EAST BAY CITIZEN. EVERYWHERE SINCE 2009

Friday, January 29, 2010

Black Cat Brings Bad Economic News to Committee

FINANCE DIRECTOR PROJECTS DEFICIT TO RISE TO $7.3M AS REVENUES DECLINE
By STEVEN TAVARES
The Citizen 
You know you're in big trouble when a black cat strolls into the afternoon finance meeting. The ominous scene actually happened Wednesday as the city finance director announced an additional mid-year revenue shortfall of nearly $2 million.

The revised budget numbers puts the city on track for a deficit of $7.3 million with revenues of $67.5 million by the end of the fiscal year this June.

"We can't afford to keep doing this," said Councilman Jim Prola, who also sits on the three-member finance committee. "If you projected out a number of years, we're in trouble unless we increase revenues."

Stephen Cassidy, the man hoping to unseat Mayor Tony Santos in November and a frequent critic of the city's handling of the its finances said, "You're in trouble now and you're in danger of going into bankruptcy by early 2011 because you're running a $7 million structural deficit that you're going to see next year as well," said Cassidy. "The house is on fire, but you're not calling the fire department."

Cassidy reiterated his call for Santos to take a pay cut as an example to city workers to make wage concessions until the budget stabilizes.

Interim Finance Director Perry Carter told the committee Wednesday a continued drop in tax receipts accounted for the newest shortfall that follows revisions in July and November of last year totaling $3 million. The poor economy is continuing to batter the city budget, according to Carter. Sales Tax revenue is projected to account for nearly half of the shortfall. In addition, the first installment of property taxes this fiscal year revealed a $300,000 reduction to $16.1 million, said Carter.

Another sign of the troubled economic times many are experiencing, Utility User Tax revenue is projected to drop $600,000 which "may be attributed to the overall economic stress communities are experiencing throughout Northern California," said Carter. Real Property Transfer Tax receipts are also down which could be a sign of the overall real estate market still struggling in San Leandro.

The $7.3 projected deficit follows a similar $7.6 shortfall last year which together will leave the city with nearly $4 million in reserves next fiscal year down from nearly $20 million just a few years ago. Such a precarious financial situation will likely force the city to make further cuts later this year.

The report also bolstered the belief offered by many including Prola and Santos the city's budget problems lie in poor revenues rather than runaway spending. According to Carter, the budget reflects nearly $2 million less in expenditures primarily from numerous employees accepting "golden handshakes." The estimate, though, also includes the possibility of a furlough once a month for city employees until June. No such program has been approved by the city.

As for the black cat, Santos said he did not know anything about the furry feline who calmly walked under the conference room table for nearly 10 minutes before startling the assistant city manager. There were also no reports of anyone opening an umbrella indoors nor did anyone walk under a ladder.

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13 comments :

Thank you for covering this important issue. Those that say spending almost $15 million more than the city took in over two years means the city has a "revenue problem" and accordingly taxes should have been higher do not have a grasp of the reality of the situation. California has a 12% rate. The Bay Area economy is not expected to start growing again until 2011.

In this economy, why would the voters approve a tax hike? What have the mayor and city council done to demonstrate they are operating City Hall efficiently and recognize the seriousness of the city's fiscal crisis?

They won't take any pay cuts themselves. Top managers receive free health club memberships. The new assistant city manager is costing us $250,000 a year. The mayor and city council authorized spending over $100,000 on polling, consultants and political mailings to convince voters to raise taxes.

What is being planned is a sales tax hike, taking San Leandro's sales tax to at least 10%. Our city would have the highest sales tax in Northern California. Even at this amount, given the size of the city's structural deficit, the city would still be running annual deficits and additional tax measures would necessary.

Of course, there is no guarantee a sales tax increase would pass. Seven of the nine local sales tax measures in California in 2009 went down to defeat.

The mayor and city council are rolling the dice and placing the fiscal solvency of our city on the outcome of an election. That's not a plan, it's a prescription for failure.

Lets work on increasing revenue too, more car dealers on our auto row from Oakland, more restaurants, retail and upscale housing/condos downtown, force upgrading and redevelopment of under utilized sections of E14th into condos, lofts and retail and renovate older retail and housing areas near Bayfair area to provide more commuter housing,big box and retail entertainment zones to serve as a draw. it is a very well located area to pull in from many areas of the 580 and 880 corridor, look at the crowds at the Marina Off Price Center and even Bayfair Target. The city needs to, actiually has to, reinvent itself like Emeryville did.

Cassidy does not know what he is talking about. As a lawyer, he should look up the facts before opening his mouth. Anyway, Cassidy works for a big time plaintiff firm, one of the largest in the country. They have taken in millions of dollars in settlements and have assisted many other plaintiffs attorneys to reap substantial claims settlements. Any chance of Cassidy and his firm cutting contingency fees and assisting Haitian relief? Also, for being an attorney, Cassiday is doing a job that a para legal can do; this is why he has time to be in San Leandro in the early afternoon instead of being at his desk in San Francisco. Finally, how come, bit mouth, never balanced the School District's budget. He had four years to do it and failed-think he can balance city budget-forget it-he isn't smart enough to do so. He hasn't had a good idea since he screwed his colleagues on the School Board. Ask his former colleagues about how they feel about Mr. Cassidy.

Tony (aka "Anonymous"), how petty can you be? You are the biggest embarrassment San Leandro has ever had as a Mayor. Can you list even one accomplishment beyond overseeing over a police department that makes harassment of women their modus operandi and driving the city into the ground financially?

Instead of ad hominem attacks against Cassidy, how about you spend some times trying to figure out how to get us out of this financial mess?

As for Cassidy, thanks to him San Leandro citizens passed a bond that is helping us improve our schools. And those board members who did not agree with him are exactly those who lost the last elections. Just like you will in November.

This is so amazing that you can attack each other but guess what it won't fix San Leandro's problems. Yes, I said problems!

Police dept. (juvenile division-my experience) HORRIBLE. Street Sweepers-waste of money! Desire to build a $5,000,000 pool when you can't maintain an already existing pool. CRAZY!

My question is...Can you actually live in San Leandro if you make under $100,000 a year? I would imagine the answer would be YES, since most of us do! So, WOULDN'T IT MAKE SENSE that the city CAP earnings to $100,000 or less? Even if it's just for a year or so to get us back on track! It's called sacrifice!

Funny also that San Leandro can't work hand in hand, city and schools, to make OUR city a desirable place to live! Amazing that the schools seem to be proud to be a PI school because we get "extra funding" That is truly SAD to me!!! Why don't we pay our teachers over $100,000 a year? They are the one's working with OUR city's future!

What a mess...doesn't anyone have any common sense anymore???

I was truly embarassed for our current leadership at a recent city council meeting when Mayor Santos (over the phone from DC) asked Cynthia Battenburg (City Business Development Manager) if maybe they could pay back some of the millions they had borrowed from the general fund. (The answer was no.)

It was a brief exchange, and raised many questions for me:

Is this the extent of the Mayor's efforts to remedying our budget woes - a little aside in a public presentation? Are these loans doled out with no repayment plan in place, other than a due date way off in the future?

What are our leaderships's priorities -- is putting palm trees in a parking lot downtown more important than safe parks? (We are slated to lose our city's successful "park ranger" program this year due to cuts.) Should paying people to work up elaborate drawings for developing the old Albertson's site (completed and in the presentation) take precedence over keeping existing infrastructure such as Farrelly Pool open and in use by the public (and at an affordable price)?

Are we in the development business, or is this government, put in place to serve the people?

In my third paragraph, I meant to say -- Is this the extent of the Mayor's efforts *at reigning in Development and Redevelopment expenditures (of Gen. Fund money)* to remedy our budget woes? Thanks. mb

About that black cat ... s/he "lives" in the area and spends her days and evenings wandering into the South Offices building and hanging out. We have our monthly Rec & Parks meeting in that conference room, and frequently the cat is sleeping on one of the chairs in the lobby. When the building doors close for good, the cat gets put outside for the night and rests up for the next day of visiting. Smile!

Perhaps it's time for the Citizen to turn off anonymous comments. Really people, if you have something to say, have the courage to stand behind your beliefs.

I have looked into options for the comment section, but unfortunately if you disable anonymous comments you also disable the ability to just add your name, too. Users would have to sign-in or register information and that is a ridiculously speed bump to communication we cannot have. Anyone who has tried to leave a comment on insidebayarea.com site know how irritating this can be and by extension know how lifeless the site is.

I've met that cat. Very friendly. Civil, too.

Thank you Steven, sometimes I feel like posting anonymous and I love that I do not have to sign in here, I avoid making comments on the Daily Rag for that reason! Great discussion on this thread btw, fun!

A black cat is a good symbol for San Leandro's current so called "leadership." Bad luck, and don't cross them if you can help it.

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