On March 23, 2004, the City Council directed the City Manager to take certain actions to achieve $25 million in budget reductions and/or increased revenues for FY 2004-2005. An implementation plan for reductions of $12.5 million was to be reported on April 6, 2004. Additional reductions of $12.5 million were to be implemented between April 1, 2004, and June 30, 2005. 

An additional $3.2 million of savings and/or revenue enhancements were to be derived from the budgets of the Police and Fire Departments, resulting in a total of approximately $28,000, which is the estimated cumulative shortfall for FY 2004-2005. This combines approximately $21 million projected for FY 2004-2005 and approximately $7 million carried over from FY 2003-2004. 

The draft plan is now circulating and includes, as we predicted, massive reductions in Library services and elimination of two-thirds of the Recreation and Parks Department. There are no actual layoffs proposed for the Police Department, but 10 additional Fire Department layoffs are projected to result in the permanent closure of Station 66. 

The layoff plan includes 183 full and part time positions with General Fund savings of $14,163,489. 

This leaves approximately $14 million in additional cost savings and/or revenue enhancements that must be implemented in the next 15 months. No details of how this might be achieved are available except one-time sales of surplus property. 

In my opinion, City management and City Council continue to show a lack of leadership in the area of revenue enhancement. One of the most popular proposals from citizens in the recent series of Town Hall Meetings is removal of the “cap” from the utility tax, thus eliminating ChevronTexaco’s unique tax break. I have been pursuing this since at least 1994, but the City Council has routinely killed any effort to even examine the possibility (See E-FORUM May 15, 2002, http://www.tombutt.com/forum/020515a.htm). There is credible evidence that removing the “cap” could produce millions in additional revenue, but the City Council does not want to know because ChevronTexaco does not want them to know. 

The lack of a requirement for business license taxes on rental property owners is another product of decades of special interest lobbying. After months of deferral by the City Council, the Finance Committee has finally recommended to concept to the City Council, but it has yet to be agendized for action. Even now, I estimate that 20% of current business license taxes are not being collected due to lack of effort by City staff.

I recently brought to management’s attention that the Palo Alto Fire Department recovers 44% of its costs, but no report has been provided to the City Council about how Richmond might implement similar practices. 

Most cities recover around 80% of their Park and Recreation costs, while Richmond recovers about 20%. This has been the result of a conscious policy decision by the City Council based on the fact that Richmond is a relatively poor city, and its recreation programs need to be heavily subsidized. This makes perfect sense if the money is there, which is no longer the case. It seems that we now have the choice of implementing “pay as you go,” like other cities, or simply get out of the business. Which makes more sense? 

Incidentally, the Park and Recreation Department continues to run the Convention center at a substantial loss. Our consultants have pointed out that appropriate management of this asset could result in major income. This begs the question, “Why has this been going on for so long, and why has management allowed it?” 

The City Council has resisted exploration of benefit assessment districts for years, although these are routinely used by other cities to balance their general fund budgets. In early December 2003, the City Council directed the City Manager to report back in 90 days on potential implementation of a variety of potential benefit assessment districts. That deadline has come and gone without any report.  

For over 20 years, I have been battling with City management over dysfunctional code enforcement and abatement operations. These operations can be funded by liens on real property, which is the best security available. But City management continues to insist that it will take three years to develop a self-sustaining program. I am reminded that over 60 years ago in Richmond, Henry Kaiser built the largest shipyard in the world and was well on the way to building 749 ships in less than three years. Times have certainly changed. 

In the next few days, the pleas from citizenry to save this program or that will continue to be heard. Clearly, there is no way that the anticipated budget cuts can be realized without major damage to all General Fund activities. What we really need to hear from citizens is what programs should be cut further to save those that are individual priorities. Unfortunately, by the consultants’ own report, a total of only about 200 citizens were heard at the six Town Hall meetings. That leaves at least 30,000 adults who have not weighed in on the current financial crisis. For years, I have been advocating an annual survey of residents to ascertain, among other things, their priorities for City services, but the City Council has routinely killed this, also. 

Several years ago, I introduced a resolution to seek proposals from other fire districts to provide services for Richmond, but it was killed by the City Council by a motion to table. 

PDF files with the City Manager’s cost reduction and revenue enhancement recommendations, including a draft layoff plan, are attached.

layoff_plan_033004.pdf

CC_Actions_032304.pdf