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City Council Faces Gloomy Budget News

By MATTHEW ARTZ
Friday May 21, 2004

Thanks to Gov. Arnold Schwarzenegger’s recently submitted state budget, Berkeley will likely have to cut an extra $300,000 on top of its $10 million deficit in fiscal year 2005. But if the governor’s word is good, city finances could be structurally sound by 2007. 

City Budget Director Tracy Vesely delivered the mixed bag of news Tuesday night to the City Council, which will consider ways to address the new shortfall at next week’s meeting. 

In other budget-related news at the Tuesday meeting, Vesely warned that lower-than-expected growth in the Consumer Price Index would mean further shortages in city tax funds. Meanwhile, the Berkeley Public Library Board of Library Trustees announced they were asking the council to place a $1.7 million tax measure on the November ballot to preserve library services. 

Also on Tuesday, the council approved a slew of new fees, rejected a resolution calling for decriminalization of prostitution statewide, and gave the green light to the David Brower Center—an ambitious project to build Berkeley’s most “green” building and largest affordable housing complex on the Oxford Street parking lot between Kittredge Street and Allston Way. 

Budget Shortfall 

The city had estimated that its total losses stemming from state takeaways of local revenue would amount to $1.6 million this year. But a deal reached last week between Gov. Schwarzenegger and the California League of Cities puts that amount $.3 million higher. However, in return for two years of givebacks by local governments, the deal would constitutionally guarantee repayment of last year’s Vehicle License Fee Backfill Loan to cities and counties in fiscal year 2007, as well as begin repayment that year of other previously deferred state reimbursements. 

For Berkeley, Vesely said that would add up to roughly $1.9 million, nearly enough to wipe out the projected structural budget deficit in 2007. 

However, she cautioned against assuming added state money would soon be flowing into Berkeley coffers. “Long term there’s a lot of uncertainty, we don’t know,” Vesely said. 

Schwarzenegger has pledged to work with the legislature to restore the funds. If that fails, the governor has promised to back a League of Cities November ballot initiative that would require voter approval for any state takeaway of funds earmarked for local governments. 

Vesely delivered more bad news on the 2005 fiscal year budget Tuesday night. While the city had estimated that the Bay Area Consumer Price Index (CPI) would grow two percent last year, the Bureau of Labor Statistics determined that it rose just 0.5 percent. The CPI considers various price indicators including food, clothes, rents and gasoline. Because city tax funds that are tied to increases in the CPI, that means more unexpected shortfalls in the city’s tax revenue.  

The parks tax will lose $160,000 in anticipated revenue from the CPI loss, and the paramedics tax will lose $25,000, Vesely said.  

“We were so shocked [by the federal statistics], staff contacted Washington D.C. and asked ‘are you serious,’” she said. 

 

Library Tax and Other Tax Measures 

The City Council offered a lukewarm reception to a proposal passed Tuesday morning by the library board of trustees for a 17 percent increase to the library tax to raise $1.7 million in new funds. If the proposal were to go through, the average homeowner would pay an extra $41 per year in library taxes.  

With the city in negotiations with its unions to pay three percent of the city’s contributions to their pension funds this year, Mayor Tom Bates hinted that negotiations with the library workers represented by Service Employees International Union Local 535 weren’t going well.  

“If the union is obstinate, maybe we shouldn’t put this out to voters,” he said. 

Councilmember Dona Spring added, “we can’t ask for this big of increase and not get some concessions from the union.” 

A three percent giveback by the library workers would amount to about $300,000—roughly 18 percent of the proposed tax, City Manager Phil Kamlarz estimated. 

Except for $240,000 that would be earmarked for its literacy program, the proposed library tax increase would pay to restore the library’s budget to buy materials and keep branches open mornings, evenings, and Sundays. Despite steady increases in tax revenues from cost of living adjustments, Library Director Jackie Griffin said the revenue hasn’t kept up with spiraling labor costs, primarily payments to employee retirement pensions. 

Since the money from a new tax wouldn’t be collected until next July, Griffin said that no matter the outcome of a ballot measure, she would have to lay off nine employees and, beginning in July, close libraries on Sundays and rotate evening and morning hours. 

The library tax—originally considered at $1.2 million—is just one of several proposed November tax measures that have increased over original projections. The emergency medical services tax—first estimated at $1 million—is now at $1.2 million and the Clean Water System Tax—first estimated at $1 million—is now at $1.2 million. The Youth Services tax—first proposed at $800,000—is now projected at $1.6 million. 

The increase to the emergency medical services tax comes from $200,000 to improve life support services and the increase in the clean water tax would pay to clean water in creeks that have been unearthed. 

In total the projected tax revenue from the four proposed measures has risen from $4.2 million last month to $5.7 million Tuesday. 

Additionally the council is now considering an increase to the Utility Users’ tax that would raise between $2 and $3 million. 

With the meeting running late Tuesday, the council didn’t discuss the remaining tax measures in depth, but councilmembers did receive a staff report that showed Berkeley property owners taxed themselves higher than their neighbors in Albany and Oakland. For fiscal year 2004 the average Berkeley homeowner paid $523.32 in city voter approved special taxes, compared to $180.92 in Oakland and $200.40 in Albany. 

 

Budget Public Hearing 

Homeless support groups dominated the first of two public hearings on the fiscal year 2005 budget. About 10 people spoke Tuesday night on behalf of the Berkeley Drop-In Center, which is slated to lose $15,000 in funding. Former director Sally Zinman says the center will need the money to successfully merge with the Alameda County Network of Mental Health Clients. 

The Drop-In Center offers services for mental health patients, who often are also homeless.  

Emmet Hudson echoed the sentiments of other speakers when he told the council that “without the Drop-In Center I would still be on drugs and still having severe mental health issues. It’s the first line of defense for people who have fallen on rock bottom.” 

The merger with the county agency was seen as a cost savings measure to save the program. 

The city budget proposal doesn’t cut overall funding for homeless programs, but it does propose moving $168,000—a portion of which went to the Drop-In Center—to programs that provide housing to at risk residents. 

 

David Brower Center 

By a 7-2 margin ( Wozniak, Olds, no), the council gave a green light to the proposed David Brower Center, with the caveat that the council hold a public hearing when the city and nonprofit developers Resources for Community Development and the David Brower Center have agreed to a Disposition and Development Agreement expected to be completed by July. 

The $47 million project would transform the city-owned Oxford Street Parking Lot into a consortium for environmental-based nonprofits and 96 units of affordable housing. The environmental groups, along with a restaurant and auditorium, would be housed in a four-story building which its developers hope will be the first on the west coast to achieve a platinum rating from the United States Green Building Council. 

The housing would be in a neighboring six-story building above-ground floor retail that would include outdoor apparel retailer Patagonia and a grocery store. 

Below the buildings, the developers plan to construct a 105 space underground garage, with parking revenues going to the city. 

In all, the city expects to receive about $425,000 a year in revenues from the project—$75,000 more than it currently receives in receipts from the parking lot. 

Critics of the project wanted more money generated from the property. 

“You’re going to kill the whole project by insisting on that housing in the most valuable piece of land that we own,” said Councilmember Betty Olds. The council rejected 7-2 (Olds, Wozniak, yes) her motion to put the project to the voters in November. 

John Clawson, a partner with Equity Community Builder which is managing the development, countered that the housing units known as Oxford Plaza will receive a subsidy of $26,000 per unit from the city’s housing trust fund—lower than typical affordable housing projects. 

 

Fees 

The council approved fee increases of 7.8 percent for Tuolumne Camp, 10 percent for services at the city Permit Center, five percent for sewer connections, and five percent for garbage services. 

Opposition was most vociferous to the proposed fee hikes at Tuolumne Camp, where the increases would make the cost of a week’s stay just under $2000 for family of four at the camp just east of Yosemite National Park. 

City Parks and Recreation Director Marc Seleznow told the council the fee increases were needed to comply with a city requirement to make all city camps self-sufficient by fiscal year 2007 and keep the city’s two other camps—Echo Lake Camp and Berkeley Youth Camp—avaiable to low income children. 

 

Decriminalizing Prostitution 

The Sex Works Outreach Program (SWOP) will continue with the petition drive for a city ballot initiative after the City Council balked at a resolution from Councilmember Dona Spring to urge the state to decriminalize prostitution. Had the council passed the resolution, SWOP would have withdrawn their measure, which also calls for Berkeley police to make enforcement of prostitution laws a low priority. 

Although most councilmembers expressed support for decriminalizing or legalizing prostitution, they instead chose to send it for review to the city’s Commission on the Status of Women. Should the commission—which has historically supported the easing rules on prostitution—return it to the council for action before SWOP’s June 21 deadline for submitting signatures for the ballot drive, the sex workers advocacy group could still pull the initiative from the ballot, SWOP’s Stacy Swimme said. 

 

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