Proposed Budget is a Mess

The El Cerrito Proposed Budget Department Preview is out and includes a proposed budget for 2021-2022 and it is a mess. (starts on page 95).

Our new budget year starts on July 1st and on May 18, 2021, they are presenting this packet that does not have sufficient information for the City Council to make a decision. Now I know the city is going to say that they are going to do more but the last page of the packet listed the next steps as these:

  1. The week of May 24th the budget will be released to Council and FAB. A little over a month before it needs approval.
  2. May 25th Special FAB meeting
  3. June 1 Council meeting and hearing
  4. June 15th Council meeting and hearing.

So my issues with this presentation are as follows.

  1. On page 97 they have the proposed budget. If this is the best the City Manager and Finance Director can do then we have a very large problem. I have looked at many other city’s budget processes and none of them look like this. Check out Albany’s two year budget. Everything is broken down by the Department (another request by the State Auditor) and there are no imaginary forecasts-just actuals and proposed. It is also easily accessible on their website and they have quarterly updates also posted.

    Meanwhile, in El Cerrito, they just subtract 2 million from the forecast for next year. We are not told if those are those structural cuts we have been promised or if they are going to use the bailout money to fill the gaps for two years and then we end up in the same mess again.
  2. Council has directed staff to start from a baseline of last year. They are not. Look at Personnel. For example: 2020-21 is $15,266,000 but he starts a forecast at 18,622,000 and then sets the budget at 17,025,000…..claims to save 1,637,00. Now based on the Finance Directors’ prior comments he might say this is adding COLAS etc. Which would be fine if it was spelled out. And then the reduction was spelled out. But it is also not savings. A savings would be an amount that is less than the prior year. 

This is a deception the City has been using for years. They forecast things to be high and then budget less and then say they are saving money. Instead of looking at mid-year 15,266,000 and saying we are budgeting 17,025,000 and that is an increase of $1,759,000. And how about explaining that increase. That is salary and benefits so what is the increase? Are COLAS back? Are benefit costs increasing? It is almost 2 million. We need to know what it means.

3. They continue to be deceptive in regards to police staffing. On page 98 they show a staffing chart that appears to show 10 positions cut from the police. Which is either going to scare residents or make them very happy. But it is not true. In January 2019 there were 54 filled positions with 40 sworn officers and the following January 2020 there were 51 filled positions and 37 sworn officers. No officer has been laid off. I verified this with Chief Keith. He also told me via email that for the next year they have 48 positions authorized with 37 sworn officers. Which is exactly the same as last year. Authorized positions mean they were in the budget not that they were on the streets. So cutting positions that were not filled does not remove officers from the beat.

4. The TRAN costs are going way up. For those of you new to this the TRAN is the payday loan the city gets every year to stay afloat. This year the financing costs are projected at 310,000. And next year he has a forecast of 550K and then budgets at 508. This is ridiculous. First off the Finance Director has been giving garbled explanations at FAB of how the TRAN does not even cost us money even though the State Auditor specifically called that out. Clearly next year the TRAN will cost more. It looks like at least 200k more. That is 4 times the library hours cost. And it costs more because we have mismanaged our city finances into a BBB- bond rating. See the chart the State Auditor created below.

5. Professional services are increased by half a million. Why? What for?

6. Dispatch services through Richmond are almost a million dollars a year. Have we looked at cheaper options? I know a few years back we were going to go into the County dispatch system which would have saved a lot of money but the Sheriff revoked the offer when we became a Sanctuary City. Are there no other options for dispatch? A quick look at our neighbor Albany and their police budget is less than 8 million while ours is over 10 million. They have 26 sworn staff and 11 support staff. So why are their policing needs so much less than ours? That is 11 fewer sworn officers. And crime is not higher in Albany with that many fewer officers.

Points to bring up at the May 18th meeting.

When is the City Council going to demand real data?

Can the city staff provide data that is true and not deceptive?

Is El Cerrito going to make structural cuts or just ride the bailout money for a bit? Is there going to be a real effort to get a community response if there are cuts?

6 thoughts on “Proposed Budget is a Mess

  1. “Personnel” in orange column would be what the City is required to pay by union contract. So that would, to me, be a baseline. Labor negotiations are ongoing but whether or not an agreement is reached is unknown at this time.

    COLAs were skipped per agreement last year. Time will tell if employees want to agree to additional pay cuts. Meanwhile Management & Confidential employees get furlough days and no COLAs; proof that it pays to be union. That’s how I see it.

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  2. Regarding the TRANs, the next one will be about $6.5 million if I recall correctly. Considerably less than the present note. Therefore, the interest cost should be lower as the principal is less. In subsequent years, as the reserve hits 10% and above, the TRAN will be history as the reserve becomes with working capital. That’s how it was explained earlier this week. What am I missing?

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    1. You are missing looking at the actual proposed budget on page 3 of the packet (budget packet I think around 100 in the council packet) that is where he put in finance costs for TRAN. and it is higher. And despite us hopefully taking out a lower tran our bond rating dropped again so costs will rise. The City Manager answers your emails so you can ask her directly about why the 200k increase. That data is not in this terrible presentation.

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      1. I bother the CM enough; she needs a break. This is a perfect question for the Finance Director. Since two City Council members met with him and the FAB a few days ago, let us see if they caught this. The figures you posted were from a rough draft. Green column doesn’t show the $2 million reduction. It’ll get sorted out on Tuesday and again at a later Council meeting.

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  3. The draft estimates revenues very conservatively and that’s smart. But I’d predict higher sales tax receipts as people are buying lots of stuff. The economy is definitely picking up. Property tax should increase as the real estate market is hot and every sale creates a new (higher) assessment. RPTT is a big winner for the City treasury as you can see. Credence is 25% sold already; Avenue 29 sales very strong. Those are new condos. Add all the other real property transactions and the City is doing quite well tax wise.

    Business license taxes ought to be higher if all rental property owners registered their businesses. Many appear to ignore that requirement. Hopefully, they get caught eventually. That takes time and luck.

    Not mentioned are the pot store taxes which will be significant. I’m not sure about NUG, but they certainly will pay taxes. Authentic El Cerrito has the agreement online and income to the City will be considerable. This assumes all the people now buying their stuff in Richmond begin shopping locally. AEC is very sophisticated and their growth predictions are probably right on.

    Longer term: hotel occupancy tax will be a large source of revenue. At least two new hotels, still planned.

    New apartments will be filled with new people and they all buy goods and services. Cerrito Vista is 86% leased last time I checked. Ground floor restaurant means more sales tax eventually. Mayfair opens in the fall.

    So not all is doom and gloom. There is a lot happening in old EC. City treasury will also benefit.

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    1. That’s a very positive outlook and I hope that all those new revenues do indeed begin to stream into the city over the next couple of years. IF (and this is a BIG if) the city takes serious steps now to get its cost structure under control, the new revenues that you mention may allow the city to avoid additional tax increases, to continue to pay off its accumulated pension deficit, and to begin to provide some of the high level of community services that our residents have never experienced in spite of already paying the highest tax rates in the state. So far the signs are not positive, with the Council and CM talking only about cutting our already-low level of services, and no discussion about permanently fixing the out-of-control cost structure that has managed to suck up every penny and more of the huge increase in revenues over the past ten years, and that will continue to do so in the future unless tackled head-on.

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