A severe cash crunch has sent the City of Berkeley scrambling to find ways to stay afloat in a tough economy, including a two-year rescue plan whose blueprint City Manager Phil Kamlarz will present to the City Council Tuesday.
At a press briefing Monday morning, Kamlarz reiterated what he had already told council at their March 9 council meeting, that the city was facing a $14.6 million deficit for the fiscal year beginning July 1 because of the recession, loss of state funding, a decline in property and sales tax revenues and change in the use of city services.
The city’s total budget is $350 million, of which half is made up by the General Fund and the other half by revenue and other funds. The most drastic shortfalls include $6 million in the General Fund, $4 million in the refuse fund and $2.7 million in public health funds, Kamlarz said.
Mental health funds will also be cut quite a bit, he said. That report will be presented to the council April 20.
“And all that’s before the state deals with the $20 billion deficit,” he said.
Kamlarz called the current budget slump the most serious he had seen in his 35 years working with the city.
“Most of the time we come back quickly, but not this time,” he said.
The city received $16 million in transfer tax evenue in 2008 from property sales which decreased to $8 million last year and will stay at that number this year.
“Our home prices have remained essentially flat,” he said. “Sales taxes have also remained flat. Everything else doesn’t have any growth at all.”
One possible bright spot, Kamlarz said, was that if President Barack Obama signed the Health Bill Tuesday, then it would help the city’s Health Department over the next four years. “All the people who were not covered will now be covered,” he said. “We’ll have to wait to get more details.”
The city’s clean storm water fund is also suffering from a $0.9 million deficit. For this, the city’s Budget Manager Tracy Vesely said they might have to turn to voters to fund day to day operations.
Another depressing area is the $6.1 million shortfall in affordable housing needs because of limited Housing Trust Fund resources coupled with increased demands, Kamlarz said.
The council is scheduled to vote Tuesday on whether to extend the $1.4 million Housing Trust Fund allocation for the proposed Ashby Arts affordable housing project at 1200 Ashby Ave.
The project is currently stalled because of the economy. Project developers CityCentric is seeking a non-profit partner to take over the ownership of a part of the project.
The city’s permit service center—whose revenue funds the Planning Department—is also operating at an annual deficit of $1.1 million.
“Building activity is down, we are not seeing a pick-up,” Kamlarz said, adding that the Planning Department had stopped filling any vacancies for a while now.
Balancing measures for 2011 include $10.8 million in cuts, $2.3 million in new revenue and slashing 67 positions, half of which are vacant. Public safety will see minimal cuts, Kamlarz said.
Recurring cuts are expected to balance the $4.8 million budget deficit in 2012.
The city will also present a plan Tuesday to balance its refuse collection budget. When Berkeley raised its collection rates by 20 percent last year, many residents switched to cheaper smaller trash cans, but Kamlarz said the city might raise rates again to combat the current deficit.
The budget balancing plan, which will have to be approved by the council first, will also reduce the number of workers on each garbage collection truck from two to one.
Every city in Alameda County except Berkeley has one person on these trucks, Kamlarz said
Another fast approaching problem for the city, Kamlarz said, is the rise in the California Public Employees’ Retirement System fees for Berkeley in 2012 and 2013.
The rate was low in 2003 and 2004, Kamlarz said. “Then all of a sudden the market tanked and people retired early,” he said. “We had a lot of retirements. Costs have gone through the roof.”
The Berkeley City Council will hold a workshop at 5:30
p.m. Tuesday to discuss ways to balance the refuse collection budget.
The council is scheduled to adopt the budget on June 22.