|Rich-mond or Poor-mond?
November 19, 2005
Right or wrong, Richmond has carved out a reputation for its itself as a cash starved city constantly struggling to meet even the most basic needs of its citizens. Initial results from an ongoing study I am pursing of general fund budgets indicates Richmond may not be as strapped as many would have us believe.
Although not yet complete, enough information has come in from my City General Fund Budget Project to share some preliminary findings. Ultimately, I intend to have data from 16 cities, including Richmond, but I currently have only 14 due to some difficulties in obtaining information form Walnut Creek and Mountain View. The raw data was compiled and entered into Excel spreadsheets by Kevin Morsony, who has done an excellent job.
A PDF file with selected revenue and expense categories is attached.
These 16 specific cities were chosen because they are all in the Bay Area and have been used in the past by both Richmond administration and public employee unions to generate data on comparable salaries and benefits. They range in population from 57,000 to 210,000, but several, including Berkeley and Daly City, are quite close to Richmond’s 100,000 population.
Each city is different, and those differences have to be taken into account. For example, some cities do not provide services such as fire and libraries that are provided by special districts or counties. Each city also has unique ways of reporting its budget categories, but we have tried to present comparable categories as close as possible. There are also differences in demographics, per capita and household income, property values and business activities that affect both revenue opportunities and expenditure priorities.
I have converted all data to per capita numbers so as to provide the closest possible comparison for cities that vary in population and gross revenues and expenditures. I have limited the comparison to the general funds because agencies such as housing authorities and redevelopment agencies typically are separate and have their own fund balances. It is the cities’ general funds that generally provide the basic municipal services such as public safety, parks and recreation and internal services such as finance and human resources.
Most cities derive their largest revenue from property taxes, sales and use taxes, utility user taxes, real estate transfer taxes, transient occupancy taxes, business licenses, franchise fees and motor vehicle license fees.
Of the fourteen cities compared, Richmond has the third highest general fund revenue at $1,063 per capita, exceeded only by Berkeley and Palo Alto. Within the general fund revenue stream, Richmond has the highest utility user tax revenue and highest real estate transfer tax revenue and the second highest property tax revenue. Richmond is about at the median for business license taxes and franchise fees. What is clear is that most cities operate on far less revenue than Richmond.
The largest expenditure of all cities is for public safety, police being the highest and fire the second highest. Richmond spends more for police than any other city except Palo Alto, and for those cities with fire departments, Richmond is fifth among 13, making it higher than average. Richmond has the highest human resources cost, the second highest city council, city attorney and finance department expenses.
Of those cities that support libraries, Richmond is far behind most but ahead of Daly City and Hayward. Similarly, most cities with parks and recreation budgets far outspend Richmond, but Berkeley, Alameda and South San Francisco do not.
What does all this mean? I think it will take a lot of pouring over the figures to extract ultimately useful information, but my sense is that there are lessons to be learned. Some cities have tapped into revenue sources, such as franchise fees, that bring substantially more revenue than in Richmond. Other cities seem to have found ways to operate certain departments or functions more efficiently, bringing better results with lower expenditures. No one city seems to have all the answers.
Traditionally, any time an exercise in comparing Richmond to other cities has been made, it gets ripped apart by critics who defend Richmond as a “full-service city,” a city beset by unique challenges and problems or a city whose residents simply demand or deserve more. Regarding the full service city argument, Richmond may have a port, for example, but neither the revenue nor the expenditures are included in Richmond’s general fund budget, so it has no fiscal impact. While there may be a kernel of truth in some of these claims, I tend to believe that in the provision of municipal services, Richmond shares many more similarities with other cities than differences. What I believe is perhaps unique in Richmond is an ingrained municipal culture that makes change and excellence challenging. I also believe this is changing, and there will be a better future.
Finally, I am perhaps most surprised by the different ways similar cities present their general fund budgets. I find those that are most expansive to be the easiest to understand. Richmond shunts a lot of its budgetary information into various “enterprise” or restricted funds so that you never see the whole picture.
When I get information from the last two cities, I intend to turn the entire database over to the city manager and to my City Council colleagues for their use.