Things you should know about the budget before the next City Council meeting on November 17. 2020. The packet is found here.
1. Charges for Services (mostly Rec Dept) are now estimated to end the FY 600k in the hole. Staff has slightly woken up and decided to maybe do cuts in the third quarter though whether or not the 5 staff positions are all from Recreation has not been stated. Making cuts with half the year completed means the cuts that are made will be more severe than if the Staff and City Council had made them in the first half of the year. I am not a financial analyst but I could have told staff that the Rec Department was going to struggle this year.
2. The Transfer Tax has been saving El Cerrito. It is currently trending at 325k a month versus a projection of 200k so that is positive and that has been mitigating the damage from the Rec Department losses. We have no idea if this trend will continue into winter. It seems likely not to as most people hold sales off for a few months during this time of the year.
3. Revenue predictions continue to be unrealistic especially with the Sales Tax. The actual number received for August was 585K for September it was 556k and for October it was 554K. So what are the predictions for each month the rest of the FY? The projections are 586K a month. At a time when businesses just closed again and the winter is predicted to be horrific as far as COVID. Where is this number coming from?
4. Personnel costs this year are high. These costs are paid out twice a month and then twice a year there are three payments. However, in the projections in this packet, these higher actual costs have not been integrated. They continue to use the same lower projected number that they have not been meeting thus far this year.
At the October meeting, we were told the prediction for personnel costs for October was $2,242,000. However, the current document says the actual costs were $2,462,000. That is a $220,000 differential.
A smarter person than I set up a spreadsheet and sent it to me. He set it up using the actual numbers we have for the first three months for sales tax and personnel costs. We used 400k a month for Rec services based on the last two months. We have been unable to get historical data as of this date so we are doing projections based on the 4 ACTUAL months of this year’s data. What we found was horrifying. With those numbers, we end the year we would have a surplus between 6-7 million dollars. This sounds great until you realize that the City needs 8.5 million to pay off the TRAN loan. The difference between the 6 and 7 million dollars is whether or not the Transfer Tax stays trending high or not. But based on these actual numbers we project that the city will end up 1-2 million dollars short of what is need to pay off the TRAN. This equals bankruptcy.
Some questions to ask the council and staff are:
1. Why are the projections not based on the actual numbers for the FY thus far?
2. Why do we have a finance director that cannot make projections that accurately reflect current market conditions?
3. Why did no one predict that the Rec Department would end with a deficit sooner given the realities of this year?
4. If there are 5 projected layoffs but not until the third quarter how much will that save the city? What Departments are the cuts going to be in-are they all Rec Department or are other departments involved. If layoffs occur on April 1 and the average total compensation is $200,000 per employee it would be a $1 million savings for an entire fiscal year but only $250,000 for the quarter of the year. This is assuming that these are higher salaried people laid off. The reality is they are probably proposing more cuts to the lowest-paid people. Regardless we need to have a number attached to these possible savings.
5. Is this yet a crisis enough for the council to recommend cuts?
6. Are these small proposed cuts enough to balance this precarious budget?
7. Why are personnel costs more than projected? When are COLA raises given? Because if it is January 1st that needs to be addressed ASAP. When are furloughs going to be extended for the full fiscal year and not just through the end of the calendar year which is quickly ending?
The next meeting is Tuesday, November. Send in public comment. To send comments send an email to email@example.com budget is item 7A on the agenda. It is helpful that if you have comments you send it in as public comment because it continues to create a record of citizen concerns that an email to your councilperson does not create. I encourage people to do both. The state auditor is looking at everything. We are creating a paper trail for them. They have currently started the city audit though it may be months before we hear anything from them. We are also still waiting for the City audit to become official in January.
Here are the other emails if you want to copy council members on your public comment or say something additional to them.
Karen Pinkos-City Manager firstname.lastname@example.org
Greg Lyman-Mayor email@example.com
Paul Fadelli Vice Mayor firstname.lastname@example.org
Councilperson Pardue-Okimoto email@example.com
Councilperson Janet Abelson firstname.lastname@example.org
Councilperson Gabe Quinto email@example.com
Editing comments. Post was edited 11/14/2020 to clarify that the trend for 2020 Transfer tax was 325K a month not $375 a month. I clarified that it was not explicitly stated that the staff positions cuts would be all from Rec Department. We also do not know explicitly if the cuts proposed are for the entire 600K estimated hole in the budget due to Rec Department.