Even with a massive Federal bailout El Cerrito is in dire straits

I had been hoping my next post would be on the State Auditor Report which is due on March 16, 2021. However, I just reviewed the budget materials (start on page 110 of the packet) for the Tuesday the 16th meeting and it is very very bad.

The good news is that El Cerrito is going to receive 4.8 million dollars in a federal bailout. The prediction is that it will come half this year and half next year. And as of this time, it appears the only restriction on spending is you cannot pay down pensions. I have heard several council members intimate that this bailout was going to save us. And on some level, I suspect it will. But staff did a five-year projection. And it appears that they are recommending two million in structural cuts for next year. Remember when I posted about the City Manager’s suggestions for scorched earth cuts? The ones the Council immediately said no way to. That is the level of cuts we are talking about.

It seems to this writer that there is no way that those cuts don’t include public safety. At this time it appears that City Manager is looking to the Council to provide direction as to what level of cuts are needed. Then she is going to have to come back with suggestions. Again it looks to me like the staff and Council read the state auditor report at their closed meeting a few weeks ago because they now appear to be taking this more seriously than I have ever seen.

Even with the suggested 2 million cuts we get to 9.4% of a reserve by 25/26. The city’s financial policy is to have a 10% reserve PLUS an additional 6 million for emergency funding. So this gets part of the first part but nothing beyond it. It also says in the staff report additional revenue would still be needed beyond 2024. And with these cuts we will still need TRAN loans of around 5 million to stay afloat.

Another thing that happened that is worth noting is that El Cerrito has been (some of us would say deceitfully) keeping a 1.3 million dollar receivable on the books. Long story short it was money the state demanded back when the Redevelopment Agencies were folded. We paid it back but sued the state and they have been keeping it on the books as money we had. So at the end of last year when they say the general fund balance was just -$110,000 it was really -1.4 million. They lost the lawsuit this week and are going to write that money off. The recent audit had not included it in their report it was just city staff including it.

So the good news is that staff seem to finally be accepting reality. The bad news is that massive cuts need to be made. I would also predict some movement towards a tax increase. Because I am not sure other than the new pot dispensary where additional income is going to come from.

The next meeting is March 16th and there is suppose to be a public meeting in April. Stay tuned here for more information. I hope to post something as soon as possible after I read the state auditors report also.