The numbers don’t work-El Cerrito Proposed Budget 20/21

I just reviewed the 419-page packet for the City Council meeting on October 6, 2020.
I have many questions because the numbers are just not matching. The document starts on page 140 of the packet. In her memo (page 141), Karen Pinkos says the following-(Bold is added by me)

“With these adjustments staff is proposing a General Fund Budget of $39.3 million in revenues and $38.7 million in expenses for FY 2020-21. This represents a $3.4 million (or 8%) reduction in revenues and $3.9 million (or 9%) reduction in expenditures over the baseline budget.”

She later says (page 142)

“With all funds combined, the proposed FY 2020-21 budget recommends total expenditures of $53,078,141 and provides funding for all City services, including Police, Fire, Recreation, Community Development, Public Works, and City Management. At this time, total revenues are projected to be $52,837,251; these funds will continue to be monitored and updated as the COVID-19 is expected to have impacts on several funds including Gas Tax, Measure J Return to Source, SB-1, Street Improvement Fund, and Measure J Paratransit. For FY 2020-21, staff is proposing a General Fund budget with revenues of $39,377,869 and expenditures amounting to $38,714,837, resulting in a surplus of $663,032.”

Later in the budget (page 182) they say

“While the City’s General Fund revenue sources are fairly diverse, there is a reliance on elastic revenue sources to provide fiscal sustainability for the City. Before the pandemic, the largest revenue source, Property Tax, comprised about 26% of total General Fund revenues. There is the potential for Proposition 8 assessment appeals under a prolonged recession scenario that may impact property tax revenues by 2% in FY 2021-22. Sales tax revenues totaled 18% of General Fund revenues before the recession. The City experienced about a 10% decline in sales tax in FY 2019-20 and is expecting an additional decline of approximately 13% in FY 2020-21. It is expected that sales tax revenues will not recover fully until FY 2023-24.”

The city took out an 8.5 million dollar loan this year to stay afloat. They desire to have a 17% reserve. They are saying sales tax revenue will be lower as will the gas tax and potentially property taxes but they are planning on ending with only a $663,032 surplus. Which if it occurred would get next year’s loan down to 8 million dollars. In City Council meetings they keep saying they will have it paid down in 3 years. At 500k a year it will take 17 years to get the loan paid off. You can’t build a reserve until you pay off the loan. So maybe 25 years to get us on track? This 600+k gives us very little wiggle room in a time of economic crisis. The idea of an 8% reduction when we are on the verge of bankruptcy is shocking. A 20% reduction seems more in line with the level of crisis we are in.

On page 183 they paint a where the numbers do not work.

“Budget Strategies To address the fiscal gap in this recessionary environment and to restore General Fund reserves to the minimum recommended reserve goal of two months (17%) of annual operating expenditures, the City is implementing budget strategies of $1.5 million in annual budget savings. These reductions are beyond the actions the City included within the preliminary FY 2020-21 budget. This action will restore General Fund reserves above zero by FY 2022-23 and to the minimum recommended reserve goal of 17% by FY 2025-26, as shown in Charts 2-5 and 2-6.”

Remember before we can build a reserve we have to totally pay off the TRAN loans. The reason we get these loans is because we have no reserves.

The information on the Fire Department was also confusing. They have said they will fill three open positions on page 233.

“For the first time in over a decade, the Fire Department will be fully staffed operationally beginning in January 2021. The Department will not rely on overtime from the three unfilled authorized “coverage” positions as in years past, resulting in approximately $400,000 savings in overtime costs. Fire Department overtime (non-OES), which has exceeded a million dollars in each of the past three years, is budgeted at $500,000 and will be contained at this level once the three vacant positions are filled.”

However, if you look at the following chart overall personnel costs are up 500k. So where is the savings? Where was the line item for OT if it was not in personnel? Are we saving money in the FD or spending more?

Regarding the police department, the only positions cut were an administrative position and the two school resource positions. Those were cut by the school district which had paid for one of them. It seems that any future cuts (based also on what the Chief said at the last meeting) are aspirational. They are waiting for retirements and then will cut positions. They are not making cuts now.

Page 242 states

“Position Listing-The total authorized positions for the Police Department includes 55 full-time positions, including 43 sworn officers. The decrease in this fiscal year reflects the elimination of the (2) School Resource Officer (SRO) positions and one (1) Management Analyst position. The department intends to hold a number of positions vacant in FY 2020-21 to achieve expenditure targets: the full-time positions are four (4) Police Officers and one (1) Senior Records Specialist, and two (2) Part-Time Community Services Officers (CSO). If other vacancies develop, these may also remain unfilled to achieve a staffing goal of 37 sworn officers.”

Once again the staff and council are not taking aggressive enough actions. Last meeting Council members Pardue-Okimoto and Quinto both pushed for more cuts but NO ACTION was taken. I beg those council members to push harder next meeting and hopefully, a third council member will have the guts to agree. This budget should not be approved without an additional 10% in cuts. The police department seems to have some low hanging fruit. The administrative staff is only committed to furloughs through the end of the calendar year so that would save 300k more if extended through the FY. We should be aiming for a surplus more in the 2 million range so we have room for emergencies and we can take a big piece out of the TRAN for next year. Because remember our bond rating dropped and that loan (if we get it) will cost the city even more than the 100+K it cost this year.

I urge readers to email in public comment and/or write the council members about this crisis.

City Clerk for public comment at the meeting budget is item 7A on the agenda

Karen Pinkos-City Manager

Greg Lyman-Mayor

Paul Fadelli Vice Mayor

Councilperson Pardue-Okimoto

Councilperson Janet Abelson

Councilperson Gabe Quinto

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