Much ado about a few dollars

The City Beat was mildly annoyed by the grilling that Grand Forks city staff got from the City Council’s finance committee about two weeks ago over some proposed fee increases. Staff members got so flustered they couldn’t explain what the hell was really going on. This has happened enough times that you’d think everybody would just learn to relax.

It started out with Council President Hal Gershman saying that he thought the council had said it wanted fees to be pegged to inflation and the proposed fee increases weren’t it. He wasn’t upset, he said, but just wanted it done right. If I remember correctly, finance Chairman Doug Christensen thought that was the signal for some hard questioning of staff. He was really curious, I’m sure. Doug was much more relaxed yesterday at finance when the fees came up again.

Anyway, I thought maybe I ought to go talk to staff myself and get the explanation that the council couldn’t get.

The part about the money

Let me start with the money side of this issue.

I did analyze the proposed fee increases – all 348 of them — and Hal is right. The increases were all over the place. Permits for businesses that provide emergency alarm systems: Up 203 percent. Dog licenses: Unchanged. Class 1 liquor license annual fee: Up 3.1 percent.

There was a pretty consistent pattern in many cases: Fees were raised by 3 percent and rounded up to the nearest $1 or $5. Some fees were rounded down. I confirmed that this was the case with staff, who said they feel the public likes it that way. There must be more people paying with cash than I thought. So the perception of inconsistency was simply that, when you round up or down, depending on how small the dollar amounts are, you get funny increases like 4.3 percent or 7.7 percent or 1.9 percent.

In other cases, there was no clear pattern. I didn’t have time to check out every one of them, but I did pick a few random ones to check on. Christmas tree selling permits, for example, didn’t go up at all, staying at $50. I was told that was because it seemed silly to jack up the price a couple dollars when the city only issued two such permits last year. The fee to have a judge preside over a wedding went up from $50 to $60. I was told they hadn’t gone up for four years and they also went up to match what others charge.

One interesting thing that emerged was the discovery of a study done in 1994, where the cost of providing every fee-based service was analyzed. Finance Director Saroj Jerath said it was misplaced in the chaos of the 1997 flood and was found in the basement. Since then, many of the fees have been subjected to annual inflation adjustments.

All of these things came up when the finance committee discussed the issue again yesterday – It came back because the council couldn’t agree on what to do with the fees. — and the committee agreed to just accept staff’s proposed fees and then do another cost-of-service study.

An explanation of inflation and cost of service

After the meeting, I talked to the council and pointed out what I thought was a discrepancy. Throughout, they alternately talked about pegging fees to inflation and pegging them to cost of service, as if the two were one and the same. They aren’t are they?

Inflation, or the Consumer Price Index put out by the U.S. Bureau of Labor Statistics, measures the changing cost of a basket of goods and services — sweaters, breakfast cereal, gasoline – at the national, regional and local level. It’s an abstraction that has nothing to do with the cost of city services. But because it would be costly in staff time to do a cost-of-service study every year, inflation is a convenient substitute. The two are not the same.

The cost of service, as the 1994 study showed, is a combination of factors such as staff time, wages, benefits, mileage, administrative overhead, material costs and so on.

Those things may go up at roughly the same rate as inflation, but they don’t have to. Staff wages have not been pegged to inflation, but roughly to the wages of staff at similar cities in the region, which has more to do with the supply and demand for those jobs than for sweaters or gasoline.

Benefits costs have been going up way faster than inflation for probably the past decade, as anyone paying health insurance premiums know.

Mileage rates have gone up because the cost of gasoline has also accelerated ahead of inflation.

On the other hand, administrative overhead has to have dropped. The number of city employees has fallen even as the population they serve has grown, something I’ve mentioned in the past.

The part about the politics

The main reason for the conflict between staff and council on this little issue, which Hal tried not to make a big deal of, is the tone of questioning, mostly by Doug, which seemed to suggest wrongdoing. This was compounded by the poor choice of words.

In my story, I mentioned how Saroj the finance director was “fuming” a little over accusations that her staff raised fees arbitrarily. Doug tried to claim at yesterday’s meeting that it was just me “editorializing,” as in opinionating. When some one spits out the word “arbitrary” in reference to what a certain council member had said about her staff, she is clearly fuming. It’s easy to stereotype bureaucrats as capricious just as as it’s easy to stereotype lawyers as weasels, so one can imagine how she might be offended at the characterization.

City staff probably miscalculated by giving the council the fee increases with no explanation attached, which leaves a lot of room for speculation by the council. As the note at the beginning of that proposal suggests, city staff thought this was just a housekeeping matter that didn’t require much explanation. The council had already agreed to the fee increases as part of the 2011 budget and this is just putting those increases into law. Having learned the lesson, staff returned with a more detailed explanation, answering most of the questions. If it had done this at the start, this thing wouldn’t turned into such a pointless fight.