Mr. Mayor and Honorable Members of Council:

In her March 23, 2020, FY 2021 budget transmittal letter, former City Manager L. Pettis Patton sounded this cautionary note:

The FY 2021 proposed budget includes $10.3 million in contributions, $9.5 million debt service on the pension obligation bonds, and an additional $1.5 million retirement fund contribution. The $21.3 million one-year budget impact to the plan with approximately 1,100 total participants poses significant fiscal challenges to the city. It is imperative that we analyze discretionary benefits that have been added over the years and refocus that money towards ensuring the long-term viability of this plan. [Emphasis is mine.]

(Interestingly, the warning itself was not a response to anticipated COVID-19 disruptions but rather to shortsighted practices of councils past and present. Had the pandemic been a factor at the moment the letter went out, its message would have been all the more relevant.)

Despite the sound advice cited above, the FY 2021 Proposed Budget should have been declared dead within days of its arrival. Contemporaneous with its presentation, the Commonwealth was entering a state of emergency created by the COVID-19 pandemic. Our national and state leaders already knew that we faced an unprecedented peacetime threat to human life and health with major implications for the economy as well. The likely economic fallout from the pandemic invalidated the revenue and expenditure assumptions that undergirded not only our city budget but those of the Commonwealth and nation. Yet, council chose to put blinders on and march forward toward adoption as though it were just an ordinary budget year.

On May 11, though, after city council had held two virtual meetings and adopted an ordinance that established a legal framework for conducting city business in pandemic mode, the city manager and her staff briefed the public and council on budget adjustments to accommodate COVID-19 constraints. The seventh slide in the presentation highlighted an estimated revenue loss of $13 to $14 million due to reduced meal, hotel, admission, general sales, and personal property taxes compounded by reduction in state revenues that would normally pass through to localities. Unmentioned were real estate tax collections, which could have been affected, too, due to the loss of income by taxpayers laid off when businesses shut down. Council still passed the original budget but also enacted an ordinance extending the deadlines for payment of certain taxes to give residents a bit of temporary relief during the economic disruption.

Seven months after the unveiling of the FY 2021 budget proposals, with the city still operating in pandemic mode, council signaled its readiness to draw down its cash reserve to hand out almost a million and a half dollars to retirees collecting distributions from the Portsmouth supplemental retirement plans. Please note that, unlike millions of our fellow Americans dependent on income from jobs, these folks suffered no interruption of payments during the pandemic. Nor has the present crisis squeezed the retiree population due to runaway inflation. Additionally, it is quite likely that a goodly number of our pensioners received fiscal stimulus payments from the federal government. Nonetheless, two weeks ago, without having received any public update on the city’s financial position since the end of Quarter Three of Fiscal Year 2020, council directed city staff to bring this matter back for consideration tomorrow. The timing is baffling. With novel corona virus cases trending upward again nationally and globally, auguring ill for economic recovery, this appears to be a very inopportune moment to tap our reserves to pay additional “discretionary benefits” to those not in distress.

Actually, I should amend the characterization that the timing is baffling. It is baffling from a corona virus perspective but not so hard to figure out when we consider that this is an election year. Incumbent candidates benefit when special interest groups whose members have friends and family living here are happy. Spreading money from the city coffers among retirees, especially a week before a local election, can boost an officeholder’s popularity among a very vocal constituency. Additionally, what goes around comes around: three incumbent candidates have received significant donations from political action committees representing fire fighters, one of the more activist groups of retirees, who also work polling places for their favored candidates. This would all be rather symbiotic except that our elected representatives are using our tax dollars to further their own political aspirations rather than creating value for the citizens generally.

Good or bad intentions aside, shooting in the dark is just plain reckless. For council to determine that it wants to draw down our reserves without an accounting of how large or small those reserves are and which direction revenues and expenses are heading is the mindset that made our real estate tax rate the highest in the region and keeps it that way. This nearly $1.5 million giveaway, coupled with two other discretionary outlays that had been deferred up to this point, could mean layoffs and service reductions in the months ahead that dwarf those of 2008-2009. Now is not the time to come out of our fiscal fox holes. As I learned at last week’s regional planning district commission meeting, even Virginia Beach with its vast resources of people, land, and revenue, is holding off on raises for its employees until we truly turn a corner in this pandemic. We would do well to emulate their caution. I urge you, therefore, to reject this proposal.

Please let me know if you need additional information.

Your truly,
Mark Geduldig-Yatrofsky, PO Box 50141, Portsmouth, VA 23703-0141

[Clarification: According to their respective campaign finance reports, Council Candidate Nathan Clark received $2500 on August 7, 2020, from the Virginia Professional Fire Fighters; Mayoral Candidate Shannon Glover received $1500 on September 21, 2020, from International Association of Fire Fighters (Portsmouth Local 539); and Council Candidate Lisa Lucas-Burke received $750 from on September 27, 2020, from International Association of Fire Fighters (Portsmouth Local 539)]