There’s good news and bad news for the city’s budget for 2011-2012. In the positive column, the city’s credit ratings remains strong, there’s money in the bank—$10 million in general fund reserves, essentially a rainy day fund—and funding for the city’s services will for the most part remain intact. The bad news is that every part of city government will experience cuts of some kind, while programs that rely on state funding are under threat of a drastically constricted state budget, and part of the city’s budget relies on ballot measures, which are risky.
Last week, Jim Goins, the city’s finance director, and City Manager Bill Lindsay presented the budget to Richmond Annex residents at a budget meeting held at the neighborhood senior center. The meeting was the last in a series held by the city’s budget team to help explain the details of the budget to interested residents. The meeting was packed, better attended than most neighborhood council meetings, and people were lively but respectful, even when they did not like what they were being told.
People at the meeting took the opportunity to question Bill Lindsay and other city officials. Some of their questions were neighborhood-specific—largely about the restoration of Carlson Boulevard, which has been torn up for over a year—but a lot of the questions were not new to Lindsay. “We’ve heard a lot of the same questions in other neighborhoods,” he said, and the focus is often on public works and public safety. For the most part, attendees were concerned that the budget cuts would take police off the streets, or cut down on improvement projects throughout the city.
Nationally, things are improving after the lows reached during the 2008 economic meltdown. Consumer spending has been up for the last year and a half, and unemployment is trending slowly downward. California is seeing its best job gains since 2007, and Governor Jerry Brown recently announced that the state budget gap is $10 billion dollars less than anticipated. But he says it is still severe and if voters do not approve new taxes, the state will be making drastic cuts.
According to the budget Jim Goins presented at last week’s meeting, in Richmond, things are mixed. Foreclosures are down by just over 30 percent from last year, but remain significantly higher than the state foreclosure rate, which has roughly every 1 in 240 homes engaged in some part of foreclosure process, according to RealtyTrac.com. Unemployment, which soared between 2008 and 2010 has leveled off over the last year and is inching down, although it still dwarfs the national rate. In April, the city’s unemployment rate was 16.6 percent, compared to a county-wide 10.3 percent.
The city’s port and a deal over utility taxes with Chevron provide a welcome boon to the city’s budget said Goins. Chevron agreed last year to a fifteen-year increased utility bill, which will add $10 million to the city’s bottom line this year. At the port, Honda and Subaru have signed deals to offload their vehicles in Richmond. Honda’s contract will bring up to $120 million dollars over the next 15 years, and Subaru’s five-year agreement will net the city about $1 million annually.
Despite the new revenue sources, Lindsay said the city is facing tough times because of deep cuts at the state level and reduced revenue from property taxes. The new state budget will likely cut about 20 percent of the budget for the Literacy for Every Adult Program (LEAP) in Richmond.
The city’s redevelopment agency will take a major hit if Brown’s proposal to cut all state funding to local redevelopment agencies. The city’s local funding for redevelopment comes from property taxes, which have dropped by more than a third, said Lindsay, so the agency will cut positions. “There was a 36 percent drop in revenues and that shrunk the project funds we had,” he said. “There’s just less activity for us to do and less employees that we can afford.”
All departments are being asked to reduce their budgets by ten percent over the next year. Most of that will be made up by freezing vacant positions, and city employees will keep their jobs. Non-emergency city employees will take a week furlough again in December.
These cuts come on top of cuts the city has had to make in recent years.
“We’ve had to cut back over the years but I really do feel like our employees have improved their productivity,” said Lindsay.
The budget will put $61 million toward the police department next year, which is roughly the same as last year, although the costs of healthcare for city employees including police officers are increasing. To make up for that, the city will eliminate already vacant non-sworn positions in the department from the budget. It will not decrease the number of sworn officers, according to Lindsay. “Even while we’ve cut back our personnel in general, we’ve increased the number of staff members and sworn personnel in the police department,” he said. “And we’ve preserved staffing levels needed to keep the fire stations open.”
Lindsay was keen to point out that this budget is nearly balanced budget, just one percent or $1 million dollars short. But in planning the budget, the city has anticipated that voters will approve Measure D, a sales tax increase on the ballot this month that would add more than $2 million in revenues to the city. “If Measure D doesn’t pass we’ll have to go back and do some secondary cuts of another couple million dollars,’” Lindsay said. “I don’t know from what services those cuts are going to come from, but they’ll have to come from somewhere.
Public works will take a hit, with $3.2 million shaved off the street paving budget. This was not a popular move with Richmond Annex attendees at the budget overview meeting who were already frustrated by the drawn-out repaving of Carlson Boulevard. “Our infrastructure is a mess, and I think we really need to think about that,” one Richmond Annex resident who did not give his name said.
Lindsay agreed. “The fact is our streets are terrible. They need work,” he said. The city has been combating years of deferred maintenance, which is hugely expensive because it allows minor problems to worsen into major ones, which are more expensive to repair. But he pointed to improvement: Over the last few years, the city has redone about a third of the city’s streets, using a combination of city funds and grants to pay the $35 million price tag and focusing on preventative maintenance as well as major overhauls. But the state is pulling back funding for city street improvement, and the federal stimulus funds that paid for projects like Carlson Boulevard have dried up. “It’s still terrible, and all I can tell you is we’re still trying to get caught up,” Lindsay said.
Recreation was another point of concern at the meeting. “It seems like recreation is getting cut in a major way,” said one Richmond Annex attendee. “But from my point of view, recreation services are essential services for keeping kids out of trouble.”
The city’s recreation department will face staffing cutbacks, but Lindsay said the city prioritized keeping programs intact. The city has farmed out adult and youth sports programs to non-profit area leagues. Some programs will rely on fees to keep running, but they will remain open. Dr. Bill Harter, superintendent of the West Contra Costa County Unified School District, said that the city is working with schools to expand the programs administered by the school district to keep them accessible to students. “We have some really great facilities and we believe that the people should be able to use them,” he said. “So we’ve partnered with the city to make sure they’re available.”
City Council will vote June 7th to approve the budget.