The Berkeley City Council got a first look at the draft two-year 2008-2009 $614,050 budget at a workshop before its regular meeting on Tuesday. Final budget decisions will not be made until the June 26 council meeting.
The budget is balanced through savings mostly from vacant or eliminated positions and limited increases in revenue, despite the fact that “growth in recurring revenues is not keeping pace with the cost of providing city services and programs,” according to the city manager’s written budget report.
As always, there’s little wiggle room for councilmembers to fund pet projects for their districts, as 80 percent of the budget is dedicated to fixed employee costs and most of the rest of the budget is tied up in ongoing projects and capital expenses.
The council will have a degree of discretion, however.
Much of that comes from a one-time infusion of cash the city is getting from unexpected commercial transfer taxes—taxes of 1.5 percent of the sales price of properties. Large commercial properties sold during the 2007 fiscal year include seven of Patrick Kennedy’s properties, the Fantasy Building at 10th and Parker streets, the Smith-Marchant building on the 6700 block of San Pablo Avenue and the Shattuck Hotel.
The total FY 2007 transfer tax is expected to be $15.6 million. Of that, the city manager considers $10.5 million as recurring revenue to be allocated as part of ongoing city expenses.
The remaining $5.1 million can be used for one-time expenditures. While the manager had detailed the projects he would like to see funded, the council will be able to make adjustments, Kamlarz said at a Tuesday morning press briefing.
Kamlarz asked the council to spend the windfall over five years on capital improvement projects including: $900,000 for deferred maintenance for city buildings and recreation facilities, including swimming pools, senior and recreation centers; $1 million transportation planning; $2.86 million for streets and other transportation funding and $1 million for clean storm water/creeks planning.
The city manager is proposing to fund other projects through a shift in expenditures. Some of the projects he is asking the council to fund include:
• Youth—$306,000: funding would go to 50 jobs for $136,000 (Mayor Tom Bates and Councilmembers Darryl Moore and Max Anderson are asking for enough money to fund 400 jobs) and adding another $170,000 for recreation programs cut in earlier budgets;
• Full-time watershed coordinator—$66,000, increasing the half-time position to full time;
• Affordable housing: $947,000 over two years to subsidize the Berkeley Housing Authority; and $1.5 million to fund three projects: Ashby Lofts, Satellite Senior Housing and the Oxford Plaza. (This $1.5 million is expected to be reimbursed to the general fund through future fees for condominium conversion.)
• Public safety—$900,000: $600,000 is allocated to keep all fire stations open (ending rotating closures) until December 2008 and $300,000 for training public safety dispatchers on a new communications system.
Still, there’s not enough money available to fund large projects, Kamlarz said, proposing their funding through new taxes.
For example, $80 million is needed to fund the aging, under-capacity storm water system, he said.
“If people want more police and fire, they may need a special tax,” Kamlarz added. “Feeling safe is a major community value.”
On the average, one police officer costs approximately $170,000, including a car, equipment and overtime, said budget manager Tracy Vasely.
At the same time, the city manager said the impact of a new tax could be blunted by refinancing existing obligation bonds.
“Given the savings resulting from the Measure S bond restructuring, the resulting increased tax generated from a ballot measure would be offset, resulting in a minimal new tax increase to homeowners,” the manager says in his budget report.
Other anticipated revenue sources are increases in sewer and garbage fees—studies on the increase are pending. A 5 percent increase in the Marina berth fee will come before the council May 22.
The budget includes a 6 percent reserve. “Eight percent covers city operations for 30 days,” Vasely said.
Among the large city costs are employees’ pension funds. “We have guaranteed pensions for the rest of our lives,” Kamlarz said. At age 50, police and fire employees can opt to retire and receive 3 percent of their top year’s wages for every year served. Other staff gets 2.7 percent per year of their top wages if they retire at age 55.
“It’s a very expensive plan,” Kamlarz said.
Areas in which city revenue is growing in addition to transfer taxes are city income from hotel taxes, auto in-lieu fees, parking fines, and interest income. Sales taxes show a small increase and business license tax revenue is flat.
Councilmembers have a number of projects they are asking the city manager to consider. Funding them would amount to $3.8 million in one-time costs and $2.1 million in recurring costs.
The council wish list includes increasing the street sweeping program, traffic calming measures, implementation of the Public Commons for Everyone proposal, holding programs at the Willard Park clubhouse, providing sex-reassignment surgery as part of employee benefits, adding funding to Options Recovery Services, funding community-involved policing and funding implementation of the mayor’s greenhouse gas reduction plan.
A community meeting will be held May 29 when the public can ask questions about the budget, copies of which are available $25 through the city clerk’s office or online at www.cityofBerkeley.info/ budget. The meeting will be at 7 p.m., at the North Berkeley Senior Center at Hearst Avenue and Martin Luther King, Jr. Way.