The following is the text version of Mayor Rene' Varela's Budget Address as presented at the Lake Worth Playhouse on July 21, 2010.

Text of Mayor Varela's Budget Address

Good evening my fellow citizens.

Thank you all for being here tonight. I want to also thank the Lake Worth Playhouse for once again enthuasticly agreeing to host this event. We are truly blessed to have this fine institution right in the heart of our City.

Five months ago, many of you were here in this same place to hear my address on the State of the City in which I spoke at length about the dedicated and wonderful citizens of Lake Worth. We are truly blessed with an informed and engaged community of neighbors who care deeply for their families, their neighborhoods and the City we all call our home. I challenged each of you to engage even more and join together to bring our community through the very tough financial times ahead. I am so proud to say that, with all your hearts, you have responded in extraordinary ways. Hundreds of you turned out for a City wide clean up. Neighborhood Associations led by Downtown Jewel transformed our post office with new landscaping making it an attractive hub on Lucerne. Six of our neighborhood associations sent representatives to a five week course offered by the County and came back with thousands of grant dollars that will soon be put to work improving neighborhoods from east to west and north to south in our City.  Dozens of you answered the call to volunteer for service on citizen advisory boards. I cannot say enough about the commitment and dedication of all our volunteer board members and applicants who stepped up and said “Yes, I’ll help my City.” Our downtown merchants, struggling to stay alive in these difficult times, also stepped up and came together to make our Fourth of July celebration a three day spectacular event. You, the citizens of Lake Worth are the most valuable treasures in our City. Through your actions, you have proven the value of an active citizenry. 

Tonight, however, it is my difficult duty to bring you up to date on the financial crisis that now bears down on all of us. 

Where we come from

A little over a year ago, I made a decision to seek election as your Mayor to become part of the process of guiding the City of Lake Worth back to the path of achieving her great potential. You see, I understood the many seemingly insurmountable challenges that our City faced ever since its incorporation in 1913, that were overcome with determination and hard work. I also clearly understood the depth of the economic abyss that faced the world, our country, state, and local governments. Additionally, I understood the degree to which our City assets and communities were neglected and drastically depreciated. These were all challenges that I realized going into this job, and that I am determined to keep as my central focus of my time in service to you as your Mayor. However, not all of your elected officials over the years have felt this same sense of mission, choosing instead to fall into the all too common bad habits of promoting pet projects which have led to poor management of our financial and civil affairs through what I refer to as the politics of distraction. Tonight, as a result of the poor (and sometimes self-motivated) decisions the City government has made over the most recent years, we as a City stand at the edge of a financial cliff. 

It is precisely the anxiety expressed to me by many of you regarding our financial condition that has compelled me to address you tonight. And so tonight, I will be discussing the current status of the City’s finances, the path that led us to this point, and the path that we will take back to prosperity and financial security.

Let me take you back in time a bit. As with almost all of the municipalities in Florida, Lake Worth has been decimated by the financial crisis that has swept this entire nation over the last three years. And there is no doubt in my mind that the financial crisis we face today is partly the result of the nation’s woes. However, it is wrong and entirely without merit to place all of the blame for our current crisis on fate, or the larger problems of the United States, as some have suggested. Indeed, many other municipalities within our state, while facing their own shortfalls, are indeed far better off than the City of Lake Worth. Each of these cities has achieved some measure of strength and stability through responsible governmental decisions and quality management. Unfortunately, the City of Lake Worth has not had the benefit of the same wisdom and foresight. In the last several years, the City Commission has wasted crucial time and attention addressing issues beyond our capacity to affect, while neglecting the issues within our capacity (and charge) to confront; challenges that, if addressed, could have prevented the dire circumstances we face today.

So you might ask: “how has this happened?” I believe that many of our problems have been exacerbated by the institutional denial associated with the economic conditions of the community. In the last four years, our City’s assessed property value dropped from approximately $2 billion dollars to just over $1.1 billion today, a reduction of almost 50%. This was the highest drop in the entire county and one of the highest in the State. The budgetary impact for the City has been that our property tax revenues have declined from a high of $18 million dollars in 2006 to $6 million dollars today. Tragically, our government refused to respond by tightening its belt accordingly, and the result is that we have depleted our General Fund balance by 90% in the last four years. Our General Fund balance, filled four years ago with over $5 million dollars, now stands at barely a tenth of that, and, on our current spending pace, we will not have sufficient funds to survive much longer. Simply stated, over the past several years, we have been spending more money than we have been taking in, with no thought given whatsoever to the unsustainable nature of that condition. Everyone in this room has the common sense to understand that if you continue to spend more money than you earn, eventually you will go bankrupt, and cities are no different. 

But if you do a little math, you might discover that the general fund balance alone could not have balanced our past budgets. So where did your government over the past 4 years find the needed money? Unfortunately, the answer can be found in your Lake Worth Utility bill each and every month. Indeed, today, the Lake Worth Utility comprises 40% of our City’s spendable revenues, resulting in an absolute dependence on our utility to generate life saving revenue to our core government activities, such as public services, public safety, and administration. Some might even feel that this is double taxation by other means. Regardless of your feelings, what is true is that the utility was created to provide our residents with physical and economic stability, with local control. It is clear today that the original intent has been deviated to supplement the drunken spending and misguided pet projects of commissions past. I believe it is tragic that your City government has forced you to pay for its mistakes by charging utility rates that are the highest in the State for businesses and amongst the highest in the State for homes. Thank God that our distant predecessors in Lake Worth government had the vision to establish our utility. If our more recent government officials shared that wisdom, we would not have deferred difficult decisions by abusing the intent of the utility. 

To be clear, our City ad valorum revenues over the past 4 years have declined by almost 2/3s. The response of the City government during that time was to shift some job positions, offer some early retirements, and defer some maintenance projects, all of which yielded very minimal savings. To make up the revenue shortfall, our undesignated fund balance (i.e. rainy day fund) was raided and the utility was charged with carrying the bulk of the financial burden.

Throughout this time, there was no call for financial reform from our commission. They instead chose to focus on a social agenda that amounted to the practice of the politics of distraction. While several of our municipal partners in the Sub-Regional Sewer agreement have fallen in arrears in excess of thirteen million dollars; while code enforcement cases languished to the extent of a 70 million dollar balance; while our relationships with the County and surrounding municipalities deteriorated; and while the living and working conditions of our residents continued to decline, our officials distracted our residents with pet projects and policies that have had absolutely nothing to do with improving our City or our collective lot in life. This is an embarrassment of enormous proportions that cannot and will not be tolerated any longer. 

Here's What I think...

• The Mayor brings us up to date on how we got in our financial mess... 

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