Tom: Good morning everyone. 

Crowd: Good morning

Tom: Good morning. What’s the old saying, “Time flies when you are having fun”? ‘Cause it sure seems like yesterday that we were in this room kind of doing the same thing. So, I wanted to start off this morning, with a few opening remarks. Tell a couple of stories that I hope are relevant to our conversation. Several people over time talked about, “how come you never tell any baseball stories?” And so I said, okay well today I will tell a baseball story but it’s not going to be probably the one you think I will tell. So, anyway most of you know that I had a short little stint with playing professional baseball in the minor leagues with the New York Yankees. But what you probably don’t know is that I have really always been a Yankees fan from the time I was a little kid. I just happened to get drafted by them. So, the reason I was is because I was born and raised in St. Petersburg, Florida and for… (like) from the twenties all the way to the late sixties, the Yankees were spring training in St. Petersburg. And, as young kid and for some of you - you’ll relate to this, others will think ‘God, is he old!’; In like 1959 or 1960 when I was like four or five years old when my dad started taking me down to the old Yankee spring training complex called Miller Huggins Field. And back in those days, it was way different in professional sports particularly spring training than the way it is now. It’s just laid back as could be. I mean you couldn’t quite walk out on the field but you parked in the same parking lots where the baseball players you know were and could after watching back and forth. They’d talk to you back and forth to the clubhouse. So, I got to meet quite a few of the then, famous Yankees. There was Mickey Mantle, Roger Maris, Elston Howard – the whole group. But one of my favorite Yankees that I got to meet was this guy. And most of you might know who he is. Can’t really see the pictures too well cause of the lights. I don’t know. Mind if I turn the lights off? Think we could do that? Would somebody do that? 

(Lights turn off to view PowerPoint slides.)

Tom: So, anyway, the reason that I, at the time a 5 or 6 year old kid, that I liked Yogi Berra, was one because he had the name of my favorite cartoon character. 

Crowd: laughter

Tom: And, two because he was actually the smallest guy. Everybody else was this huge – I mean I remember Mickey Mantle being this big massive guy. And Yogi Berra was this little guy. He was even hunched over back then. He was a catcher. And so I was still a little tike and I could actually see him better than I could the others so he just seemed better. Thirdly, he was really a very approachable person. He was just as friendly as could be. He’d talk to the kids and do all of that kind of stuff. But it really wasn’t till um, quite awhile later quite frankly that I kind of learned to like him even more because of what they call “Yogi –ism”. And I don’t know if you are familiar with Yogi Berra. Yogi Berra has hundreds of things that he said sometimes that were just ridiculously stupid – like one of his most famous baseball Yogi-isms; he said to the media one day that, “Baseball is ninety percent mental and the other half is physical.”

Crowd: laughs

Tom: So, you say, “okay.” But as I was thinking about this today and how I could translate this into a story and one of the most famous things that Yogi had to say and I think it’s relevant to where we are today and that is, “This is like déjà vu all over again!”. 

Crowd: laughs/murmurs

Tom: So when I thought about that I said okay well let’s talk about this thing that we call déjà vu. And anybody have some thoughts about déjà vu and what that might mean to you? What déjà vu means?

Crowd: Indistinct

Tom: (repeats from crowd response) Been there before? Yeah, that certainly would be one of them. But another description of déjà vu and certainly the most popular that illusion of having previously experienced something actually being encountered for the first time – and so I’m not sure that’s exactly where we are today. But another definition of déjà vu is disagreeable familiarity or sameness. And I think that might well be more relevant to where we are today. A friend of mine who’s a city manager out on the west coast actually came up with another way describing where we are in the experience today – and they call it ‘vujà dé’. 

Crowd: laughs

Tom: She calls it, ‘vujà dé’. ‘Vujà dé’ if you think about what that might mean in that context is maybe we have not seen or experienced anything like this.  I think that that may well be where we are; both in terms of the overall economy going forward and where we are with the city budget and budgeting process. I hope you all know from me or seen that I tend to want to look at the optimistic side of things. And so for me, I think we still have with even all said the where are not sure we have been here before I think we have plenty of things to be optimistic about. 

At the budget kick off retreat, we talked about that song “Optimistic Voices” and I’m not going to get back into the Wizard of Oz analogies right now so you don’t have to worry about that. But truly, there are plenty of things for us to be optimistic about as we move forward in this budgeting process. We are going to hear about several of those optimistic aspects this morning quite frankly. We’re going to hear about an extremely positive community survey response. We are going to hear some about the economic outlook. And one of the takeaways from that for me and I hope that Michael Waldren will reconfirm it. I heard him say it last week so he better is that while we have some pretty challenging times going forward the economic recovery. 

Clearly, North Carolina is one of the better places to be in that economic recovery. The Research Triangle area is the best place in North Carolina to be as part of that economic recovery and Durham is certainly in the center of that. More reasons for optimism: we continue to have our triple A bond rating reconfirmed. Another one just happened yesterday if you haven’t heard about that. And as it relates to the budget I feel optimistic that last year we stood in this room and had lots of fear and trepidation about some fairly significant numbers.

And we did it so we know we can bring home a budget that meets the community’s needs that matches the expenditures and the resources. At the same time, the budget that was adopted you know we talked about we’ve executed that budget. We are going to hear some more about that today as we get the update on the second quarter report. 

Is everything perfect? No. But if you recall this time last year, we were making significant reductions in budget we were living with at that point in time. We were, as some described it, painting the bus as it was going down the road. And I think that if we also and this will carry forward to the next – second budget retreat we are truly laying the groundwork for many, many positive actions in the community. We are going to hear about the Strategic Plan process this afternoon. In two weeks, we are going to hear about the three year financial plan. We are going to hear about a fundable CIP, the Culture of Service Initiative, while we are not to be talking about that in the next couple of retreats is also something very, very positive we need to remember to be optimistic about our future. 

Also, the step that we took last year with the City Council in the development of budget guidelines early in the process is something that I’m confident we will do again this year and leads me to be optimistic about where we are going to be with the budget. And finally, and certainly not least, I’m optimistic about the talent that I know we have in the organization; certainly in this room and throughout the organization. I have continued to talk to the Council members and also to community when they ask me about impressions about things and I consistently talk about how impressed I am with the depth of committed and talented people that we have in the organization so that is another great reason to be optimistic. 

But at the same time that we are optimistic, we’ve got to be realistic. And, realistic is to talk about what are those challenges that we face as part of this budget. And that gets me back to this idea of ‘vujà dé‘ - maybe we haven’t been before. And we probably haven’t been here before. And so as I think about the budget, I think about issues like well the economy may be rebounding we think, but certainly and I think we’ll hear about that shortly not nearly as quick in the projections of the long term rebound are definitely different in terms of growth rates and those kinds of things then we have ever experienced before. 

The issues just in our general fund - the fact that the property taxes and sales tax are almost two thirds of our revenue stream, and we know what property values - how they are challenged and any increase in property tax rates really are marginal at best. Sale taxes are actually continuing to go down so the bottom line there is options we have for revenue to address the needs are somewhat limited.  

Second, another piece of the challenge in terms of us (that we) don’t know if we have been down this road before is the fact that we are facing a $15 million budget gap and think about last year was what $40 million budget gap. So have we ever had budget gaps of that nature two years in a row? I don’t think so. You think about what it takes to reduce the budget a million dollars and quite frankly a million dollars last year is a lot easier than a million dollars will be this year to reduce costs because I don’t want to say we’ve taken the easy stuff but there is some fact that the more we go into make budget cuts or adjustments a million is harder and harder every time. 

Then I think about the decisions that the City Council will have to make and certainly at the top of that list are questions about taxes and tax rates. And I think, well, how will the citizens in this environment – would they be willing to consider a tax rate increase for additional debt that they voted for in a different economic environment? That’s a question that I don’t think we have ever had to face before. At the same time how will citizens react to the potential for increased taxes in this environment for new services? Or to address needs in the community that really will improve and in some respects and in my opinion catapult the community forward another level? What is the tolerance for and the willingness for people to pay more to really more the community forward? 

And I think about our employees – how will we sustain employee morale if we have to have a second year in a row of no pay increases? I don’t have the answers. The answers are in this room. The answers are at this table. But I know that they are challenges that we will be facing as a part of this. So, where do we go from here? This is maybe some déjà vu – the same thing again. Just like last year, we have to focus on the highest priorities. We have to be willing to focus on the highest priorities and put the resources to the highest priorities. We have to commit – and this is directed to the City Council – to clear and concise budget guidelines as early in the process as we possibly can. That is something that the staff is going to need ‘cause we have got the challenges for sure but without those clear and concise guidelines from you, we understand and that we can count on it will make the budgeting process even more challenging. 

And then finally, this goes back to what I think we did an excellent job last year starting with the Coffees with Council – and we’ll have the first one tomorrow. All the way through the process was to communicate, communicate, communicate. We were very transparent I believe with the Council; we were very transparent with the community about the challenges we faced; the difficult decisions that we faced; and the input that we needed. So with that, I certainly don’t want to leave on a down note. I went back and thought about my friend Yogi Berra again. 

Oh, let me do this first. Just real quick, just the schedule, I think everybody’s seen that - kind of what we are going to do today. And make sure that Council was comfortable that was the schedule and the order that you want to move through this today. One thing that I did want to mention we are going to work through lunch on that budget outlook piece. So we have lunch at 11:30, so we’ll get up and get lunch, but then we’ll work through lunch on the budget outlook. And then when we get to Strategic Planning, primarily that is a Council input process and so some of the staff is just going to go back to work this afternoon. There is not a real need for all of them to stay so if you see some of the department directors leaving or some of the other staff leaving; it’s not that they are not interested it’s just that they are not actively involved in that (process) and  I think that they can get some other things done. That’s today. 

And just to refresh everybody about what we are going to do in two weeks. We’ve got some significant discussions to have both in terms of longer term planning and then some more specifics about some of the service challenges and service issues. Then most importantly for us is the Budget Directives/Priorities. I anticipate that what we are to do is that beginning today as we have conversations budget staff that is here; we will actually begin developing what we think are the budget priorities based on the discussions and some of the feedback that we hear from you, the City Council beginning today (so that when we come back) and we’ll continue that through next time as well, but then as we come back for that closing budget priority piece in two weeks, we won’t be starting from scratch. We’ll have some things as we’ve picked up to go. So, okay, so anyways, let’s close with this. The other ‘Yogi-isms’ I call to budget by, “the future ain’t what it used to be”; 

Crowd: laughs

Tom: "If you come to a fork in the road, take it."

Crowd: laughs

Tom: And lastly, "If you don't know where you are going, you will wind up somewhere else.” So with that, let’s let the budget process begin.