Gosh has it been 10 months since the last post? Holy Moley does time fly? The author of this blog moved out of state and tried hard to move on with their life. But in the past few weeks, they got a few emails begging them to come out of retirement. Or at least focus back on El Cerrito finances. I have agreed to do so because this November El Cerrito has a competitive election for City Council! This is a huge opportunity to add fiscally inclined people to the council. Three people are running for 2 openings. We will cover the candidates and we are creating a list of questions to ask all the candidates as we have in the past. If you have suggestions email email@example.com.
So enough of all of that! Let’s get down to the business of updating you on the El Cerrito finance situation. Because if you are watching the City Council meetings you might think all is well. The Biden Bail-Out of 3+ million last year and again this year along with an INSANE real estate market has helped the city quite a bit. No more pay-day loans (TRANS) to keep the city afloat. The budget planning documents now include much more detail on the assumptions used. There is a new Finance Director. There is an actual 17% reserve. That is all huge progress. However, problems remain.
What are the issues that remain?
- The City Bond rating continues to be BBB-. You can read my post when it dropped to that in September 2020. This low rating means borrowing is expensive or may not be able to happen. This potentially jeopardizes any Bond Measure. We expect that El Cerrito will push for a bond measure for a new library at some point. With this rating that is not possible. The rating is old so one wonders if the city has pursued getting re-evaluated at some point.
- The outlook for Real Transfer Tax may be overly optimistic. They are assuming an 18% drop-off from FY 2022. The July data provided by the county indicated that July 2022 income was 36% below July 2021. If that happens there might be a $1 million shortfall. The Auditor called out not counting too much on such an unstable source of income.
- Pension costs continue to rise with NO real plan in place to address them. The Staff continues to research a 115 Trust plan which allows them to put money aside for future pension costs but they still need the money to put aside.
- There continues to be a serious lack of transparency in the budget process. This year’s budget was passed on June 21, 2022, by a 4-1 vote. (Motoyama voted NO). Much of the public comment was about that lack of engagement on the process with the public. Councilperson Rudnick acknowledged in her comments that the process was not inclusive of the public. Councilperson Motoyama tried to get the budget continued to the next meeting but that failed by a 3-2 vote. (Rudnick voted Yes).
- The City Council continues to not effectively utilize the Financial Advisory Board (FAB). When they do make recommendations to Council they have not been listened to. For example, FAB has been recommending a budget surplus of 1 million in every proposed budget. This year’s DRAFT budget has an 812K surplus (because 812k and 1 million are the same). The budget does not include some items such as the wage and compensation study which if included would lower the surplus by 465k. Dick Patterson, The Chair of FAB, (at the time of the meeting) spoke at the Council meeting June 21, 2022 and spoke to this and other concerns FAB had about the budget. (he starts speaking at 1:44)
- Complacency has returned. The City Council engaged once the financial crisis hit the news. They made some demands for information. They have been getting monthly financial reports for the past few years. Which allowed the public to closely watch also. Now it has been decided that quarterly reports are enough. Why has the Council not demanded continued monthly reports? Quarterly is not enough to catch things, especially with the slow pace for action in the city. The public also deserves to keep a close eye on the budget given that El Cerrito still shows as #6 on the High Risk City List. (We do not know when rankings will be updated. The State Auditor did not respond to the El Cerrito March 2022 update)
We’re back and we hope you will be back also. Engage with the council. Pay attention. And stay tuned here!