|Revenues Perk Up
February 27, 1999
WEST COUNTY TIMES
* A MIDYEAR BUDGET REVIEW SHOWS CUTS, TAXES WILL HELP AVOID MORE LAYOFFS
Saturday, February 27, 1999
RICHMOND The city is on stable financial footing for the first time in five years, officials say, but City Council members are warning against excessive optimism about Richmond's budget.
Income is improving; some of the cuts made in the beginning of the fiscal year will be restored; more money will be set aside for reserves; and the city staff has come up with about $3.1 million they say could be generated through new revenues and by making city government more efficient.
But much of the new money will be available only this year, and salary negotiations with the city's six employee unions have yet to begin.
"We're nowhere near out of the woods," Mayor Rosemary Corbin said.
The brighter financial picture was painted during the council's midyear budget review Tuesday. Finance Director Anna Vega's report came just eight months after the city grappled with a $5 million deficit that resulted in the loss of 53 positions.
"It's all good news for once," City Manager Isiah Turner said. "We're in pretty good shape. Nobody's going to get laid off."
About $2 million in new revenue has been realized as a result of last year's cuts and increased tax revenues brought on by a thriving economy, Vega said. The total also includes about $400,000 in property tax payments from Chevron, $200,000 in fines and forfeitures collected as a result of increased police patrols and $200,000 from a settlement by BankAmerica Corp. of a class-action lawsuit that accused the bank of cheating issuers out of municipal bonds.
The money will help pay for about $621,000 in additional expenses and to restore some community services lost in this year's cuts. And about $1 million will be set aside for reserves.
Despite misgivings, the council unanimously approved the added expenditures.
Corbin cautioned against relying on one-time revenues to prop up the budget. And she reiterated a long-standing complaint about the state taking away much of the city's property taxes.
"There are a lot of ifs out there," Corbin said. "Anybody who looks at the budget and says there's more money there, don't you believe it."
Councilman Tom Butt complained that nothing has been set aside for long-deferred capital improvements such as an earthquake retrofit of the City Hall complex, improvements to the city's ailing sewer system and street and sidewalk repairs. The city is in the process of informing residents about the sewer needs to avoid a protest over rate increases.
Butt also noted that union negotiations could alter the city's financial picture dramatically. Contracts with the unions have expired, and city officials are hoping to put salary increases off for one year.
"We still haven't negotiated any contracts," Butt said. "That's a big unknown that could translate into a lot of money."
The council Tuesday also learned that the city may be able to generate an additional $3 million. The city staff has been trying to find ways to save money and generate new revenue as part of the management efficiency study commissioned by Chevron.
Chevron, as part of a property tax settlement with the city, has agreed to pay the city $1 million and to help it find ways to operate more efficiently.
A consultant has been hired to analyze the fees charged for city services and the cost to the city of providing services to other departments. Years of undercharging for such costs may have contributed to the deficits in past years, Vega said.