’re not getting out of there the kind of leadership and the
kind of focus on these issues, at least publicly, that we think we should have.
And so, we tried to do something about it.

            City:
You’ve talked about a dismaying lack
of trust among political parties and politicians. Do you see any hope?

            Richards:
This
report looks beyond the election. The day after the election, this problem will
be staring at us in the face. Arguably, in light of the way the county budget
is being managed this year, it could conceivably be worse. And that’s true
whether Bill Johnson wins or Maggie Brooks wins.

            During an election is a tough time
to develop trust. I do think, because of that, a lot of what happens in the
election sort of misses the point. We should be at the point where we start
talking about specifics. “Metro government” doesn’t mean anything unless you’re
gonna describe what you’re gonna do. “Not raising taxes” doesn’t mean anything
unless you’re gonna describe what it is you’re gonna do.

            Neither the city nor the county
faces good economic times. The difference between the city and the county is
the city has less capacity to deal with it. That doesn’t mean that Bill Johnson
was a bad mayor — I personally think he was a good mayor.

            There’s a very strong statement in
the report that says the city may not be financially viable. If you look at the
city’s own documents, they project deficits that start next year at $41 million
and go in four years up to over $100 million. We’re talking about a $350
million budget. Buffalo went broke on a $100 million deficit. The way it comes
out politically is, therefore the mayor is no good. That’s not it. The only way
we’re gonna deal with this is, people have to start to look at this financial
issue with respect to the County of Monroe — which includes the city of
Rochester, last time I looked — as one problem. If you run for county
executive, you should run not just on how you’re gonna take care of
Irondequoit, but what you’re gonna do about this. Are we in the same shape as
Buffalo? No, we’re not. We’re a ways away from that. But it could happen to us.

            We used to say nothing like this
could happen to us. It was because Eastman Kodak employed 60,000 people and
Xerox employed 20,000. And they were for a very long time immune to the change
in the industrial United States. Does anybody think they’re immune today?

“Apathy Is not
an Option” suggests that the community study consolidating city and county
governments. But it focuses principally on consolidating functions, like
insurance purchasing, water delivery, and fire service.

            Richards:
I
think there’s all kinds or problems with [merging the city and the county]. My
own view of it is that I don’t think a lot of city people would like it. To
some extent, that issue gets tossed around more around here because it was
proposed by a black man who’s the mayor of the city of Rochester.

            So, what do we do? We focus on
functions. And I think there’s lots of them. This is not exclusively a
criticism of the county. The county resists it and has an attitude about it,
but to some extent it’s a city issue, too. The city’s gonna have to say to itself,
“Y’know, we just can’t control this stuff anymore.”

            City:
Obviously you feel that just focusing
on these functions would be enough to help us out of the economic mess we’re
in.

            Richards:
It
would be enough to substantially mitigate it. In the long run, we need to have
economic growth. But you’re not gonna get economic growth fast enough to avoid
having to deal with this. I think people understand that local governments —
particularly small or medium-sized urban governments — are struggling all
around the country. It isn’t that you have to say, “Poof, it goes away.” But
your capacity to manage it, your capacity to not have a community come apart
over it, that does matter. Plus, I think some success gets you headed in the
right direction. There’s a certain fear: This is gonna take away from me
something that’s important to me; my services will deteriorate. How many people
in the county know where their water comes from?

            City:
Or care.

            Richards:
Or
care. Well, they’d care if they didn’t get anything. How many people in the
county know who owns the War Memorial? Or the Convention Center? I think
decisions can be made that get us headed in the right direction.

            City:
Does the Rump Group have any sort of
strategy during the election season?

            Richards:
We
really don’t want to get into a partisan process. One of the things you can do,
though: I remember hearing someone say that “politicians are people looking for
a parade to get in front of.” Now if that’s so, one of the things you can do
here is help create the parade. Why is it that they don’t address these things
in ways we think are specific? Because they think they’ll be punished for it.
They’ll lose. We play into the system. We get exactly what we ask for.

            If the county is relieved of paying
the portion of the Medicaid it now pays [for example], it would have the money
that is used for that to use for other things. You wouldn’t have to raise
taxes. What’s happening with these mandated programs is they’re sucking all the
money out of the discretionary expenses. So in order to pay for Medicaid, we
close the park.

            They’re going to close kindergarten
in the city of Buffalo. What a horrible thing to do in an urban area. Why is
that? Kindergarten’s not mandated.

            City:
But even if the state funded all of
the mandates, the public would still pay for them. We would just pay through
our state taxes.

            Richards:
There’s
a really important financial principle there. Most local taxes are regressive,
by their definition. The only way the county and city can collect money is
sales tax and property tax. We’ve created these social programs, many of which
are very good, but the funding mechanism that we’re using to do it is not able
to respond to the magnitude to the cost.

            You can’t fund these programs —
particularly in areas in upstate New York where property value increases have
been modest — through these limited taxes. You collect that from the general
wealth of the population, as opposed to the value of real property.

            If you think about it, it’s exactly
backwards. Where are you going to have high social welfare costs? Usually,
where property values are modest. It’s a fundamentally flawed concept.

            City:
The report says we need “meaningful”
change. What’s “meaningful”?

            Richards:
Meaningful,
to me, is not necessarily defined by the amount. Meaningful in the beginning is
identified with the fact that, “This isn’t as bad as I thought it was. This
isn’t awful and it looks like it’s sorta working.” And that’s meaningful, I
think, over time.

            It’s a circular argument, because
people have said: “Well, we’ve studied all these places that have done this
structural change, consolidated governments, and they haven’t saved any money.”
It’s usually because in order to get the structural change made, they
compromised on all the functions. So, when you look at it, nothing really
changed. Everybody had everything they had before, just at a different level of
government.

            The flip side of that coin is, can
you get functional change without structural change? If you have to get
absolutely everybody to agree to absolutely everything, are you ever gonna get
it done?

            It’s as important to the people who
live in the city of Rochester that they can run people who are representative
of them to be on the school board as it is to the people in Riga. We forget
that in this debate. People look at Rochester as though it was Bosnia and
everything to Rochester is foreign aid.

            City:
Assuming that it’s going to take at
least some structural change, how do you see us getting there?

            Richards:
The economic realities will begin to grind on us. I hope we can deal with
it before they are overwhelming. It is very interesting to me that some of the
debate going on here politically today is the debate between two subdivisions
of the same geographic area, both of whom have looming large deficits and are
arguing about how much better a job they’ve done. We’re hopeful here, by
educating, that we will provide support for and ideas to and public acceptance
of the kind of changes that our political leaders need to make.

            City:
The report suggests some consolidation
of fire-protection services.

            Richards:
That’s
a very politically explosive issue. Particularly in the county, there’s a lot
of politics in volunteer fire departments. Volunteer fire departments are
increasingly having difficult times recruiting people, so they’re hiring more
professionals. More professionals cost more money.

            We’re going through a transition
here, and people have to start looking at it. “To have your own fire
department, we’re going to have to raise your taxes — which we have an
independent right to do as a fire district — 5 to 6 percent a year for as far
as we can see. How do you feel about that?”

            To be fair, on issues that are close
to people’s hearts like that, we’re gonna have to work our way up to ’em. So,
we’re wise to pick things that have less emotional appeal to people.

City: Let’s talk about economic development. You say clearly that
there should be one economic development effort. Are you suggesting that there
be one agency that supercedes the economic development efforts of the city,
county, towns, villages?

            Richards:
First
of all, economic development requires a new definition here. Most of what the
city of Rochester does is community development: bringing a grocery store in
High Falls. That’s not what we’re talking about. By the same token, we’re not
necessarily talking about retail development in towns and villages. There are
government programs that are part of economic development, which have to stay
in the government: COMIDA, which grants tax advantages, other kinds of
programs…

            But when it comes to marketing the
community and managing the economic development process, that we feel should be
consolidated.

            Government sees economic development
from the point of view of the political subdivision. The customer is the
business we’re trying to attract or get to grow or be created. [Business] sees
it from the point of view of their business needs. So the government says to
the customer, “You have to do it my way.” Business person says, “You’re driving
me crazy.”

            City:
There is competition between Mendon
and Henrietta, between Henrietta and the city, fighting over people who are
already here. Luring them away, giving them tax breaks. COMIDA tax breaks going
to people who are already here. Should there be in your economic development
dream something that puts an end to that warfare that doesn’tget anybody anywhere?

            Richards:
Practically speaking, changing all that is a ways away. But one of the
arguments for having this consolidated effort, you do eliminate some of that.
Because that entity hasn’t got a geographic interest. It can make itself an
honest broker over time. It won’t eliminate this problem, but it will go a long
way toward managing it. And also immunizing the customer from some of it.

            It isn’t necessarily bad for the
community if the customer goes to Mendon instead of Henrietta; it is very bad
for the community if the customer goes to North Carolina because we knocked
each other off here. That we ought to be able to avoid.

            We need to professionalize this. We
need to hire the very best people and pay them well. Because we’re not
competing with Syracuse and Buffalo here, folks. We’re competing with the State
of Virginia. And most of those middle southern states that have very good
programs and have been very successful are statewide programs. They don’t have
the problems New York has. They’ve got a much simpler situation.

            City:
Of the two candidates for county
executive, who is saying the right things?

            Richards:
All
I’m willing to say is that I don’t think anybody can run on the ticket of “what
we’ve been doing has been working and I’ll do more of it.” That, I don’t think,
works for anybody. We put some fairly specific things out here. One of the
things people could ask is, do you support this or not? Are you willing to do
it? By support it, I mean people have to [say] “I will push for this.” I don’t
think it means, we’ll hold a meeting and anybody who comes [and] has an idea,
we’ll dance around the maypole here.

            You talked before about apathy. Our
favorite thing to do is to compare ourselves to Syracuse or Buffalo. This is
like being 10 feet up higher on the deck of the Titanic. That’s not helpful,
because they’re both in tough shape; Buffalo’s now in wretched shape. What the
hell kind of comparison is that?

            City:
Do you think political leaders really
believe things are OK and that continuing to do what we’ve been doing is fine
and we just need to do more of it? Don’t you think they get it?

            Richards:
Some
do, some don’t. There’s another one of these pet expressions, “If everybody’s
on board, you’re having a lousy revolution.” It has something to do with what
your job is. If you’re the mayor of Fairport, to be fair, you got elected to
deal with the Village of Fairport. Other than the fact that you may be a good
person with a broader perspective, that isn’t your job. And quite frankly, the
amount of money spent on the Village of Fairport is not causing this problem.

            I think everybody perceives that we
have a problem here. Not everyone perceives the significance of what we’re
gonna have to do to get out of it. And not everyone perceives the necessity to
deal with it as the Community of Monroe. Even in political leadership.

            Are we going to be able to, as a
community, deal with these challenges we face? Or will our governmental system
and our social and other structural systems be so difficult to deal with that
we will have to fail first, and then pick up the pieces?

            Very often, the losers are the
people who can least tolerate it. Who gets hurt by eliminating kindergarten in
the City of Buffalo?

            Will we get this thing turned
around, before it is taken out of our hands? The ultimate financial insult, I
believe, is to be told by the State of New York that you’re not financially
responsible. Can you imagine the State of New York telling somebody that? Think
about how insulting that is.

            City:
How is the report being perceived?
What kind of feedback are you getting?

            Richards:
It
varies. We get a certain amount of positive feedback, people saying, “We’re
glad you did that.” We’re starting to get a lot of people who have ideas;
sometimes that’s helpful, sometimes it’s not. You know, people tend to have a
little bit of tunnel vision — “if you fix Midtown….” They’re engaged, at least.

            I think, politically, they’re going
to try like hell to ignore us. And I can see why. I told you we’re really
focusing beyond the election, because they don’t want us to take over their
agenda. They figured out where they’re going — can’t be interrupted by the
facts. I’m not surprised at that.

            Politics is reasoning backwards. “I
can’t change anything if I’m not elected, therefore anything I do to get
elected is justified.” If you want to really engage the debate and you want to
have a real good knockdown, drag-out… it’s going on in Buffalo right now. I
mean, they’re engaged.

            Am I disappointed? Sure. [But] even
being ignored is a form of a compliment in this situation. So, whoever gets
elected — we’ll start trying to work away at it.

            To
view “Apathy Is Not an Option,” visit www.rumpgroup.org.

This article appears in Sep 24-30, 2003.