While the city’s $315 million 2008-09 budget appeared balanced earlier this week, Berkeley was anticipating bad news by Wednesday afternoon, when the governor addressed state budget woes.
The Berkeley City Council budget workshop last week kicked off the annual two-month period that culminates in budget approval. Given that 2008-09 is the second year in a mostly-set-in-stone budget—employee costs are generally considered fixed—the council has little wiggle room to advocate for special project funding. The fear was that the state would take millions of dollars in permanent cuts and temporary borrowing from healthcare and police services, which Schwarzenegger confirmed in his statement.
The $315 million draft budget reflects a 2.7 percent increase over the second year of the two-year budget adopted last year.
City Manager Phil Kamlarz told the council he has set aside some $2 million in the 2008-2009 budget to address potential state and federal cuts, but the cuts could lead to city to an eventual deficit by fiscal year 2011.
The manager has recommended cutting nine vacant staff positions to balance the budget. Program cuts will be considered once the state budget is finalized, Kamlarz said.
Toward the end of the workshop, octogenarian Councilmember Betty Olds brought a moment of comic relief to the discussions with her revenue-raising plan: people growing “pot” in the city “are making a pretty good living,” she said.
“How are we going to tax those people?” she asked. “There might be quite a lot of money there.”
Kamlarz responded, suggesting, “We could open a bakery next door.”
Most of the workshop was more serious, as city staff presented a balanced “all-fund” budget to the council. (The all-fund budget includes the general fund’s basic services—police, fire, public works, parks and more—plus special grant, state and federal monies the city receives. The projected 2008-2009 general fund budget is at about $145 million, 3.6 percent more than allocated last year.)
“Some long-term planning puts us in a good position,” he said, noting however that employee demands for salary increases could tip the balance. Police and fire employees recently got 14 percent raises over four years. Other unions are in negotiations.
Kamlarz himself is reportedly asking for a wage hike from a City Council subcommittee evaluating him. The manager earns about $208,000 annually, according to records posted on the city’s Human Resources website, www.ci.berkeley.ca.us/ ContentDisplay.aspx?id=10792, plus about $100,000 in benefits.
When the Planet asked during a Monday budget press briefing how large a raise he was requesting, Kamlarz said—joking, perhaps—that he was asking for less than the $316,688 salary of the city manager of Vallejo—which is now facing bankruptcy.
(2007 salary data for the 372 Berkeley bureaucrats earning more than $100,000 can be found on the SF Gate website at: http://www.sfgate.com/webdb/berkeleypay/.)
Asked why the city generally gives high-paid employees the same percentage raise as more modestly-paid employees—with an across-the-board 4 percent raise, a worker earning $50,000 would get a $2,000 annual raise and a worker earning $125,000 would receive a $5,000 salary hike—the manager told the Planet that it is important for city workers to receive salaries which will compete with those of employees in similar positions in other jurisdictions.
In the manager’s report, however, he says: “The only method to effectively eliminate the city’s structural deficit is through cost reductions—primarily through controlling labor costs since employee salary and benefits make up 77 percent of the city’s operating budget.”
Some of those controls are in place, with many employees taking a voluntary monthly unpaid day off.
The city has been able to balance its budget through improving its Business License Tax collections—by revising fees for miscategorized businesses—and generating new parking meter revenue, the city manager told the council.
Kamlarz addressed concerns over the “pretty dramatic decrease” in the number of properties sold due to the downturn in the economy—down 17 percent from 2007—and the reduction in property transfer taxes. However, the recent sale of a $21 million building—the downtown Wells Fargo Building—helped balance out the loss in residential transfer tax revenue, he said.
Additionally, increases in revenue from hotel taxes, better billing and collections for ambulance fees, utility users tax collections and interest income have helped balance the budget. The increase in hotel occupancy has created “a double digit increase,” Finance Manager Bob Hicks told the council.
“Part of this balancing approach involves generating new revenue through November 2008 ballot measures for critical programs like fire and emergency services, libraries and public pools,” the manager wrote in a May 6 report to the council.
State cuts in MediCal and Social Security payments to disabled people could hurt some of the most vulnerable Berkeley residents, Health and Human Services Director Fred Madrano told the Daily Planet Thursday.
At the same time, the city’s safety net for those in need will be impacted by state and federal cuts.
“Most of these folks [on SSI] are at poverty level,” Madrano said. “If you remove any of the support they count on, it wears away at their ability to maintain their independence.”
The cuts could also impact city-funded clinics in the long term, as reimbursement for MediCal services begin to generate less income from the state. (No immediate impact is projected, according to the manager’s report.)
About $1 million in state and county reductions for Berkeley’s Health and Human services have been proposed, Madrano said, noting that decisions on program cuts will not be made until after state cuts are announced,
Added to that is last year’s cut of about $1 million in Berkeley’s share of state funds used for housing and services for once-homeless mentally-ill persons. “Staff is developing a transition plan to deal with this dramatic program cut,” the manager’s report says.
The HIV-AIDS program is likely to take the greatest hit in the Public Health realm, Janet Barreman, deputy health officer, told the Planet Thursday. There is likely to be a decrease in the amount of outreach to people who may be HIV positive, although the testing and referral program will not feel the impacts, she said.
Feds cut too
The federal budget is running at a $500 billion deficit, up from a $410 billion deficit forecast in February, according to the city staff report.
While federal Community Development Block Grant funds that help support community nonprofits have been reduced by about $134,500 or 4 percent, funds unspent from last year will likely make up the deficit, Housing Director Jane Micallef, who heads up the CDBG program, told the who heads up the CDBG program, told the Planet.
Some community programs, however, will experience shortfalls. In 2007-2008, the city cut funds from $9,000 to $20,000 for about a dozen programs. Among them were Berkeley Food and Housing’s hot evening meal program, Building Opportunities for Self Sufficiency’s multi-service center for homeless persons, and various supportive housing programs. The city found funds to restore funding for last year’s budget only, so funds targeted for these programs will fall short this year.
Most community programs continue to be funded at last year’s levels. The program to receive the most CDBG funding from the city—at about $320,000—is an energy-efficiency program funded through the Community Energy Services Corporation, a nonprofit whose board of directors is the city’s Energy Commission.
The police department could take a $1 million hit from the state. While the chief will determine precisely where to make cuts, police spokesperson Sgt. Mary Kusmiss told the Planet that the loss of (2004) Proposition 72 money—one of the possible state cuts—could mean a cut of four sworn officer positions. Cuts in COPS funds—a state grant—could mean the loss of three or four civilian positions, she said. The state also reimburses booking fees through the county, including costs of housing, food and medical care for arrestees. These funds may be held back by the state.
The department is budgeted at $48 million for 2008-2009. At present, it has reported an excess of about $700,000 over the $2,382,690 budgeted for overtime. Of that, about $250,000 has been spent in overtime caused by the pro and anti-war demonstrations around the downtown Marine Recruiting Center, according to Kusmiss.
There is also a great amount of overtime spent in homicide investigations, in which officers can sometimes work 50 hours straight on an investigation immediately after the crime, Kusmiss said, noting, “The first 48 hours are critical.”
Patrol officers can volunteer for overtime and work up to 16 hours straight. If there is no volunteer, the department will impose overtime to cover vacant shifts, she said.
While some officers earn huge overtime salaries, Kusmiss said that saves the city from hiring additional officers, which would cost the city more in benefits. According to the city’s human resources department, benefits cost about 50 percent of a city employee’s base salary.
According to data on sfgate.com, the three top earners in the city of Berkeley are police officers. Police Sergeant Howard Nonoguchi’s gross pay for 2007 was $217,880, which included $115,744 base pay, $73,925 overtime and other non-specified pay that could include cashing out vacation time.
Police Lt. Wesley Hester, Jr., the city’s second-highest earner, received $217,143 in gross pay in 2007, with a base pay of $138, 933 and $11,798 in overtime pay. The third-highest earner was Police Lt. Allen Yuen, who took home a gross salary of $207,225, with base pay at $138,933 and overtime of $32,362. Chief Douglas Hambleton is looking for some savings in his department, and is considering hiring additional non-sworn officers, as other officers retire or leave the force, according to Kusmiss.
Non-sworn officers cannot make arrests or investigate felonies, but can help cut down the work of sworn officers by taking reports, such as for burglarized vehicles. They can also patrol traffic.
Similarly, the fire department overspent its budget in the current budget year by $700,000 for overtime. The city manager’s report says that the overtime costs are a result of 14 sworn vacancies resulting from work-related injuries, family medical leave, parental leave, long-term sick leave and military leave.
The top earner in that department, with the eighth highest ranking in city-wide gross pay, was Fire Lt. Michael Nagamoto, whose gross pay in 2007 was $200,864, base pay, $103,818 and overtime, $27,278. The department’s projected budget is $24,500.