Budget Update

On September 15th City Council met and discussed two items in regards to the budget. The meeting was over 4.5 hours and it is not a reasonable expectation that most people will listen to it all. I will confess I listened to 2+ hours only.

The first item was regarding the Finance Department’s monthly reports. This starts on page 121 in the packet. I give kudos to Councilperson Abelson for first pushing for this report to exist and secondly for pushing during this meeting to make the report functional and transparent. Councilperson Pardue-Okimoto also questioned this report. What is missing is is a clear explanation of what percentage of income is coming in each month as compared to past years. We know property taxes primarily come in during two specific months but we need to be closely monitoring sales tax as we can expect that to be severely impacted due to the recession. From the chart below it does seem that we are behind projections. Sales tax does come in a month later than collected and the finance director gave several confusing explanations as to whether this report was helpful or not. The utility tax also comes in as less than proposed.

One of the MOST important reports is found on page 125 of this report. You will see as currently projected we have an 8.9 million dollar amount left at the end of June 2021. However, we have 8.75 million dollars due to the TRAN loan. This is an unacceptably close margin. I will give both Council members Pardue-Okimoto and Quinto credit for both suggesting more severe cuts now. However, it seems that if a councilperson other than the Mayor suggests this nothing happens. This is frustrating to watch. As stated above we do not have accurate information on how our sales tax revenue is doing compared to last year based on the chart included it looks lower than projected. At one point will the Council and Staff act or will there have to be another crisis. If we do not have the money to pay the TRAN the city goes bankrupt. The Finance Director did say that 8.9 million did not include a 300k CARES fund expected and what seems to be an increase in the transfer tax. Again we are requesting a higher level of transparency. How close to the edge are we and at what point will the council and staff act?

In response to some questions the City Manager stated she would make further cuts if directed by three members of the council. So which three members are going to step up and demand that? There was greater feedback from the council on how the assumptions were made and if they were accurate and that they expected monthly updates. Councilperson Pardue-Okimoto brought up the idea of extending non-management furloughs beyond end of the calendar year and the Mayor stated he wanted to wait another month or two before taking action. He wants “ready solutions” if things continue to worsen. This is an action item-the budget will be on the agenda each meeting and we need to tell the Council to start making additional cuts.

There was some talk of the TRAN as a result of public comment. Some council members seem to be optimistically saying we will be TRAN free in 3 years. With an almost 9 million loan it seems to me that we would have to be cutting an additional 3 million dollars a year for the next three years on top of cutting for any revenue shortages to be even close to get rid of the TRAN loan. It looks like a bit of magical thinking to get to the places that council is saying when we are only a few hundred thousand ahead of just paying the loan off this year.

There was some dialogue on the hiring of new fire department staff members. They are saying this will cut OT costs the next few years. Councilperson Abelson pointed out that this is a short term solution as personnel costs grow over time. Staff stated there were changes in the retirement law make new hires cheaper than in the past which is why these hires were not made previously. However, the numbers that they were either looking at or talking about it the meeting were not accessible to the public so I still cannot ascertain what data is used. Please ask the council to release this data in the next packet.

The Finance Director also stated the CAFR should be out in December and he is currently predicting as a worse case scenario a deficit of 2.3 million for the year that ended June 30th.

I plead with Council and staff to make information accessible more easily and to TAKE ACTION NOW! I hope that readers of this will email their council members to ask what it will take to make cuts. Email address for council can be found here.

El Cerrito Progressives also wrote a post on the budget meeting. Check it out for their perspective.