As some council members conclude their terms, it’s important to revisit the city’s past budgets and see how well the predictions held up against reality. Let’s take a community-focused look back at our financial forecasts.
FY 2021 Budget Predictions
The FY 2021 budget, detailed on Page 36, Chart 2-3, projected small surpluses for the next few years, including a $2.5 million surplus for FY 2024 and FY 2025, and a $3.8 million surplus for FY 2026.
Changes in the FY 2022 Budget
Page 35 of the FY 2022 budget outlined the FY 2021-2026 General Fund Long Term Financial Forecast Assumptions:
- No changes to service delivery.
- A goal to restore pre-2016 credit ratings by FY 2023.
At one time, the city had an AA- credit rating, which dropped to A- by the end of 2018 and currently stands at BBB. The financial outlook flipped, with deficits predicted for FY 2024, FY 2025, and FY 2026. Expenditures were initially forecasted at around $45 million per year, but current projections exceed $50 million annually.
FY 2023 Budget Predictions
Table 2-8 in the FY 2023 budget forecasted surpluses for the General Fund, predicting that the city wouldn’t reach $50 million in expenditures until FY 2027.
Community Observations and Insights
Before the passage of 2018 Measure V, the city saw continuous tax increases without corresponding service enhancements. Post-Measure V, there has been a reduction in services, including the permanent closure of the senior center despite promises that the real property transfer tax would enhance services.
During the COVID years, a new tax generated $4 million annually, alongside $6 million in ARPA funds, significant staff reductions, and service cuts. This mix temporarily prevented overspending. However, with the depletion of ARPA funds and the city nearing full staffing levels, balancing the budget has become increasingly challenging. Predictions for the 2020s indicate three surplus years during Covid and seven deficit years otherwise.
Looking at the General Fund budgets for the next two years, they are projected to be essentially even, given the assumptions that were made. This suggests deficits unless there is further degradation of infrastructure or significant cuts to services. Management might be able to defer some expenditures, leading to a major deficit a few years down the road.
The citywide budget is predicted to have a deficit of about $3.5 million for next year, with FY 2026 facing about a $1 million deficit. FY 2024 is finishing up with about a $13 million deficit citywide that no one is talking about.
The Financial Advisory Board (FAB) did not provide substantial recommendations on the budget and was not consulted on many items, raising questions about its effectiveness and the potential need for its disbandment or whether they should all resign.
Moving Forward: A Call for Meaningful Change
As the community moves forward, the critical question is whether the council will vote for the budget without making meaningful changes during their tenure. Reflecting on past budgets and their outcomes is essential for making informed decisions that will shape El Cerrito’s financial future.
Community members are calling for a closer alignment between financial planning and actual outcomes to avoid future deficits and enhance service delivery. It’s time for the leaders to address these concerns and ensure that El Cerrito’s financial health is secured for the benefit of all residents.
Influenced by concerned community member’s public statements.
El Cerrito Committee for Responsible Government (ECCRG) 