The opponents of Measure O keep using the $248 million figure to explain the city budget and they argue if the city cannot manage that quantity of money, they should not be trusted with an additional $3.7 million in tax revenues.
We can certainly make the argument that the city has mismanaged its money, however, at the same time, it is not true to say that the city has a $248 million budget.
As the city explained in its mailing, “The city organizes the budget into several fund categories. Each one functions like a separate bank account with different revenue sources and targeted expenditures.”
Most of the time, we deal with the general fund. The general fund is roughly $42 million and represents the city’s “main source of revenue paying for public safety and essential community services. It is also the most flexible fund allowing the city to apply its revenue to other city expenditures when necessary. This fund relies heavily on property or sales tax revenue.”
The projected $5.1 million deficit is in the general fund. At times over the last six years, we have seen deficits within all funds and at times, budget cuts and contract agreements have impacted the all-funds budget as well.
The biggest portion of the all-funds budget is the enterprise fund. There are five enterprise funds in the city – water, sanitation, sewer, storm sewer and public transit. That accounts for a huge amount of the all-funds. These services are funded not through taxes but rather through fees, charges by the city for service, and they are generally established at a level that will cover the costs to provide the services for the current fiscal year.
There is roughly $4.3 million left in the RDA Successor Agency. That money is used to pay the obligations that the city still has from the Redevelopment Agency, and some of that money goes to pay the pass-through agreement.
The city also has about $5 million in debt service for general obligation bonds, and that’s a figure that is likely to grow as the city borrows for the surface water and wastewater project.
The city has about $7 million in the Capital Improvement program. This is used to account for financial resources to be used for the acquisition or construction of major capital facilities.
The city also has about $19 million in administrative services, and much of that is funded through internal service funds which fund programs that provide services to other city departments. Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the city, or to other governments, on a cost-reimbursement basis.
Finally, while some of public works is a general fund expenditure, most of it is not. About $17 million of the public works funding is non-general fund. This is a main reason why cuts to the public works department do not help the general fund that much.
A lot of the public works funding comes from transportation funds, state and federal grants, and the gas tax. Fleet and central stores also have a large portion of funding coming from the utility funds.
Where is the general fund deficit coming from?
The $5.1 million deficit is really a misnomer. On the one hand, the city has been neglecting to put substantial amounts of money into the roads fund for the last decade. The council has asked for a more realistic accounting of unmet needs and deferred maintenance into the budget.
However, the $5.1 million is really a theory more than a reality.
When the city council voted to reduce the tax from three-quarters-cent to half-cent, it stripped out $1.5 million of the $2.5 million ticketed for roads and other infrastructure. In reality you could argue that the actual deficit is about $3.4 million or so.
If you want to include roads in that, the number soars. The city really needs to fund roads at a rate of $5 to $8 million per year, with additional funding for parks and buildings which have yet to be determined.
Right now, the plan is if Measure O passes, the city would fund the $2.3 million in personnel-related costs plus PERS and retiree medical benefit cost increases, plus $1 million for roads.
The city has designated about $1.2 million in additional cost cuts, regardless of whether Measure O passes.
If Measure O fails, the city would either cut 12.5 percent across all departments, or 25% holding public safety harmless. The most likely option is the latter.
The parcel tax, proposed for November, would then have to fund capital projects like roads, parks, buildings and other maintenance. While the city clearly needs to find those monies, the council is likely to base their willingness to go forward on the results of the Measure O election.
—David M. Greenwald reporting