Public Comment

How Berkeley Employee Costs Eat Up the Rest of the City's Budget

By David M. Wilson, Berkeley Budget SOS
Tuesday October 04, 2011 - 08:24:00 PM

Berkeley residents are beginning to understand why there is no money for those nasty potholes, decayed play structures, community pools, and safety-net social services. They are also beginning to see cracks in the whole civic structure as the City is forced to cover tens of millions in unfunded pension and infrastructure liabilities. 

Silently and stealthily, City employee costs have devoured the rest of the City budget. 

In FY 1991, the total City budget was $139,380,776. 64% of this amount, $90,643,816, was devoted to personnel costs (wages, overtime and other cash payouts, and benefits). The rest of the money was there to keep our streets and sewers and parks in good shape. Twenty years later, in FY 2010, without any significant change in population, the total budget rose 226% to $315,000,553 and employee compensation rose to $252,571,909 or 80% of the budget. 

During that same period, the CPI was up 166% but the City budget was up 226% and employee cost was up 224%. How did we fill the shortfall? Instead of tough bargaining with our unions, we caved in to their wish list, and paid for it by short-changing things like parks, road and sewer maintenance, and the like. 

For example, 1991 capital expenditures by the Public Works Department was $13,563,971. In 1992, $27,054,500 was budgeted. Assuming a total City budget of about $140,000,000 for each of those years, this equates to about 10% and 19% respectively, for capital improvements in those years. 

Twenty years later, for Public Works capital improvement, only $12,967,999 was spent in FY 2010 and $8,387,008 was budgeted for FY 2011. This equates to 4% and 3% respectively of the total City budget of $315,000,000. 

When adjusted for inflation the 1991 expenditures of $13,563,971, should have been $22,516,191 in 2010, just to break even. The $27,054,500 budgeted in 1992 should have become $44,910,470 in 2012, just to break even. Looking at just the past two years as compared to twenty years ago, we’re talking about a real dollar decrease of $26,808,190 in what the city has spent for ongoing infrastructure maintenance and improvements. 

It’s clear that part of the budget that was previously devoted to capital improvements and rainy day reserves is being eaten by the out-of-control employee costs. It’s kind of like the cuckoo who lays her eggs in a smaller bird’s nest. The cuckoo babies get bigger and bigger and starve the rest of the fledglings out of their home. 

How we got here is a bit less clear. Certainly it is not the fault of employee unions: they exist to cut as good a deal as they can for their members. But Berkeley’s job is to cut as good a deal as it can for the city as a whole. Are we afraid of being called “anti-progressive” if we bargain too hard? Or is there something structurally wrong making the City Manager chiefly responsible for negotiating wage/benefit packages of which he is a primary beneficiary?  

The City Council knows or should know all of this. But instead of real solutions, it is now ready to ask the voters (yet again) to pay more taxes. In the meantime, other cities, like San Francisco, have bargained with their unions to bring wage/benefit packages into line with available resources. Berkeley should do the same. 

A new report by the civic group Berkeley Budget SOS reveals that Berkeley has the highest number of employees and highest employee compensation per capita of twelve regional cities of similar size (to view report “City Employee Costs, Proposed Savings and Action Plan” go to 

Berkeley Budget SOS is a civic organization dedicated to fiscal clarity, accountability and sustainability. It produces articles, analyses, insights and recommendations aimed at resolving the City’s fiscal challenges without additional taxation to its already financially-burdened residents.