News and Blog – Cassidy for San Leandro

In early December 2009, I noted that San Leandro’s day of fiscal reckoning was quickly approaching.  The mayor and city council have adopted a series of budgets that have set the city on the path to bankruptcy.  The city has been running deficits for the past three years, covering them by transferring millions from reserve and self-insurance funds.  Repeatedly using one-time only money for ongoing expenses is a prescription for fiscal disaster.

Instead bringing expenses under control, the budget for 2009-10 continues to draw on reserves.  While the mayor claimed to have cut 10% of positions at City Hall, many of these jobs were part-time positions or vacant, and the cuts did not produce substantial savings.  Moreover, the budget relied on grossly overly optimistic projections of revenue increases.  It assumed a 4% gain in sales taxes, a 3% jump in property taxes and slight increase in the utility users fee.  These are the three largest sources of revenue for the city.

Before the budget was adopted, I stated in the San Leandro Times that it “was dead on arrival” because it was based on unrealistic revenue expectations.  “If they pass this budget,” I stated, the city council “will be doing the same thing Sacramento does and just passing it for the sake of passing it.  They need to roll up their sleeves and make decisions based on sound fiscal sense or they will be back in July or August asking where the money is, because this revenue is not going to just appear.”

At a city finance committee meeting on January 27, 2010, the city finance director reported that revenues have declined another $1.9 million from what was projected last June.  Revenue from property taxes, sales taxes and utility users fees remain in free fall.

The latest revenue decline follows a $3 million drop in revenue reported in earlier finance committee meetings.  Instead of receiving $72.6 million in revenue as contained in the budget for fiscal year 2009-10, the city now projects receiving only $67.5 million.  As five months remain in the fiscal year and the Bay Area economy is not expected to start to recover until 2011, a strong possibility exists that revenues will continue to fall.

In terms of expenditures, there has been slight progress.  Originally, expenditures were set at $77.7 million for 2009-10.  Now, the city is projecting it will spend $74.9 million this fiscal year, a decrease of 3.6%.  This $2.8 million reduction in expenditures is partially based on anticipated savings from employee furloughs that have yet to be implemented.  Nor does it cover the $5 million plus loss in expected revenue.

The bottom line is that the city’s annual deficit has expanded from $5.4 million as set in the adopted budget to now $7.3 million.  Last fiscal year, the city’s deficit was $7.6 million. Thus, the city is on track to accumulating nearly $15 million in red ink in two fiscal years.

One city council member at the meeting commented, “If you project out a number of years, we are in trouble.”  During public comments, I stated that the city was in trouble now, and in danger of being forced to declare bankruptcy next year.  The reason why is the city has a $6 to $8 million structural deficit and soon will exhaust its reserve funds.  Once over $20 million, these reserves will be at $3.8 million by June 30, 2010, and possibly much less if revenues continue to decline prior to the end of the fiscal year.

Do the mayor and city council recognize the seriousness of the city’s fiscal crisis?  From their actions, I have seen no indication this is the case.  Recently, they hired a new assistant city manager, at a cost to the city of $250,000 a year.

What is planned is a measure increasing the sales tax, taking it to at least 10%.  San Leandro would have the highest sales tax in Northern California. Even at this amount, given the size of the city’s structural deficit, City Hall would still be running annual deficits and additional tax measures would have to be placed on future ballots.  The mayor and city council are placing the fiscal solvency of our city on the outcome of an election.

On January 19, 2010, the San Leandro City Council voted 5 to 2 vote (Council members Starosciak and Stephens dissenting) to adopt ranked choice voting (RCV, also known as instant runoff elections).  There will not be any election for the office of mayor and city council positions in June 2010.  Instead, the election for city offices will occur on Tuesday, November 2, 2010.

Fourteen persons, including myself, spoke in favor of RCV at the meeting. No one from the community spoke against RCV. I stated that eliminating the need for runoff elections would save the city money over time. In addition, democracy works best when there are contested elections. With ranked choice voting, candidates for office would know they only had to raise funds for one election, making the run for public office more affordable and increasing the likelihood multiple candidates will compete for the same office

On Tuesday, January 19, 2010, the city council will decide how to use over $3 million San Leandro will receive from Measure WW, a bond for East Bay parks and recreation facilities.

Originally, Mayor Santos established an ad hoc committee of solely city council members to determine how the funds should be spent.  Over a three month period, council members Starosciak, Souza and Gregory met behind closed doors, without any public input, and proposed allocating the vast majority of the funds to one project.  The city council disagreed with this approach and referred the matter to the Recreation and Parks Commission.

I congratulate Peggy Combs and Debi Vandiver, chairs of the Recreation and Parks Commission, the other commissioners and city staff for inviting the community to provide its input on how Measure WW funds should be spent.  I participated in one of public forums.  Neighbors from all parts of San Leandro attended.  I was impressed by how well-run and informative the process was.

The  Recreation and Parks Commissioners have accepted the community’s top choices for the funds.  These choices are ten projects that will improve parks and recreation facilities across San Leandro.  They are Toyon Park Play Equipment, Marina Park Irrigation Improvements, Marina Park Par Course Improvements, Marina Dog Park, San Leandro Ball Park Locker and Restroom Refurbishment, Stenzel Park, Drainage, Marina Park Group Picnic Areas, Pacific Baseball Field Bleachers, and Resurface Skate Park with Concrete and for all Parks the rehabilitation of Asphalt Walkways.

In turn, next Tuesday night, the city council should do the same and use Measure WW funds for the projects that received the greatest community support.

Update January 20, 2010

The views of the community prevailed.  By a 7 to 0 vote, the city council voted on January 19, 2010, to adopt the recommendations from the Recreation and Parks Commission.