After the Great Recession gut checked federal, state and local government budgets across the United States, many policymakers realized how vulnerable their budgets were to economic uncertainty. However, policymakers weren’t the only ones who noticed. In Colorado Springs, concerned citizen and president of The Broadmoor Hotel, Steve Bartolin, wrote a letter to then Mayor Lionel Rivera criticizing the city’s unsustainable fiscal policy and lack of transparency.
At the time, Colorado Springs faced two major long-term issues: First, unsustainable fiscal policy exacerbated by a lack of transparency; and second, burgeoning civil employee pension liabilities that are outside the control of local government [civil servants are part of the state’s Public Employee Retirement Association (PERA)]. These concerns, combined with citizen dissatisfaction, created a distrustful environment blocking meaningful government reform. Bartolin’s letter ultimately served as a catalyst for the creation of The City Committee in 2010.
The City Committee endeavors to apply best business practices, where appropriate, to improve the operations of Colorado Springs’ city government and its enterprises. Its members offer city officials management consulting services in an effort to maximize the “return on investment” to the taxpayer.
In this December 2011 interview with Reason Foundation’s Harris Kenny, Chuck Fowler, CEO and Chairman of The City Committee, discusses the formation of the organization, the changing structure of city government in Colorado Springs, and future government reform efforts in store for The City Committee.
For more information, visit The City Committee online: http://www.thecitycommittee.org/.
Harris Kenny, Reason Foundation: What was the political climate like in Colorado Springs before The City Committee was created?
Chuck Fowler, The City Committee: There was a growing frustration within the community with the city council and their actions, starting in 2005. Further, community leaders were eager to figure out a way to keep the U.S. Olympic Committee in Colorado Springs, but the deal was botched, frustrating people further.
Steve Bartolin, President and CEO of The Broadmoor Hotel (a five-star luxury hotel located in Colorado Springs) wrote a letter to then Mayor Lionel Rivera after the 2009 municipal election that called into question the city’s labor costs (equaling 70% of the general fund budget at the time). Bartolin was especially critical of the lack of transparency. Bartolin’s letter went viral within the business community and fanned the flames of discontent with the mayor, city manager and city council.
The November 2009 election asked voters for a modest increase to the city’s mill levy, which the voters turned down by a large margin. Another ballot issue essentially terminated the Storm Water Enterprise, a controversial municipal enterprise created by the city council in 2005 that many believed circumvented the city tax limitation law. Voters were tired of attempts by city officials to use fees instead of voter-approved taxes to fund city services. The political climate was edgy and turning hostile towards city government to the point where voters approved a city charter amendment in 2010 that changed the governance system from a city manager/council to a strong mayor form of government with a line item veto. Day-to-day functions of the city were essentially taken away from city council.
Kenny: What events led to the creation of The City Committee?
Fowler: Citing budget woes, the city started cutting services, like taking garbage out of local parks and turning off streetlights. These events captured significant national media attention. Bartolin and I met regularly with City Councilman Sean Paige who was formerly the editorial page editor for Colorado Springs Gazette. Sean shared our frustration that his colleagues on city council were either unwilling or unable to recognize the cause of our fiscal problems and make some tough decisions to right the ship. So we came up with a plan to organize a group of experienced business people who would research city financial data and discover for the community the true financial condition of the city. Bartolin had 100 individuals respond to his letter. Those people provided our initial list of candidates for the group.
Kenny: What were the early goals of The City Committee?
Fowler: We wanted to bring private sector, free market sensibility to the business of public service delivery. We didn't want to have a representative organization of various community organizations and stakeholders—we already had that with our Chamber and Economic Development organizations. The City Committee was intentionally comprised of people with private sector experience who were experienced at meeting the challenge of revenue dropping like a lead balloon while costs continued to rise. We felt successful businesspeople would be best suited to find ways to align operating expenses with revenue. We recruited business executives from the community because they were on the front lines as their companies fought to stay alive through the recession.
Kenny: When did The City Committee get off the ground?
Fowler: We held our first meeting in May 2010 with 13 people appointed to the committee. The city published its Comprehensive Annual Financial Report (CAFR) data each year, but the data had never been charted from year-to-year to demonstrate how cumulative salaries, health benefits, pension costs, etc. grew over time. We thought if the data came to the attention of city they might arrive at different conclusions for how to find efficiencies in service delivery. After producing and analyzing charts and graphs we met with city council members in private sessions without the media present. We then started making presentations to other groups and organizations in the community. We were able to provide information to help residents understand the fiscal problems the city was facing. This approach was helpful for both city council and city staff. We came up with our own recommendations for aligning revenues with expenses—a difficult undertaking when 70% of the expenses are related to public employee compensation. But every municipal government is confronted with such a challenge. Colorado Springs is likely better off financially than other communities because of our tax limitation law. We have very little debt. Unfunded pension liabilities remain a concern, however, mostly because they are beyond the control of the people who pay them.
Kenny: Colorado Springs residents recently voted to change the structure of city government; did the City Committee play a role in that decision?
Fowler: When we assembled the City Committee we focused on policy, the budget and fiscal trends going back to 1995. We didn’t play an active role in the strong mayor initiative, but the backstory that prompted the structural changes in city government was essentially the same backstory that got the City Committee in business that I described earlier. There was a total dissatisfaction and lack of accountability with our city manager form of government and people wanted to have accountability and transparency.
The rationale was that if we have one elected chief executive whose job is to execute the policy and procedures of government, then the city council can focus on city enterprises (hospital, utilities, airport, etc.). People felt the previous model didn't work anymore. Maybe that was personalities rather than the structure—that’s a fair response—but there was an opportunity to change the structure and the electorate raised it and put it into place by a good margin. That really changed the setup for the City Committee because we had anticipated we'd be working with the city council, city manager and city staff, but now the city staff serves the mayor. Since the city council no longer has the authority to execute policy, we had to also change our focus to include the mayor’s office. Previously, the mayor was essentially a ceremonial position who presided over council meetings. One flaw in the governance change, however, kept personnel policy under the control of council—most chief executives have authority over their workforce beyond simply hiring and firing. It’s a touchy political issue right now that will need charter resolution at some point.
Kenny: What is the long-term vision for the City Committee?
Fowler: The City Committee was formed as a 501(c)(3) nonprofit organization so we really want to stay in business indefinitely because government is fluid and we want to make sure the performance data coming from government is being collected and analyzed to drive the right decisions. The current mayor (Steve Bach) adopted The City Committee recommendations as his political platform during the election last spring and he won by a large margin in a run-off election over a candidate who was a former city councilmember.
When Mayor Bach was inaugurated into office last June, he was confronted with all kinds of things he had zero experience in. Being the first strong mayor he was tasked with redefining the city government and it was like trying to drink from a fire hose. With old department heads retiring he has had the opportunity to position our community to compete against other American cities for badly needed jobs—efficient government service delivery, what we call Optimization, is vital to distinguish our brand in that marketplace to attract and retain successful businesses. We don’t want any business prospect to say, “Love the community, but your government is a barrier to our success and we’re headed elsewhere.”
Kenny: What’s in store for the City Committee moving forward?
Fowler: Mayor Bach is aligned with our values and vision for Optimized core service delivery. Going forward, there are many opportunities for us within the larger umbrella of city services, including the enterprises such as the utilities, to look into business practices and policies that might be able to be applied. We’re also trying to divest our city-owned Memorial Hospital—it looks like a potential big win for the community with a possible branch of the University of Colorado Medical School as part of the deal. We’re going to continue to monitor the general fund and the pensions. The pension problem is an issue that needs leadership to get resolved and I’m not sure that can come from people who hold political office. I think that pressure needs to come from outside.
We need to keep the pressure up to ensure we're paying our public employees competitive wages and benefits (competitive to the private sector, not just comparing to other local governments). Our cost-of-living is lower than the national average and of course, our Rocky Mountains offer recreational opportunities that are second to none. We don’t see attracting good talent to serve our community as a big problem, even if the compensation is aligned with what we can simply afford to pay. We have other assets to offer, too. The taxpayers are hurting. We also don't see General Fund revenues increasing, like most communities, and it's tough to grow the tax base that's coming into the city in these economic times. It requires a whole new set of assumptions and models to live within our means. Outsourcing, privatizing, and managed competition are obviously a big part of that. As that’s taking shape we want to help the mayor ensure that Optimized services remains a transparent and public process.
Kenny: Do you have any recommendations for concerned citizens who might be interested in starting something like The City Committee in their community?
Fowler: First, the common thread is the recognition there's a problem. Second, that it's time to do business differently. Every community is different and the variables that have shaped communities over time are what make them different. Recognition of the problem and willingness to find the courage to make changes is what will bind communities together. Communities need to find their collective courage, tear down their silos, to look at the issues they’re confronting in a realistic way, which I think if one trusts the current economic forecasts its going to be a while before governments have the type of revenue that they enjoyed the past few decades—something’s got to give.
Growing the revenue to government enterprises is less likely of an outcome than a reduction of public services by the government. The only way to pay for a level of service that some have come to expect from government is to question: is this something government should do? And if it is, maybe their role is to oversee procurement to give the private sector the privilege to provide these services competitively. This practice is widely known as managed competition.
Economic cycles come and go. Financial tides rise and fall. At this moment in our country’s unique economic and political history, all citizens—whether individuals, businesses or public servants—can and should participate in redefining appropriate solutions for more effective and efficient government. American ingenuity has always led to innovative solutions. That’s foundational to the mission of the City Committee.
This article will be featured in a forthcoming edition of Reason Foundation's Innovators in Action report.