On January 1st, six New Rochelle firefighters who had been facing layoffs will remain on the job. Fire Ladder Truck 12 will be staffed and available to answer emergency calls. School children will continue to receive supervision and assistance as they cross busy intersections. And Community Service Officers will still be on-hand to bolster the work of our Police Department.

These services had been slated for elimination in the City Manager’s proposed budget for 2012. Widely regarded as the most painful of the budget’s proposed cuts, they had attracted considerable public concern and opposition. Yesterday evening, the City Council made a collective decision to restore these positions, a choice made possible by an unexpected reduction in projected health insurance costs, first reported on Monday.

A brief explanation is in order: the City’s health insurance cost projection had been based on State figures issued in March, which predicted a year-to-year increase of roughly 16%. New estimates from the State forecast a smaller increase of just 5.5%. The net “savings” will be at least $1 million and probably a bit more. These are the unanticipated funds that the Council chose to apply to service restoration.

It’s good news. But we must not confuse a temporary budget reprieve with a long-term solution to the City’s fiscal challenges.

The trends that have conspired to undermine our fiscal health show no signs of abating. The national economy continues to limp along, the State has not articulated any realistic strategy for mandate relief, and the City’s labor costs can be restrained only through workforce and service reductions. Meanwhile, our present anemic investment in infrastructure is unsustainable.

Out of the hundreds of line items in the City Manager’s proposed budget, just three are sufficient to tell the whole story:

  1. pension contributions to the New York State Retirement System, up about $5 million since 2009;
  2. health insurance payments, also determined by the State, up about $4 million since 2007 (now revised to about $3 million); and
  3. mortgage tax revenue, linked to the housing market, and down about $3 million since 2007.

Combined, they add up to a negative variance of $12 million. Put another way, if each of these line items were simply reset to their pre-recession level, then the $8 million shortfall that had been projected would instead be a $4 million surplus.

New Rochelle has managed the recession’s impacts as well as or better than any comparable community, and I am proud of our record. But the City’s various fiscal actions (detailed more fully in this series of posts from late 2010) were conceived mainly as temporary steps to confront a temporary condition. Unfortunately, that temporary condition now looks like a semi-permanent state of affairs — twelve months from now, we are likely to find ourselves right back in the same place, grappling with identical or equally unsavory choices.

If this is our new normal, then it is time for New Rochelle to undertake a fundamental examination of local government’s operations and mission, one calibrated to an enduring era of limits. We can no longer automatically accept prior budgets as ideal or accurate representations of the community’s values and goals, and must instead question assumptions and past practices. Perhaps the most valuable thing the Council purchased with the unexpected health insurance savings is time — the time to undertake this sort of rigorous and in-depth analysis of service priorities and options, so that future budget choices will be grounded in a fully-considered strategic plan.

During yesterday’s meeting, the Council discussed in general terms the concept of a citizens’ panel that could work with City officials to ask and answer basic questions about New Rochelle’s service-level expectations, about the most efficient means of achieving these expectations, and about our tolerance for paying taxes or fees in support of the services we desire.

Obviously, the details of how this exercise would be structured need to be fleshed out. For now, I simply want to signal my strong support for and personal commitment to this idea. I’ll keep you posted as we proceed and, as always, welcome your feedback.