Mayor Don Ness: The uncut Budgeteer interview

In the 11 months since he took office, Duluth Mayor Don Ness has quelled any fears people might have had about his age (34) and lack of executive experience by meeting head-on the myriad challenges facing the city.

It wasn’t easy and the pastor’s son who grew up in Duluth’s Central Hillside neighborhood (and delivered the Budgeteer News for a time) is far from finished. Still, he’s come a long way, especially considering the budget challenges that seemed to fall from the sky every couple months over the past year.

During the interview at City Hall Tuesday, Ness is thoughtful and deliberate in his speech. He searches for the right words and answers every question, although occasionally those answers sort of trail off, rather than coming to a nicely rounded finish. However, those are answers to questions about the future, something Ness is obviously wary of.

He’ll probably gain a few more gray hairs over the next year or two, but Ness believes much of the work done by the administration and the council this year has laid the groundwork for greater success dealing with problems the city might face in the future.

Now if only he could figure out how to fit a few more hours of sleep into his daily schedule.

Budgeteer: Coming in, you knew it wasn’t going to be easy. How about we hit a few of the bigger challenges and you give each one a grade (based on what you’ve done to address the problem, not the severity of the problem) and a short explanation of that grade.

Let’s start with retiree health care.

Ness: I’d give it a C-minus. Coming into office, the first thing we did was an assessment of the information we had to make our case for retirees contributing to the overall solution. What I found is we were not prepared to make that case. We hadn’t done the research, we couldn’t put our fingers on key documents that were necessary to make our case. So, we spent the first four months gathering that information, putting it into electronic form, preparing for the next step.

In the meantime, a small group of retirees filed a lawsuit against the city for changes that they said were implemented, that haven’t actually been implemented. That has effectively tied our hands, because now we’re stuck in this litigation that continues to be drawn out. So, this is the issue I had hoped to make much more progress on during the course of this year and to this point, we haven’t been able to accomplish our goals. A significant part of the budget difficulties we’re facing are related to increased healthcare costs, and, in particular, our retiree healthcare costs. Until we can reduce that rate of medflation and the amount of money going to retiree healthcare, we will not be able to create a sustainable budget for city government.

Budgeteer: How about Lake Superior Zoo?

I think it’s an Incomplete (grade). We have been in negotiations with the zoological society throughout the year. We are trying to resolve the personnel issues with city employees there. I think we’re getting close and it could be a very important success story for the city when we’re able to transfer the responsibility for operations to the zoological society. I think they’ll be in a better position to engage the community and create a zoo experience that people expect to have. Given our financial challenges, the city of Duluth is not in a position to do that.

Is it mostly staffing that holds it up then?

It’s just, it’s a very complicated agreement. There had been some interest in moving this forward very quickly and having it done at the beginning of the year. But we wanted to make sure that it was done responsibly, that the society would be in a position to succeed in its new role and that the city could be confident that the zoo will be successful in the future.

Budgeteer: What about city streets?

With many of the issues we have engaged in a more detailed planning process to create a new approach, (in this case) a new strategy for addressing our streets. I’m proud of the fact that we looked to the overlay program and the capping program as a way to improve a greater number of miles of streets at a lower cost.

In the coming months, we’ll be coming out with a longer term, more aggressive approach to street reconstruction which will aggressively increase the number of miles we fix on a year-to-year basis. ...

We’ve been on two tracks this entire year.

One is that we’ve been addressing a number of crises that have been placed in front of us, whether it’s the budget or the consent decree (for sewer) or the main sale or this lawsuit on retiree healthcare, immediate things that need to be addressed and I think we have been making progress on those.

The second track is trying to establish that more long-term and strategic thinking about how we do business. We’ve laid some important groundwork for some significant changes that we’ll be able to implement in the coming years. The progress in implementing some of those ideas has been slowed, because we’ve been in a state of crisis, but we’re still making some good progress in laying the groundwork for new systems and new strategic way of addressing city operations

Budgeteer: The final graded item, the poor reputation of city bureaucracy.

I think our success in the building safety office is a good solid B. I think it is a reflection of our intent in other areas of government. We started the year with a very honest assessment of where we were at. We engaged city employees in a planning process that looked at their operations, their processes, the system by which they did their day-to-day work. Then we looked for innovative ways of improving the service that they are giving to the public. There is still much more work to be done in the building safety office. Now that they have improved their internal process, we want to give them modern tools that will assist them in providing even better service. I think it’s an approach that has proved successful and we want to continue it and duplicate it in other divisions.

Budgeteer: What accomplishment or change are you most proud of?

I’m not sure if proud would be the right word, but I think the most significant accomplishment of city government this year is overcoming a $6.5 million deficit in the current fiscal year. This is a deficit that was created in large part by factors outside of our control — a reduction in state aid, increased costs of fuel, a reduction in investment income — and yet we’re now very close to balancing that budget as well as presenting a balanced budget for 2009, which overcame an $8.5 million deficit.

The third challenge was rebuilding an undesignated reserve that was down to $750,000, less than 1 percent of the General Fund budget. And, we should be able to reach our 5 percent minimum budget reserve early in 2009. (The city of Duluth has a General Fund budget of approximately $80 million a year.)

So, if you look at the combined budget recovery we’ve had to do in those three challenges, it’s in the order of over $18 million in the course of two fiscal years. We’ve actually solved all three of those problems in the course of one fiscal year. During this calendar year, we’ve overcome those budgets and have at least positioned the city to have some fiscal stability going into 2009 and beyond. Now, I don’t know what the state’s going to do to us, but at least we’ve taken care of a very serious financial crisis.

Budgeteer: On the flip side, what would you rate as your worst move?/

Within our budget process, we put forward over 120 different strategies across all of city government. We came up with those strategies in the course of 6-7 weeks. Very aggressive, because in facing a deficit in the current fiscal year, you need to implement those as soon as possible to have an effect in the same year.

I think because we were very aggressive at moving these strategies forward, they weren’t vetted as well as they should have been. And there were some ideas that were not as thoughtfully considered, either in the formation of the policy or the communication of the policy, and that led to confusion and it lead to policies being presented to the public that shouldn’t have been. The difficulty we had in explaining the police and fire charges on some very specific services was spun completely out of control and there was a tremendous amount of misperception of what that proposal was. The city — and our budget recovery process — was damaged because that was not handled as well as it should have been.

So how did it feel to make Leno? Did you see that?

I may have seen the clip, I wasn’t watching (the actual program).

Budgeteer: On the subject of the budget, was the hardest thing to cut?

Without question, the most difficult thing were the layoffs. The step of having to lay off dedicated, hard-working employees that brought great value to the community still pains me. To realize that was a step we had take this year.

Budgeteer: What would you reinstate first if the budget outlook improves?

Well, given how difficult it has been to come up with a balanced budget this year and next, the financial difficulties of the state and the health of our national economy, unfortunately, I don’t think city government will be in a position to rebuild these programs in the short term. We need to focus our energies on building collaborations and community partnerships to help fill those voids, rather than simply waiting and hoping that city government will, once again, be able to provide that service on its own.

Because, not only do we have forces potentially working against us — the financial difficulties of the state and national economies — we also continue to face significant cost drivers within city government. Again, healthcare is at the top of that list, also energy costs, many of the deferred maintenance costs in our infrastructure and our facilities are costs that, in many cases, can no longer be postponed or ignored.

So, I think we need to continue along the path of focusing core services and strengthening the infrastructure, both operationally and physical infrastructure in city government.

Budgeteer: As a former city councilor, have there been any surprises for you as mayor?

Well, it’s a completely different role. ... I think as a councilor you have a good idea of the differences in roles and responsibilities. I was surprised at how little perspective I had, as a councilor, on some of the major issues facing the city.

As a city councilor, you’re dependent on the administration to bring good information and there were a number of issues that took me by surprise coming into the office: the severity of our budget situation, where we were at on the consent decree in the sanitary sewer issue, the basic assessment of city operations.

So, I think having had the experience of being on the city council, we’ve made an effort to engage the council, present them with good information early in the process to try to encourage them to be team players and assist us in addressing these challenges. So, for example, in the past, as a councilor, the budget process had been weighted toward the end of the year. This year we’ve had a number of updates throughout the year to tell the council, our staff and the public the status of our budget, what is the scope of the challenge, what are some of the strategies — both internal and policy-wise — that were needed to address this crisis. Now, taking that approach and being very transparent has created a lot more work for city administration in kind of working through a lot of the issues in a public way that had been done more quietly within city administration in the past.

There are definitely great challenges involved with being more accessible and more transparent in addressing our challenges.

Budgeteer: How would you describe your relationship with the council?

(He lets out a small sigh.) I was hopeful that it was going to be better than it is. I had a theory that by being accessible, by going to the council meetings, by taking personal accountability for the proposals we were bringing forward, and by attempting to provide good and accurate information to the council on a consistent basis, that those actions would have translated into more of a partnership with the council. I should say that the council has had to take a lot very difficult votes, and I appreciate their leadership and I think — once we move out of this crisis — some of that work will translate better in proactive projects and issues. So, I guess I’m hopeful that the difficulties that we’ve had are a reflection of the crisis state that we’ve been in throughout this year, and that the working relationship with the council will improve next year. 

Budgeteer: How is your level of support, in your opinion? What do people say to you when you’re out in the community? On the flip side, what kind of e-mails do you get? I’ve noticed people are horribly rude in e-mail or on blog sites when they aren’t in person.

(Longish pause here.) I think there’s an appreciation of how difficult the situation is. I hope that folks understand that, we’re doing our best and we’re putting in the effort and trying to do it in the right way. But I also recognize that people are rightfully disappointed in our circumstances. They’re disappointed in the loss of services, in some of the decisions we’ve had to make, in some of the problems that seem insurmountable. And there are times when people feel a need to take out their frustration and I’m a convenient target for that. But that’s part of my role, and I would rather that frustration be taken out on me than on my professional staff or on staff that are working hard to provide quality service with a lot less resources than they had in the past. That’s the job of mayor, and I think that’s a role I’m very willing to take on.

Budgeteer: Are you more closely scrutinized by the media and the public than you expected?

I think there is a much greater level of detail in the coverage of city government than I’d anticipated or seen as city councilor. I look with envy at the county and some other large organizations in our area that have nowhere near the scrutiny that city government has.

Honestly, it has an effect on the work that we do, the amount of time and energy that needs to be dedicated to addressing misperceptions or, you know, a public controversy or disagreement with councilor or member of the public. Those are complexities to an operation that other large institutions don’t have to wrestle with. But, then again, I think it’s a sign of a healthy democracy that people keep their government accountable. And I think, in light of the state of crisis that we’ve been and the amount of attention that has been given to our operations at a pretty detailed level, that we’ve held up pretty well to that scrutiny given the broader context. ...

For example ... We’ve had this huge news cycle on bonding. I mean, bonding, it’s a normal, every year we bond for the capital equipment, improvements that are needed and the normal city operations. Yet we’ve expended an extraordinary amount of time and energy talking about that particular issue.

We had this whole big controversy and people questioning what our rates were going to be. Then, when we sold our bonds last week, our rates were just as good as the year before and better than the rates we had two years ago.

... There are professional staff whose job it is to keep an eye on the market and to understand the volatility of the market, and we are not going to put ourselves in a position to sell at a time of great volatility or with rates spiking. We have the flexibility to wait and find the appropriate time to sell and sell when it’s responsible. It’s not necessary for the policy board to be managing at a level in which you have professional staff that do their job well.

Budgeteer: So, how successful have you been at balancing the demands of being mayor with the demands of being a dad and husband?

I think we’ve been very successful at that. There’s certainly been an adjustment, um, that Laura and I and the kids have made. It’s a different role for all of us. But, you know, I make it a priority to be home for dinner as often as I can, and to keep my weekends free, in particular, my Sundays. I spend that time with my family. I basically do two things: I work and I spend time with my family.

Budgeteer: Do you sleep?

(He chuckles.) Barely. That’s probably been the one area where I haven’t put enough focus, is getting enough sleep.

You know, I’ve been pleasantly surprised how understanding folks are when I decline to go to an event on a Sunday afternoon. Or when I say I’m going to need to make this visit shorter so I can get home to have dinner with my family. People have been very gracious and understanding of that and it hasn’t been an issue at all.

Budgeteer: Looking into your mayoral crystal ball, what do you foresee in the next year or two for Duluth?

(After a few false starts) I don’t even know how to start.

Why, because our entire world is haywire so it’s impossible to make any prediction?

Yeah, I’m very concerned about the state of our national economy. I’m very concerned about the state’s budgetary challenges and what that might mean to Local Government Aid. In many ways, it’s frustrating that those factors are looming so large on the horizon when we have put in this extraordinary effort to achieve stability and a balanced city budget.

It would be very difficult to handle — if once we’ve achieved our own balanced budget — to be then handed a new multi-million dollar deficit in the form of reduced state aid.

I know for certain that the efforts we made in 2008 are going to put us in a much stronger position to deal with any future unpleasant surprises that may arise next year. Had we taken the approach of simply pushing 2008’s problems into the next year, and then had those problems compounded by a reduction of state aid and a downturn in the economy, that would have been nearly impossible to overcome.

Now, at least, because we have some stability in the factors we can control, if we have new challenges, well ...

Budgeteer: What do you see in your own political future?

As difficult as this year has been, I love this job. I enjoy being in a position to do well for the city that I love and I know that the work we are doing this year is important for the long-term health of the city.

And I also know that the decisions that I’ve had to make this year are closing more political doors than they’re opening, and yet, that’s where I want to be. My only goal in politics is to do as well as I possibly can as mayor of my hometown. Anything beyond that, I’m not going to waste the time to predict or project what might happen.

Budgeteer: Are you going to the presidential inauguration?

Probably not. I would obviously love to be part of that history having been a Obama supporter prior to the Iowa caucuses, so I’m absolutely thrilled for him and our country and I’d love to be part of that moment. (Ness was also co-chair of the Obama campaign here in Minnesota.) But we have a lot of work here in city hall that has yet to be accomplished. And, trying to navigate 4 million visitors into Washington, D.C. is not my idea of a relaxing getaway.

Budgeteer: Do you know him personally?

I got to meet him. I had a short conversation with him. I think it’s been a long time since we’ve had a president from the Midwest, and a president who understands Great Lakes issues and who understands the importance of a healthy center of the country. So, I think that bodes well for us.

If you want to know more about Mayor Ness’s background, read his campaign site at www.nessformayor.com/bio.

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