The City Staff continues to “monitor the deficit” as our revenue projections are way off.

The packet is out for the meeting on October 20, 2020. It is a shorter agenda with the financial reporting agenda item 7-A. The information for this item in the packet starts at page 42.

A quote from the section on Revenues. Bold is mine.

“The expectations for Charges for Services is  based on historical first quarter collections during 2017-2019 that have ranged from $1.3to $1.5million. The expectation for the current period was tied to the lower end of that scale due to the Covid-19 pandemic. Even with this lowered expectation it appears that revenues are $624,000 under budget at this point in time.”

Remember two posts ago when I said that the end of the year projection was a surplus of just $663,032. So no action here and we end with zero surplus. And surplus is a misleading word since we have an 8.5 million loan that any “surplus” would be used to pay off. The initial reports from the un-audited budget from 19/20 are that we ended that year with a 2.3 million deficit.

The summary quote states-bold is mine

“The Amended Budget anticipates a General Fund surplus of $662,000. The expenditure side of the budget is relatively certain, but there is uncertainty surrounding revenues, especially Charges for Services which is predominantly Recreation Department Revenues. The projected $2.3 million General Fund deficit from the last fiscal year will be partially mitigated by the projected surplus. It must be noted that one time revenues, government grants, or unforeseen increases in revenues will help reduce the deficit further. Staff will continue to monitor the deficit and report to City Council through the monthly reports.”

So even with a reports saying projections are off the city staff are insisting that all is well. We may still see some “unforeseen increase in revenue.”

How about we recognize we are

  1. Almost bankrupt
  2. In a recession
  3. Making projections based on years that are not 2020 with all of its complications.

If you look at the budget figures provided in the packet it seems that the projections for revenue are higher than 19/20. I would like to know why that is? How is the Finance Director making these projections and can we trust them given the history of El Cerrito financial projections?

So actions-please again write the council and send it an email for comment to the City Clerk for public comment at the meeting cityclerk@ci.el-cerrito.ca.us-the budget is item 7A on the agenda

Karen Pinkos-City Manager kpinkos@ci.el-cerrito.ca.us

Greg Lyman-Mayor glyman@ci.el-cerrito.ca.us

Paul Fadelli Vice Mayor pfadelli@ci.el-cerrito.ca.us

Councilperson Pardue-Okimoto rpardueokimoto@ci.el-cerrito.ca.us

Councilperson Janet Abelson jabelson@ci.el-cerrito.ca.us

Councilperson Gabe Quinto gquinto@ci.el-cerrito.ca.us

Suggested comments

  1. When will the council take action and make cuts commensurate with the seriousness of the situation?
  2. Please require the Finance Director to report on how he is making revenue assumptions with all the assumptions he is using listed.
  3. When does the council intend to deal with rising Cal-Pers costs and how?
  4. Please require that the Finance Director follow up on the questions the Mayor asked last time about financing charges being down so substantially.
  5. Please have council members state on the record why they are refusing to ask for more cuts (exception is Councilperson Pardue-Okimoto who has been asking)
  6. Please state clearly any revenue that is expected but has not been reported on. It seems that we keep hearing about one-time revenue sources but have not seen any specifics.

More of the same inaction from El Cerrito City Council on the budget-When is enough enough?

The El Cerrito City Council continues to refuse to take real action on the budget.

I will start this post by stating that Councilperson Rochelle Pardue-Okimoto was a superstar during the meeting and she would have taken action. I will also be honest and say that I did not watch the entire meeting. I did watch every section where I share quotes here. I tried to make quotes as close to verbatim as possible but that was not always possible and some statements were not included. I do not believe that changes the context but encourage you to go to the the video link and verify for yourselves. I have indicated the time of the quotes so that people can watch for themselves. 

I am going to outline several big issues.

  1. Minimization of the bond rating drop.

At 3:22 Karen minimized the bond drop because S&P stated the outlook was stable from negative. She stated that the TRAN rating is different and acted as if this rating would not affect our interest costs for the next TRAN. This is our credit rating. Karen said that S&P had been monitoring council meetings and she stated because the council made cuts we got a stable outlook. Then Karen said if the city borrowed more money it would cost the city more money. So, it is confusing that she says the TRAN rating is different because this does mean we will pay more interest. It was stated that it will impact any financing for any capital improvements.

2. Why is the city ignoring the massively rising costs of Cal-Pers?

You will see in the above chart Cal-Pers costs are broken out into normal cost which is the current costs and the unfunded liability, which is what is unfunded from years the city did not pay into the system (that is a long story and something many cities chose to do)

In the meeting at 2:33, Karen says that the projected amount of the unfunded liabilities is 4.8 million. 

At 2:45 in the video Councilperson, Pardue-Okimoto brought up that the city’s liability increased from $61.8 million to $88.2 million per year. That represents approximately $2 million per year in additional costs. She reminded people that it is something that we should be preparing for now.

Karen responded with a statement about advocating with the state and monitoring costs but nothing about how this giant increase in costs would be paid for.  Remember it has taken us almost a year to get to the current 4 million in cuts done during this process.

3. Mark Rasiah’s incompetence. 

At 3:28 Mayor Lyman started questioning the Finance Director about financing costs. The Mayor was pointing out that the documents showed a savings of almost a million dollars in that line item and asked the Finance Director several times in several different ways if it was a real savings. Mark insisted that there was a real savings but that some of it was a cut in professional services costs. It is a very painful piece to listen to. The Mayor pointed out that if there was a 1 million dollar savings it should have been heralded and it should have also shown up in the bottom line neither of which happened. 

4. Councilperson Rochelle Pardue-Okimoto was a superstar

3:48 Councilperson Rochelle Pardue-Okimoto starts talking-this is not her complete statement but most highlights.

I do not think we are building our reserves as quickly as possible. It is up to the city council to make the hard decisions.

She brought up police department positions-bringing up the two positions were eliminated by the school board but not the council and the other position was already vacant

We stated we should show our values by our funding. She wants to protect the library and suggested putting it under the police department budget. She asked what will be the trigger for change? What if retirements do not happen? 

Another thing I brought up but did not get much support for is looking at our salaries…. Clearly shooting for the median is not working for us. I couldn’t help but think who hires and pays our consultants? Of course, the consultants are not going to say to the people who hire us and pay us, we think you should cut your own salaries. I personally do not like how we are comparing our salaries to big cities. I think we should compare our salaries to small cities. If we do not cut salaries, then we need to extend the furloughs in order to stay afloat. We need to do something now, and I do not think this budget does that.

We need to budget for disaster. We need to prepare for that now. We need to prepare today for the disaster that can happen tomorrow. 

The weight of the Financial Advisory Board does not carry the weight with me anymore because they approved the previous budget that helped us land in this position. I was listening in at FAB and someone asked the city manager why the city is waiting until January to do these layoffs and the city manager replied because the city council thought that would be best. I remember thinking I don’t remember being asked about that. It is all semantics. They present us with something and we vote YES and then it comes back that it was our decision. Where does it really come from? 

3:55 If I had to make these cuts, I would have made them a lot sooner. At the end of the day, the residents are looking to the city council to make these cuts. I depended on the advice of the FAB in the past at the end of the day it is us that the residents expect to make these decisions. I don’t want to look back on this and have more regrets. I will be voting NO on this budget.

#5 More of the same from other council members

Councilperson Quinto keeps saying he was deceived and that big austerity cuts need to happen but says he will vote yes on the budget. Councilperson Paul Fadelli says let’s pass this to show we are doing something (4:03). Let’s pass the buck to the state auditor. 

Councilperson Quinto at 3:57

 I am going to support this budget. It changes every day and will continue to do so. We need to look at it monthly and we will have to make more cuts and it is all about austerity. The independent auditor was telling the truth. We need checks and balances. We have not been getting this for the last 15 years, we have had the same progressive council that agrees on everything. We cannot do that anymore. We have a city manager now that tells it like it is and doesn’t give a rosy picture. We’ve done three taxes since I’ve been an elected official in six years. We are still spending, spending, spending, and we need more cuts. I look forward to the new council that will help me make these cuts. This is going to be a painful next three years. We just did the wrong thing, and it is nobody’s fault. What I learned is to not listen to your colleagues. They have their own agendas and are lying.

Councilperson Quinto attacks his colleagues for lying to him and stated that the newspapers were right years ago when they said the city was not prepared but he chose not to believe them.

It is very confusing to this writer that he talks about the need to not have unanimous votes and how he wants a NEW council to help him make cuts since this council won’t do it. But he is going to vote for the terrible budget anyway instead of showing the courage of Councilperson Pardue-Okimoto

Councilperson Abelson moved at 4:16 to pass the budget and Councilperson Quinto seconded it and it was passed 4-1 with Councilperson Pardue-Okimoto being the one no vote. 

The numbers don’t work-El Cerrito Proposed Budget 20/21

I just reviewed the 419-page packet for the City Council meeting on October 6, 2020.
I have many questions because the numbers are just not matching. The document starts on page 140 of the packet. In her memo (page 141), Karen Pinkos says the following-(Bold is added by me)

“With these adjustments staff is proposing a General Fund Budget of $39.3 million in revenues and $38.7 million in expenses for FY 2020-21. This represents a $3.4 million (or 8%) reduction in revenues and $3.9 million (or 9%) reduction in expenditures over the baseline budget.”

She later says (page 142)

“With all funds combined, the proposed FY 2020-21 budget recommends total expenditures of $53,078,141 and provides funding for all City services, including Police, Fire, Recreation, Community Development, Public Works, and City Management. At this time, total revenues are projected to be $52,837,251; these funds will continue to be monitored and updated as the COVID-19 is expected to have impacts on several funds including Gas Tax, Measure J Return to Source, SB-1, Street Improvement Fund, and Measure J Paratransit. For FY 2020-21, staff is proposing a General Fund budget with revenues of $39,377,869 and expenditures amounting to $38,714,837, resulting in a surplus of $663,032.”

Later in the budget (page 182) they say

“While the City’s General Fund revenue sources are fairly diverse, there is a reliance on elastic revenue sources to provide fiscal sustainability for the City. Before the pandemic, the largest revenue source, Property Tax, comprised about 26% of total General Fund revenues. There is the potential for Proposition 8 assessment appeals under a prolonged recession scenario that may impact property tax revenues by 2% in FY 2021-22. Sales tax revenues totaled 18% of General Fund revenues before the recession. The City experienced about a 10% decline in sales tax in FY 2019-20 and is expecting an additional decline of approximately 13% in FY 2020-21. It is expected that sales tax revenues will not recover fully until FY 2023-24.”

The city took out an 8.5 million dollar loan this year to stay afloat. They desire to have a 17% reserve. They are saying sales tax revenue will be lower as will the gas tax and potentially property taxes but they are planning on ending with only a $663,032 surplus. Which if it occurred would get next year’s loan down to 8 million dollars. In City Council meetings they keep saying they will have it paid down in 3 years. At 500k a year it will take 17 years to get the loan paid off. You can’t build a reserve until you pay off the loan. So maybe 25 years to get us on track? This 600+k gives us very little wiggle room in a time of economic crisis. The idea of an 8% reduction when we are on the verge of bankruptcy is shocking. A 20% reduction seems more in line with the level of crisis we are in.

On page 183 they paint a where the numbers do not work.

“Budget Strategies To address the fiscal gap in this recessionary environment and to restore General Fund reserves to the minimum recommended reserve goal of two months (17%) of annual operating expenditures, the City is implementing budget strategies of $1.5 million in annual budget savings. These reductions are beyond the actions the City included within the preliminary FY 2020-21 budget. This action will restore General Fund reserves above zero by FY 2022-23 and to the minimum recommended reserve goal of 17% by FY 2025-26, as shown in Charts 2-5 and 2-6.”

Remember before we can build a reserve we have to totally pay off the TRAN loans. The reason we get these loans is because we have no reserves.

The information on the Fire Department was also confusing. They have said they will fill three open positions on page 233.

“For the first time in over a decade, the Fire Department will be fully staffed operationally beginning in January 2021. The Department will not rely on overtime from the three unfilled authorized “coverage” positions as in years past, resulting in approximately $400,000 savings in overtime costs. Fire Department overtime (non-OES), which has exceeded a million dollars in each of the past three years, is budgeted at $500,000 and will be contained at this level once the three vacant positions are filled.”

However, if you look at the following chart overall personnel costs are up 500k. So where is the savings? Where was the line item for OT if it was not in personnel? Are we saving money in the FD or spending more?


Regarding the police department, the only positions cut were an administrative position and the two school resource positions. Those were cut by the school district which had paid for one of them. It seems that any future cuts (based also on what the Chief said at the last meeting) are aspirational. They are waiting for retirements and then will cut positions. They are not making cuts now.

Page 242 states

“Position Listing-The total authorized positions for the Police Department includes 55 full-time positions, including 43 sworn officers. The decrease in this fiscal year reflects the elimination of the (2) School Resource Officer (SRO) positions and one (1) Management Analyst position. The department intends to hold a number of positions vacant in FY 2020-21 to achieve expenditure targets: the full-time positions are four (4) Police Officers and one (1) Senior Records Specialist, and two (2) Part-Time Community Services Officers (CSO). If other vacancies develop, these may also remain unfilled to achieve a staffing goal of 37 sworn officers.”

Once again the staff and council are not taking aggressive enough actions. Last meeting Council members Pardue-Okimoto and Quinto both pushed for more cuts but NO ACTION was taken. I beg those council members to push harder next meeting and hopefully, a third council member will have the guts to agree. This budget should not be approved without an additional 10% in cuts. The police department seems to have some low hanging fruit. The administrative staff is only committed to furloughs through the end of the calendar year so that would save 300k more if extended through the FY. We should be aiming for a surplus more in the 2 million range so we have room for emergencies and we can take a big piece out of the TRAN for next year. Because remember our bond rating dropped and that loan (if we get it) will cost the city even more than the 100+K it cost this year.

I urge readers to email in public comment and/or write the council members about this crisis.

City Clerk for public comment at the meeting cityclerk@ci.el-cerrito.ca.us-the budget is item 7A on the agenda

Karen Pinkos-City Manager kpinkos@ci.el-cerrito.ca.us

Greg Lyman-Mayor glyman@ci.el-cerrito.ca.us

Paul Fadelli Vice Mayor pfadelli@ci.el-cerrito.ca.us

Councilperson Pardue-Okimoto rpardueokimoto@ci.el-cerrito.ca.us

Councilperson Janet Abelson jabelson@ci.el-cerrito.ca.us

Councilperson Gabe Quinto gquinto@ci.el-cerrito.ca.us

Tessa Rudnick’s campaign finance report

I did a prior post on the other candidates campaign finance reports found here. Tessa Rudnick’s report got filed late so that it is the reason it is getting it’s own post. I will say she did reach out to the author and acknowledge that she had missed the deadline and she took responsibility and got it in. I personally appreciate public officials (or those trying to be public officials acknowledging mistakes. How refreshing! Her report is found here for those that want to dig in.

So what stands out? She has raised quite a bit of money-just under $12k. To this date she has spent just under 5k. She has donated just under 2k to her own campaign. Her main expenses seem to be a campaign consultant and a polling place. She is not showing donations from her campaign to others except the Democratic Party of Contra Costa County. Her donations appear to come from individuals with a fair amount of family members also contributing.

El Cerrito City Council Candidate Financial Reports Released

The first filing date for campaign contribution reports was September 24, 2020. Items had to be postmarked by that date so there may still be some additions. Two candidates have not created Campaign Committees so therefore do not need to file.

A few things stand out

  1. The former City Manager Scott Hanin, a person many believe was fundamental to the current financial crisis, donated to Matt Burnham.
  2. Lisa Motoyama is heavily supported by past candidate Margaret Kavanaugh-Lynch and current mayor Greg Lyman.
  3. Paul Fadelli has many donations from local politicians. He has loaned over 23k to his campaign and has over $16,000 cash on hand so one wonders why the loans. Compared to his last filing this time he has not time accepted money from SEIU or the unions for the Fire and Police Departments.

We will continue to check to see if Jennifer Greel and Tessa Rudnick file for this period.

Matt Burnham reports $1,650 contributed to his campaign. Notable contributions include Former City Manager Scott Hanin who gave $100. Leslie Reckler, candidate for School Board, gave $100. Jenny Keith, whom we suspect is married to Police Chief Paul Keith, gave $500. He reports not spending any money yet.

Jennifer Greel nothing filed yet

Lisa Motoyama She has received $4,874.14 in contributions. Notable contributions include $600 from Greg Lyman for City Council 2016. $1,097.14 from Margaret Kavanaugh-Lynch for City Council 2020. $250 from former El Cerrito City Councilperson and current attorney Letitia Moore. She has spent $3,456.70 + 804.90 in outstanding bills for a total of 4311.60. Payments were made to El Cerrito for $440 for the filing fees. $54 to Democratic Party of Contra Costa County for what is listed as civic donations. $420.94 to the Democratic Party of Contra Costa County for literature. There were also payments for graphics and website.

Paul Fadelli He has by far the largest amount of contributions with $8944 this reporting period and $11,470 the calendar year. In the calendar year column it also shows a $23,000 loan. When that is looked at more it is all money he loaned to his campaign over the last 4 years. He has spent $2,417.89 this reporting period and $4,363.53 YTD.

He received $100 From Gabriel Quinto for City Council 2018, $150 from Janet Abelson for City Council 2018, $200 from former councilperson Letitia Moore, $100 directly from Councilperson Pardue-Okimoto, and $100 from former Councilperson Sandi Potter

Paul Fadelli’s expenditures include donations to other candidates like Eric Salwell and some of the same Democratic donations that Lisa Motoyama made. When you look back at his last filing he has not this time accepted money from SEIU or the unions for the Fire and Police Departments.

Isis has had $1125 of contributions all but $100 of which were made by her. Her expenditures were $814 and most seem related to her website.

Arthur Yee No Campaign Committee Formed so no filing was needed

William Ktsanes No Campaign Committee Formed so no filing was needed

Tessa Rudnick nothing filed yet. Update September 30th I was informed by the candidate that they made a mistake with the filing date and they will file today. I will update as soon as the information is available.

City Council-Will You Act Now? Bond ratings drop again

On September 24th El Cerrito’s bond ratings once again dropped. The Sales Tax Revenue bond rating dropped to BBB+ and the CA COP rating dropped to a BBB-. Google what BBB- means and you see that it is one step above junk bond.

Yesterday I posted a blog post about how at the last meeting there was an unwillingness to act on further cuts even though they were suggested by Councilperson Pardue-Okimoto at least twice during the meeting.

We just got an 8.5 million dollar TRAN loan a few months ago. Our normal bank did not take the loan so it went to the open market and ended up costing the city considerably more in interest. The reason that happened is because of a prior bond rating drop in November 2019 from A to BBB. With this new drop, it appears that the risk of not getting a TRAN loan for next year has also dropped. At a minimum, the cost of getting the loan has risen again.

The article on the drop to BBB- states

El Cerrito, CA COP Rating Lowered To ‘BBB-‘ On Negative General Fund Reserves And Reduced Expenditure Flexibility

SAN FRANCISCO (S&P Global Ratings) Sept. 24, 2020–S&P Global Ratings lowered its underlying rating (SPUR) to ‘BBB-‘ from ‘BBB’ on El Cerrito, Calif.’s certificates of participation (COPs) outstanding. The outlook is stable. 

“The lowered rating reflects our view of the weaker economic and financial circumstances under which the city is attempting to stabilize its budget and restore reserves,” said S&P Global Ratings credit analyst Tim Tung.

The COVID-19 pandemic and related recessionary pressures have further strained the city’s revenues, yielding an operating deficit for fiscal 2020 and pushing available fund balance further into negative levels based on unaudited actual results for fiscal 2020 provided by management. The city’s fiscal 2019 audit marks the third consecutive year in which the audit was transmitted with a “going concern” opinion by the auditor, which reflects the auditor’s concern about the city’s ability to meet required operating obligations, and we anticipate that this trend will continue for a fourth year when the fiscal 2020 audit is produced. The outlook is stable based on our view that the city’s corrective actions during the past year are adequate to at least maintain credit quality at the current rating level.

El Cerrito’s credit quality is currently driven by the city’s negative general fund reserve position. Although the city has been in the process of realigning the budget with a focus on restoring reserves, it now faces recessionary pressures that present diminished growth prospects as compared to last year, when the economy was in the late stages of an economic growth cycle. Also, based on unaudited actual results for fiscal 2020, we understand that the general fund produced a negative $2.3 million net result, which worsens the existing negative available fund balance and further sets the city back from its targeted reserve goals. 

While we acknowledge that the city has taken aggressive action during the past year to set in motion plans to achieve structural balance and restore reserves–including a rapid adjustment once the COVID-19 pandemic and economic recession injected additional complications–the expenditure cuts that the city has made and will be making further reduce its expenditure flexibility if needed in the future,” Mr. Tung added. “Given the expenditure reductions already made, any substantial additional expenditure reductions will likely require layoffs, which would likely be politically challenging. Finally, while the adjusted trajectory to restoring reserves still achieves the city’s stated goals, that trajectory is now starting from a lower point, is on a steeper incline than before, and reaches the goal at a later projected date.

Despite these challenges, we still view the city’s liquidity as very strong. We also note that the city’s otherwise robust tax base and close proximity to the San Francisco economy is limiting the downside effects of its current fiscal situation.”

The article dropping the sales tax bond rating to BBB+ states

El Cerrito, CA Sales Tax Revenue Bond Rating Lowered To ‘BBB+’ On Weakened Obligor Creditworthiness

SAN FRANCISCO (S&P Global Ratings) Sept. 24, 2020–S&P Global Ratings lowered its long-term rating to ‘BBB+’ from ‘A-‘ on El Cerrito Public Financing Authority, Calif.’s sales tax revenue bonds, issued on behalf of the City of El Cerrito. The outlook is stable.

“The downgrade reflects our view of the obligor’s creditworthiness weakening,” said S&P Global Ratings credit analyst Tim Tung. For more information on our view of the city’s overall creditworthiness, see our article published Sept. 24, 2020, on RatingsDirect.

The city benefits from a strong and stable local economy, as evidenced by continued assessed value growth, and its location within the San Francisco-Oakland-Hayward, Calif., metropolitan statistical area. However, the city’s general fund has experienced financial challenges during recent years resulting in weakening reserve levels, and leading to weaker creditworthiness, in our view, which limits the rating on these sales tax bonds.

Although sales tax revenue declined sharply in the fourth quarter of fiscal 2020 as the COVID-19 pandemic and related shelter-in-place activities constrained economic activity, we have observed some rebound in recent months although not to prerecession levels. While pledged revenue has experienced some volatility in recent years, coverage has remained strong. We anticipate at least stable performance in the near term, supported by an established sales tax base.“

So is another bond rating enough to act? One suggestion in the meeting was low hanging fruit. The non-management (non-public safety) staff are only furloughed through the end of the calendar year not the fiscal year. That is something that can be addressed quickly even if the benefits do not come into play until Jan 1st. It should have been already done.

The Public Safety budget is 50% of the budget and needs further evaluation. We can’t cut fire safety for obvious reasons so it is time to look at the ECPD. Chief Keith has previously stated that they are responding to fewer calls. He also stated that burglaries are down most likely due to so many more people being home. If you look at the weekly crime reports there are more and more days with no calls at all. Whether or not you support any change in police funding for racial and social justice reasons it is certainly worth looking at whether or not the largest piece of the pie is taking its fair share of the cuts. El Cerrito Progressives has reported 

The ECPD will now take  31.2% of our city budget, and the proposed “restructuring” will take place over three years and still not address our concerns and demands to reimagine policing. , As Chief Keith explained, the savings they hoped (his word) would affect the ECPD budget were based on attrition, in other words, if an officer decides to leave the agency or retire the savings would kick in. These are aspirational reductions, and certainly do not affect the budget in a real way or address the concerns of so many residents. ”

The City Council and staff are continuing to move very slowly and not make significant enough cuts. As I reported in the last post we are projected to be only a few hundred thousand above what we need to pay the TRAN loan in June 2021. There is no way we move towards reducing the TRAN when we are still at risk of not being able to pay it at all. We ended FY 19/20 with an estimated 2.3 million dollar deficit because Council and staff were so slow to respond. El Cerrito was warned they were in trouble. Their own auditor brought up concerns in November of 2018 that they disregarded. Then they were told early in the 2nd quarter of FY 19/20 that the State Auditor (October 2019) considered the city at high risk of bankruptcy but action was delayed for months until the problem was compounded by the COVID 19 crisis.

We have been asking the City to act since the State Auditors report was issued. We beg them to act now.

Budget Update

On September 15th City Council met and discussed two items in regards to the budget. The meeting was over 4.5 hours and it is not a reasonable expectation that most people will listen to it all. I will confess I listened to 2+ hours only.

The first item was regarding the Finance Department’s monthly reports. This starts on page 121 in the packet. I give kudos to Councilperson Abelson for first pushing for this report to exist and secondly for pushing during this meeting to make the report functional and transparent. Councilperson Pardue-Okimoto also questioned this report. What is missing is is a clear explanation of what percentage of income is coming in each month as compared to past years. We know property taxes primarily come in during two specific months but we need to be closely monitoring sales tax as we can expect that to be severely impacted due to the recession. From the chart below it does seem that we are behind projections. Sales tax does come in a month later than collected and the finance director gave several confusing explanations as to whether this report was helpful or not. The utility tax also comes in as less than proposed.

One of the MOST important reports is found on page 125 of this report. You will see as currently projected we have an 8.9 million dollar amount left at the end of June 2021. However, we have 8.75 million dollars due to the TRAN loan. This is an unacceptably close margin. I will give both Council members Pardue-Okimoto and Quinto credit for both suggesting more severe cuts now. However, it seems that if a councilperson other than the Mayor suggests this nothing happens. This is frustrating to watch. As stated above we do not have accurate information on how our sales tax revenue is doing compared to last year based on the chart included it looks lower than projected. At one point will the Council and Staff act or will there have to be another crisis. If we do not have the money to pay the TRAN the city goes bankrupt. The Finance Director did say that 8.9 million did not include a 300k CARES fund expected and what seems to be an increase in the transfer tax. Again we are requesting a higher level of transparency. How close to the edge are we and at what point will the council and staff act?

In response to some questions the City Manager stated she would make further cuts if directed by three members of the council. So which three members are going to step up and demand that? There was greater feedback from the council on how the assumptions were made and if they were accurate and that they expected monthly updates. Councilperson Pardue-Okimoto brought up the idea of extending non-management furloughs beyond end of the calendar year and the Mayor stated he wanted to wait another month or two before taking action. He wants “ready solutions” if things continue to worsen. This is an action item-the budget will be on the agenda each meeting and we need to tell the Council to start making additional cuts.

There was some talk of the TRAN as a result of public comment. Some council members seem to be optimistically saying we will be TRAN free in 3 years. With an almost 9 million loan it seems to me that we would have to be cutting an additional 3 million dollars a year for the next three years on top of cutting for any revenue shortages to be even close to get rid of the TRAN loan. It looks like a bit of magical thinking to get to the places that council is saying when we are only a few hundred thousand ahead of just paying the loan off this year.

There was some dialogue on the hiring of new fire department staff members. They are saying this will cut OT costs the next few years. Councilperson Abelson pointed out that this is a short term solution as personnel costs grow over time. Staff stated there were changes in the retirement law make new hires cheaper than in the past which is why these hires were not made previously. However, the numbers that they were either looking at or talking about it the meeting were not accessible to the public so I still cannot ascertain what data is used. Please ask the council to release this data in the next packet.

The Finance Director also stated the CAFR should be out in December and he is currently predicting as a worse case scenario a deficit of 2.3 million for the year that ended June 30th.

I plead with Council and staff to make information accessible more easily and to TAKE ACTION NOW! I hope that readers of this will email their council members to ask what it will take to make cuts. Email address for council can be found here.

El Cerrito Progressives also wrote a post on the budget meeting. Check it out for their perspective.

New Proposed Budget Book is out

The City Council has its next meeting on September 15, 2020, at 7 pm. Here is the link to the e-packet-the budget information starts on page 121.

This is a lot of information to digest. The City continues to not disseminate this information in a manner that is accessible to a resident that does not have an accounting degree.

A few things called out to me-The figure below is the operating expenses. To me, it doesn’t look like substantial cuts have been made. There are increases in supplies and a large increase in professional services. We have spent months hearing about cuts that are proposed but I am not seeing them below.

From the proposed 20/21 budget book

From the 16/17-18/19 budget book

If we look at these two charts we see that we are being told the Police are taking some big cuts but the percentage-wise that is not changing and the percentage of the budget the police is has increased. It also shows the Fire Department budget as a percentage of the budget has increased dramatically. We are watching our state burn so We all want an adequately funded Fire Department but one of the issues raised by the State Auditor was whether El Cerrito could afford to keep their fire department levels. I think it would help if the city could be more transparent as to why the percentage has risen so much. Is it the cost of living in a state filled with fires or are there ways to make strategic cuts? Data is the only way to know. Perhaps El Cerrito needs to look at other sources of funding for the fire department. OES grants for disaster preparedness would be a great start.
Many recommendations have been discussed at the last few meetings but the lack of specificity still is alarming. What are the changes to the Fire Department and Police Department specifically? What administrative positions have been cut. We need more details on the 1.5 million in proposed cuts that they have been discussing in the last few meetings.

Please keep sending in your comments to the city clerk and or the council members. A budget has not yet been adopted and we need to continue to push for transparency and accountability.

Contra Costa Measure X

There are other things on the ballot El Cerrito residents need to pay attention to. Contra Costa County is trying to pass a .5% sales tax increase. El Cerrito currently has a sales tax of 9.75% so this would make our city sales tax 10.25% at a time when our economic development is very poor and our businesses are suffering. In general, sales taxes are considered regressive because they impact lower-income families at a much more substantial rate than higher-income families.

This sales tax is not earmarked and will used to increase the general fund. So while I have heard proponents of this tax claim it will increase services for the unhoused and for mental health services there is no evidence that will happen. We have just seen the County Supervisors approve 25 new Sheriff’s officer position and money to improve the Martinez jail. In a time of a de-fund, the police movement it seems a different solution might be to use some of that money to fund social workers to deal with the mental health issues that the Sheriff’s officers are not trained to deal with. in the Mercury Times article linked to below Supervisors were claiming they had to fund these positions to improve mental health conditions. Some of the initial funding comes from federal funds but after the first six months, the county taxpayers will pay for those positions. The one mental health position is at a cost of almost $300,000.

We are in a very tough economic time right now and the County will also need more financial resources. The question to ask yourself is that is a sales tax the best way to fund the county and do you trust the county to use additional monies for the issues/services that you deem most important?

References

25 new Contra Costa Sheriff’s Office jobs OK’d over opposition-Mecury Times-August 12, 2020

Measure X Text

Contra Costa County Recommended Budget 20/21

Tessa Rudnick answers the budget questions

As I wrote recently ECCFRG asked all of the candidates a series of questions in regards to the budget crisis. Tessa Rudnick sent in her responses Tuesday. We did allow each candidate a brief bio space also. The words below are all the candidate’s except for when I repeat the question. We thank Tessa Runnick for taking the time to answer our questions.

Brief Bio

I care about smart government and sustainable communities. I’m a Public Sector Technologist with more than a decade of experience working as a Project Manager and Business Analyst, implementing software solutions for local governments. I have worked for the City of Berkeley and the City and County of San Francisco. I’m a proud Bay Area native and hold a Masters degree in Public Administration. I’m also a mother with a nearly 5-year-old daughter and a 13-year-old stepson. To me, smart government means being responsive and agile to support the needs of our community. I believe in El Cerrito’s future, which is why I am ready and willing to make the tough decisions needed to get us there.

1. What is your analysis of how the city became insolvent and what changes will you make to ensure it does not happen again?

It’s a case of, “The road to hell is paved with good intentions.” During the recovery period from the 2008 recession, El Cerrito chose to dip into its reserve funds instead of eliminating full-time employees (FTE’s). Many neighboring jurisdictions actively chose to eliminate FTE positions in favor of dipping into reserves. The City tried to do right by its employees and the community. However we are now in the situation we are in because we missed some fundamental principles of public sector finance.

If El Cerrito was a person, she’d be living paycheck-to-paycheck, she’d have no savings, and she’d be a medical emergency away from total financial ruin. We have to take this situation seriously, and make the hard decisions needed for a few years. Which using the person analogy, means cutting up our credit cards and eating top ramen noodles in order to build up our savings.

2. How will you independently verify staff budget projections and analysis?

My motivation to run for El Cerrito City Council is to be that independent verification required by the community. Staff projections and analysis are only as good as the data they have access to, so I will make sure that city staff are: a) Using the right analytical techniques b) Have access to the correct datasets c) Are able to produce reports which are informative and accessible to Council and the community.

I have no problem asking targeted questions about line items on the budget and looking deeper into the data. Council should have the competencies to understand how government works, and working in local government has allowed me the opportunity to understand the in’s and out’s of critical reporting.

3. Describe what you understand to be the working relationship between the City Manager and the City Council. Are there any changes you would like to see in the current culture, and if so, how would you go about it?

I have worked in local government as city staff for a decade, and have a strong sense of the City Council/City Manager framework. The City Manager is responsible for the operations of city management, and the City Council represents the constituents who have elected the members of Council. Council sets the policy direction for the City, and the City Manager reports to Council. The culture of local government is constantly shifting and adapting to changes, and it’s up to the City Manager to ensure a healthy and inclusive culture for city staff.

4. How will you evaluate the city manager’s performance and hold them accountable?

El Cerrito is lucky to have a City Manager who is widely regarded and respected in the public administration field. We will evaluate the CM’s performance based on agreed upon goals and a framework for success. The most critical thing our City Manager needs to address is our dire financial situation, and we cannot be blindsided by any unaccounted for expenditures. Our City Manager must manage in crisis mode for the next few years until our financial situation is better, which to me means a reserve account with $6M and a better bond rating.

5. What role do you you think short-term borrowing has in the budget? If there is no role then what is your plan to eliminate it? If there is a role then what do you see as the impact on the city’s bond rating, borrowing costs and our ability to finance other capital projects?

Short-term borrowing unfortunately has been a pattern in El Cerrito for the past few years to stay afloat. We may need to borrow again to get us through this year, but I believe drastic cuts to all of our department budgets will set us up to avoid unnecessary borrowing. We should focus on attracting and retaining our small businesses, so we can begin to increase our tax base. If we do not increase the City’s bond rating, we will not be able to take on the community projects the majority of us in the community want, such as a new El Cerrito Public Library.

6. What are the details of your plan for El Cerrito getting out of the financial situation we are in?

We must operate under lean principles and the principles of ethical public sector finance. We can no longer accept the “shoulder shrug” with empty explanations of why we need to spend money which we did not account for… We must say “NO.” Often and frequently. Similar to the concept of wearing a mask and keeping your distance is how we show our love and respect for another, saying “NO” to expanding programs is how we will show our love and respect for the community. We have to become financially solvent and establish a reserve if we’re going to make our community stronger and have the ability to fund forward-thinking capital improvement projects. I imagine these next few years on Council will be tough, which is exactly why I want the job.

We have to build more affordable housing, we must attract and retain high-quality businesses, we must keep our community disaster-resilient, and we have to invest in our own community through our actions. Shop locally, use public transportation, and bicycle. If we focus on “winning on the basics,” we can create the type of community we are all proud to call home.

7. What do you see as the issue behind the over 1 million dollar amount of overtime for the Fire Department? How would you resolve this issue and keep El Cerrito fire safe.

In order to keep the community safe and maintain minimum staffing, overtime is a necessary evil. Minimum staffing ensures that ECFD has the capacities to respond during our neighbors deepest time of need. I believe we can use data to better understand our call types and call volumes and adjust staffing based on this data. Do we need to send an engine for every “lift assist?” Let’s use CAD data to better understand our Department, and tailor our responses better to our community needs. Overtime is ultimately less expensive than adding more FTE’s, and maintaining minimum staffing is critical for keeping all of us safe.

In order to keep El Cerrito fire safe, beyond maintaining minimum staffing, we must look to the State and our regional partners in order to expand our Emergency Preparedness capacities. We cannot afford to do it on our own. Disaster response is both a municipal and community effort, and we need the support of our El Cerrito Public Safety professionals.

8. What changes would you make with the police budget?

The police budget, along with other department budgets, has been reduced and will continue to be reduced. The most important thing we can do as a small city is ensure public safety. Which means safety for all stakeholders: housing insecure, low-income, communities of color, women, business owners, new families, and families that have been here for generations.

I most recently worked for the San Francisco Department of Police Accountability, an independent civilian-oversight law enforcement agency. I implemented a web-based tool for community members to file a complaint independently of the SF Police Department, and learned a great deal about 21st century policing models in the process.

The El Cerrito Police Department has been an innovator in community-service based law enforcement, and we can continue to innovate while operating on lean principles. We must look to our 911 data, daylight any inequities, make data-driven decisions, and work collaboratively to keep El Cerrito safe. Officers in El Cerrito receive extensive bias training in addition to their typical police officer training, and officers have an extended probationary period so we can make sure we’re retaining only high-quality officers.

Our country is facing a much-needed reckoning around local law enforcement. The Black Lives Matter movement is beautiful, and its principles belong here in El Cerrito. We should end qualified immunity nationally, we should reevaluate POBRA protections, but we also cannot carelessly reduce our public safety budget. We must approach public safety budgets with a surgeon’s knife instead of a hammer.