Richmond won't have to make midyear budget cuts
By Katherine Tam
Contra Costa Times
Posted: 02/16/2011 04:16:52 PM PST
Updated: 02/16/2011 05:49:44 PM PST
For the first time in two years, Richmond won't have to resort to midyear budget cuts to make ends meet.
Projections for the city's expenses and revenues are holding fairly stable so far, and officials hope to reach the end of the fiscal year on June 30 without bringing down the ax.
"This year, unlike the last two years, we're actually hitting those (revenue) estimates," City Manager Bill Lindsay said. "It feels like we've hit bottom or at least if it's (revenue) declining, it's declining in a way where it's much more easy to manage. It really felt like it was spiraling for a while."
However, this does not mean that officials should ramp up public services too fast too soon, he said.
"It is still a time to be extremely careful with our very limited resources, given the needs of the community and the aspirations and goals of the City Council," Lindsay advised the City Council on Tuesday. "It's important to have stability in the services we provide so we're not adding services and then saying 'We let out the rope too fast, we need to cut back.' "
A draft budget for the 2011-12 fiscal year is slated to reach the City Council on May 3.
Big challenges are on the horizon. Gov. Jerry Brown wants to eliminate redevelopment agencies, which Richmond has used to finance big projects such as affordable senior housing, the BART parking garage and road repairs downtown.
More home foreclosures are expected over the next two years, and unemployment is at 17 percent, said Jim Goins, finance director.
Health care and pension costs are continuing to rise. The city needs a strategy to tackle that and should consider ideas, such as extending the retirement age of police officers, to save money and avert bankruptcy, Councilman Nat Bates added.
"We don't want to get ourselves in that situation," he said.
Already, council members are assembling a mental list of what projects need funding, including repairing potholes, building a police substation on the south side, fixing or replacing the old boiler at the Richmond Memorial Auditorium, and adding an elevator to the auditorium so seniors can easily reach the disabled restroom on the second floor.
"We are going to have to prioritize," Mayor Gayle McLaughlin said. "We can't do everything."
Richmond has come a long way since 2004, when poor fiscal mismanagement led to a $35 million budget crisis. Officials laid off 300 workers and cut public services such as libraries and community centers at the time.
Under Lindsay and Goins, both hired to sort out the city's coffers, Richmond's finances have stabilized.
Then the recession hit and the economy tanked. Sales tax, property tax and other money the city depends on has dropped sharply. This past fiscal year, the council had to cut $7.5 million and eliminate dozens of positions through early retirements, transfers and layoffs, just three months after adopting what had been a balanced budget in order to bring costs in line.
Projections for this year's $136 million operating budget are hitting the mark. The city expects about $2 million more in costs at the midyear point, which it will cover through grants and other one-time money.
The reserve stands at $10 million.
Katherine Tam covers Richmond. Follow her at Twitter.com/katherinetam. Stay up-to-date on West Contra Costa news at IBABuzz.com/westcounty.