Last year, I wrote that the city’s budget was “seriously flawed” because it continued to rely on one-time only funds to pay for ongoing expenses and on “unrealistic projections that tax receipts will increase.” I said there was an unwillingness at City Hall to address hard fiscal issues, and added: ”The senior center under construction may have to be closed as soon as it is opened.”
My prediction proved accurate. The city is on course to accumulating over $7 million in red ink this year, and $21 million over the past three years.
“How is the city council planning on avoiding the city’s day of financial reckoning?” I asked. One solution I offered was:
The city council should also revise the budget approval process. When the city council adopts a budget, it reviews data only for the next fiscal year. That’s like an ocean liner sailing at full speed across the Atlantic without radar. The city should take into account multi-year fiscal projections. This way financial time bombs in the future can be identified and defused before they explode.
Sadly for our city, the city council does not engage in multi-year budgeting. The result is the new senior center, which is nearing completion of construction, will not open due to a lack of operating funds.
When it will open is unknown, perhaps not until 2011 or later. In fact, simply to maintain the building without any community use could cost over $200,000 a year. As noted in the Daily Review:
Although construction of the $11 million center is paid for, the city lacks money to operate it. The City Council has been undergoing budget cuts to balance an approximately $3 million deficit, and funding to operate the new Senior Community Center has not been included in the proposed 2010-11 budget. City Manager Stephen Hollister said the center’s annual operating costs will run $400,000 to $500,000. Delaying the opening for a year will save $250,000 to $350,000, after maintenance expenses.
Multi-year budgeting could have avoided this fiasco. Simply look at the San Leandro Unified School District. Like the city it has been dealing with declining revenues for years (due to cuts in education funding from Sacramento). Unlike the city council, the school board reviews budgets for the current and next two fiscal years.
The school district identifies in advance funds for the operation of new facilities. The city does not. This is why students will be attending the new Fred Korematsu campus at San Leandro High School next Fall, and the new senior center will be closed.
