Commentary: City Budget: Wasted Windfalls, Overlooked Opportunities By MARIE BOWMAN

Tuesday June 21, 2005

In November 2004 the residents of Berkeley sent the City Council a loud message:  

• The city’s budget can be balanced without increasing taxes and fees.  

• Essential services should not be targeted for budget cuts.  

• City staff and non-profits (55 percent of Berkeley’s landowners) must pitch in to balance the budget.  

What does the proposed budget have in store for us?  

• Multiple fee increases beyond the cost of living.  

• Reduced services in police, fire and public works. 

• More sidestepping of budgetary structural issues in favor of pet projects.  

Why should we be saddled with “more of the same” poor fiscal management when there are plenty of opportunities to do things right? 


City Revenues More Than Adequate 

Berkeleyans have the highest tax/fee burden in the state, with a median income of only $44,485.  

The city is experiencing windfall revenues. In the first nine months of fiscal year 2005, transfer tax revenues went up $10.5 million, 38 percent more than last year. The city can expect a minimum of $15 million in increased revenue from vehicle license fee and transfer tax sources alone. Property tax revenues are up 7.7 percent versus last year. 

Sewer fees are ridiculously high. Annual sewer fees for an average single-family home in Alameda are $162, Albany $245, El Cerrito $111, Hayward $79, Oakland $176, and San Leandro $104. The average house in Berkeley pays $400 -- over four times as much as Hayward! Berkeley’s sewer fees increased by 5 percent last year and are proposed for further increases of 3 percent annually through the end of the decade. Refuse fees were increased 5 percent last year, and are proposed to be increased by 8 percent this year and 20 percent the year after that. All of the above municipalities except Berkeley, can maintain and replace their sewer systems. 


Missed Opportunities 

Berkeley has the highest number of city workers in proportion to our population: It takes 66 residents to support one employee. Berkeley’s staffing ratio is 50 percent higher than Alameda and Oakland, the next most staff-heavy municipalities. Salary and benefit costs make up more than three-fourths of the city’s budget. It makes sense to look for savings in this area. None of the following suggestions from residents have been adopted:  

• Reinstate the one-day-off a month for non-essential staff.  

• Have staff contribute toward their retirement programs.  

• Have staff contribute toward their rapidly rising health care costs--18.5 percent annually. 

• Reduce excessive salary increases.  

• Reorganize and restructure city departments for greater efficiencies and cost savings (Berkeley is overstaffed compared to anywhere else).  

• Eliminate the YMCA benefit.  

Many nonprofits in Berkeley receive a free ride. Residents proposed “payments in lieu of taxes” or PILOT fees, for the major players, but so far the city has sold out the residents. Recent negotiations with the university have resulted in a locked-in subsidy from Berkeley residents to UC, because UC’s payments don’t come close to covering the cost of city services provided. This is a $177 million giveaway! The average Berkeley household will subsidize the university by $750 per year. Once the university’s Long-Range Development Plan takes effect, UC will remove 30 city blocks from the tax rolls to create 2.5 million square feet—the size of the Empire State Building!—of space that requires city services but pays no taxes. Within 10 years each Berkeley household will be subsidizing the university at an average of $1,000 per year! 

The second-largest landlord in Berkeley is the University Students Cooperative Association. They have net revenues of approximately $1 million annually, and cost the city approximately $200,000 annually in calls for city services. PILOT Fees should be negotiated with the USCA. 


Misplaced Priorities 

Cuts are being made in exactly the wrong places. Partly this is done from cynical motives. If the city targets essential services for cuts (instead of pet programs), it thinks residents will be willing to pay higher taxes, because residents will want to protect essential services. Some examples: The proposed budget reduces the police force by seven full-time employees (FTE). Berkeley has the fourth-highest crime rate in the state when it comes to rape, robbery, burglary, and personal assaults—higher than Oakland, San Jose, Los Angeles or San Francisco.  

The proposed budget reneges on the city’s pledge to restore a fire truck shift, even though the Fire Department found $300,000 in internal savings just for this purpose. City leaders agreed that the truck would be reinstated June 1 for the start of the fire season, but it didn’t happen.  

Park maintenance/landscape staff were reduced by six FTE last year and three FTE this year.  

The city clerk’s office will have a reduction of one FTE, which will reduce the support provided for public access to actions on the City Council agenda. The proposed budget eliminates all support for festivals and fairs, which improve revenue and economic development, not to mention our quality of life. Is Scrooge running the City Council? 

Things are looking up for the library with increases of more than twice the Bay Area cost of living index. They remain closed on Sunday, so why doesn’t the additional support translate into additional services?  


More Roads Not Taken 

The city continues to sell off real property for a pittance, rather than lease unused land. There is no discernible strategy to increase sales and business tax revenues by becoming a business friendly city, including revitalizing the business districts on Telegraph, Shattuck and University. Customers need to find parking spaces to increase the commercial base. 

Good fiscal policy includes eliminating the $160 million in unfunded liability and increasing the city’s reserve from 6 percent to 13 percent (average reserve rate in Alameda County). 

Balancing the budget via fee increases shows not just managerial laziness, but outright disrespect for the will of the electorate given November’s results. Residents are stretched financially, while the city is receiving windfalls. The City Council needs to develop a sustainable budget, with sound fiscal policies and priorities, that meet resident expectations and is fair to all. 


Marie Bowman is a member of Berkeleyans Against Soaring Taxes (BASTA).