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City Council Ponders Budget Woes
June 12, 2003

When the city manager presented the proposed budget for 2003-2004 on June 2, 2003, it was not without a grim introduction. Income projections are slightly down overall, primarily due to reduced sales tax revenue and transfers from the budget-challenged State of California. Expenditure projections are up substantially, primarily from increased employee pension fund costs. The city manager went on to say that he had trimmed departmental budget requests of $103 million down to a manageable $93 million, that all essential programs would be maintained, but the reserves would dip to a risky 1.6 million, substantially below the 5% minimum desired by the City Council and generally recommended.

Beginning on June 2, and continuing through June 3, 9 and 10, each department head presented details of his or her budget and answered questions from City Council members. Although these budget hearings were televised, they consumed some 10-12 hours and did not exactly make for stimulating viewing. This is in addition to the two regular City Council meetings on June 3 and 10, including a final report by Caporicci & Larson of the City's FY 2001-2002 financial audit.

Following are some particularly interesting nuggets (bombshells?) that came out of the budget hearings and City Council meetings:

           Of 162 cities surveyed, Richmond ranks second highest in cost per employee for workers compensation claims. Richmond has been infamous for mismanagement and abuse of workers compensation for years.

          Of the 70 California cities audited by Caporicci & Larson, Richmond ranks 69th in financial management. The firm's Recommendations for Management included descriptions of seven major deficiencies, including a basic failure to balance the City's checkbook. The auditor also found some $1.5 million in delinquent accounts receivable, including $800,000 "miscellaneous" and $700,000 belonging to the Port of Richmond. To be fair, they went on to say that substantial progress had been made over the last several years, including moving from a qualified to an unqualified audit report, and that progress was continuing. After deleting bad marks for tardiness, Caporicci & Larson went on to say that Richmond would be ranked a more respectable 45 out of 70.

          The Police Department needed at least $1.3 million more to maintain its existing operations.

          One of the last presentations was from the fire chief, who perhaps dropped the biggest bomb of all. After four days of hearings and working under the assurance from the city manager that essential programs would remain intact, we were shocked to hear the fire chief say that the proposed budget would result in permanent closure of two fire stations, layoffs of some twenty or more firefighters and increase of the City's fire insurance risk rating. (Other fire management staff and union leaders have publicly stated that three fire stations will be closed.) With only $1.6 million projected for reserves, some of which had already been reallocated in the three previous days of hearings, a dumbfounded City Council decided to call it quits at midnight and go home to ponder all this and perhaps dream of better times.