There is no doubt that Concord’s Budget Officer Jovan Grogan, and Director of Finance Karan Reid, do a brilliant job projecting the City of Concord’s current expenditures and future expenses. Unfortunately, and despite the passage in 2010 of Measure Q, neither of these individuals, and City Manager Valerie Barone or the City Council has the ability of Rumpelstiltskin to weave gold from straw.
The City of Concord, and likely all cities in Contra Costa County, face limited funds that are available from tax revenues, the State of California, and federal governments which Concord needs to properly administer the city.
With the May 13th budget meeting soon approaching, Concord officials hope to formulate plans that will take care of budget needs for the 2014-2015 and beyond. It isn’t an easy task. The problem is that with that only $68 million of revenue being available for $74 million in expenses (plus another $10 million or so for deferred maintenance and unfunded liabilities to contend with), striking the right balance is a difficult job.
This gap has been partially off-set by some $10.9 million of extra tax revenues made possible by the 1/2 cent sales tax enacted by Measure Q in 2010. This money has been spent eliminating the $6 million shortfall in the yearly budget, plus building up the city’s reserves for when the half cent sales tax expires in March 2016.
The Measure Q Oversight Committee, on which I serve, has had the responsibility of advising the City Council if these Meaure Q monies have been spent judiciously by the City according to Measure Q requirements. In its opinion, this mission has been accomplished. After three years of monitoring Concord’s finances, the Measure Q Citizen Oversight Committee, unanimously approved by the Committee dated May 13th to the City Council:
Does the City’s proposed General Fund Budget for Fiscal Year 2013-14 make progress toward resolving the City’s structural budget deficit within the next 10 years?
The Committee finds that the proposed General Fund budget and 10-year financial forecast for FY 2014-15 makes progress to resolve the structural deficit, in that the forecast includes budget reductions that amount to $4.2 million to begin occurring in FY 2015-16. The Committee recognizes that significant work has been done over the Committee is concerned that, although the City is experiencing some revenue growth as the economic recovery continues, the recovery has been slow and the City will continue to rely on Measure Q revenue and reserves.
Unless significant actions are taken, the Committee is also concerned that the expiration of Measure Q in March 2016 will once again cause the City to rely on the use of reserves to fund on-going operations –causing the City’s reserve levels to deplete over the long-term. In anticipation of Measure Q expiring, the 10-year financial forecast includes unidentified budget cuts in the amount of $4.2 million to be phased in beginning in FY 2015-16. However, even with $4.2 million in budget cuts, projected revenues without Measure Q are not sufficient to address deferred infrastructure needs and other liabilities.
The Committee recognizes that significant work has been done over the last 12 months to transparently identify the magnitude of the unfunded liabilities and infrastructure maintenance challenges that face the City. Further, the Committee finds that the 10-year financial forecast includes costs for unfunded liabilities and infrastructure needs –something that was omitted from prior forecasts and highlighted by this Committee.
The Committee concurs that it makes sense to minimize service reductions while Measure Q is being collected from tax payers to preserve City services, however, the committee also recognizes the significance of the challenges and urges the City Council and City management to develop a clear roadmap to stabilize the General Fund budget.
In short the Measure Q Oversight Committee is saying:
1. It is concerned that when revenue from the half cent sales tax sales tax which provides around 10.6 million dollars a year for the general fund expires in mid 2016, the City will likely have to cut existing services that the community is accustomed to receiving.
2. The current plan of spending the 30% reserve fund to keep City government afloat between 2016 and 2020 is not a desirable thing.
3. In the post 2016 world the Committee expressed apprehension about paying for pension and medical costs for current and retired employees will be very difficult based upon projected revenues coming in.
4. Although the City Council is now dealing with unfunded liabilities of what is owed retired city workers (currently $1.7 million annually for retiree medical alone) being able to even do this much in the future is in doubt.
5. The Ability to pay for deferred infrastructure maintenance, principally for roads, city buildings, and parks which is conservatively at least 8 million dollars per year.
What this all means is that if the City of Concord were a family of 4 living in a house owned with a 30 year mortgage, they would be adversely affected if their disposable income were reduced by 35% each year. Unlike the federal government that can always print more money, our fictional family that is having their income reduced from 69,000 to $61,000 per year will have to make some cuts in their household spending.
Much like a city they would fixed costs that can not be easily altered such as a mortgage of $2900.00 per month (including taxes )car payments, auto insurance, loans and medical expenditures. The family still needs to eat and basic needs of the kids have to be met. After those obligations are taken care of, all discretionary spending is up for elimination including hobbies, school activities, support for charities, going to the movies, vacations, restaurant meals, clothing, sporting goods, trips to the Mall, etc…
While making such choices to reduce expenditures is not pleasant, at least a family has a safety net that can include help from relatives, government assistance and charitable organizations. City governments (unless they are Detroit) cannot expect a bail-out. Quite to the contrary, Concord and other cities have been put in precarious financial position partially by funding taken away five years ago by the State of California in order that they could balance their budget during the recession. (More on that next week)
Presently, there is no Sugar Daddy lurking in the wings who will give this family the resources to comfortably operate as in the past.
The City of Concord and other communities in the Diablo Valley, much like our fictional family, are looking at ways to cut their expenditures to balance their budgets. On the chopping block are things like The Fourth of July Parade, office hours at the library, keeping up the parks, road maintenance, public events, landscaping, the Senior Center, mitigating impacts of addiction homelessness roaming our streets, plus domestic violence, gang activity, general law enforcement and a host of other services.
It would be difficult for the City to continue to insure its motto “In Concord where families come first” if the place becomes a bare bones operation with a low functioning city government and budget strapped law enforcement.
This is why on May 13th when the City Council deals with formulating the budget for fiscal years 2014-15 and beyond, it will likely take up the matter of extending Measure Q after its March 2016 expiry date. Insiders believe they will commission a professional polling firm to ask voters:
A. Are they in favor of extending the sales tax and it so for how long?
B. Should the sales tax remain at one half percent or be less?
C. If the sales tax is extended, should there be a means for it to be terminated or reduced if more money comes in from the state and/or property tax revenues to increase in the coming years?
It is apparent to the City Council and civic leaders that budget cuts and staff reductions made in the past five years have cut out almost all the fat and inefficiencies in city government. If this process of reducing costs of government continues, no one but card carrying libertarians will want to live with the consequences.
~ The author is a member of the Measure Q Oversight Committee and any opinions expressed in this article are his own and not that of the committee, or the City of Concord.