Tuesday, April 13, 2010

Budget Talks Center on City's Cash Flow Dilemma

The Citizen

SAN LEANDROHere's the deal: move forward with a proposed budget that further depletes the city's general fund or hope for winning the lottery in November. The San Leandro City Council Monday night recommended to the city's finance department to proceed with the former, but not without ominous signs the city may encounter serious cash flow problems in the next year either way.

The revamped budget proposal hopes to reinstate 10 full-time equivalent jobs for six months, along with an addition six months of funding for ladder truck services. The original proposal sought only to finance the ladder company for the first six months of the next fiscal year and pinned its hopes for funding the remainder of the year on a likely tax revenue measure on ballot this November. The option favored by the council will lower the city's general fund balance to $1.1 million, if passed sometime in June and may not stave off layoffs without additional revenues.

A second proposal, which Councilwoman Ursula Reed called the "rose-colored glasses" option formulated the budget under the assumption a tax revenue enhancement, possibly in the form of a quarter percent sales tax, would add $2 million to the general fund. Mayor Tony Santos and Councilman Jim Prola favored the proposal, which other members concluded was too much of a risk. If the yet-to-be-proposed tax measure does not pass, the city's general fund balance would drop to a paltry $677,000, which Finance Director Perry Carter said presented the city with potential cash flow problems.

"I'm very nervous about that," said Carter when asked by Reed if the city could function with such low cash reserves.

According to Carter, the city's $5 million emergency reserves are a hedge against unforeseen disaster such as fire and earthquakes, but also serves as working capital for the uneven flow of revenue and expenditures throughout the year. "As we get closer to this number, we have to be careful of what steps we take," said Carter.

The city still has a ways to go until the final budget is approved. Santos will present the details of the crisis confronting the city tonight at the San Leandro Library at 7 p.m., but much of the proposal is still in a very much preliminary mode. "There's a lot of ifs," said City Manager Stephen Hollister. Areas such as the number of employees accepting the city's early retirement offer, attrition, an uncertain local economy and possible mid-year layoffs still leave the council with  tough decisions in the next two months, according to Hollister.

The finance department's original proposal nearly closed a estimated $7 million shortfall, which included cutting over 9 FTEs in the police department and 5 sworn officers. The nearly balanced budget only accounted for funding a half-year of the ladder company employing 9 firefighters. The hit to public safety caused some consternation among councilmembers who cited surveys showing San Leandrans overwhelmingly favored maintaining current levels of police and fire, along with a few hoping to earn brownie points during an election year. According to the budget report, the passage of a tax revenue measure would fund the ladder truck for an entire year, but add just one sworn police officer to the mix.

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  1. Oh brother, here we go again. More crying and sob stories. When people were duped into raising the business license fees and telephone 911 taxes a couple years back the City promised that there would be an improvement in finances. bahahhaahahahaha Only idiots believe that increased taxes lead to better finances. As the taxes were raised, the revenue fell. DUMB SH*&&TS.

  2. Well, here we go again. When the people of San Leandro were duped into raising the business license tax and 911 tax a couple of years ago, the City promised that the increased taxes would improve the finances of the City. And what happened? The exact opposite, revenue has fallen, expeditures have risen. Only an idiot believes that increased taxes will lead to a balanced budget.

  3. Steve, were we at the same meeting? The Mayor twice said he supported option 1, and when he tried to move on, stating "we have a a consensus for option 1", it was other councilmembers that wanted to keep discussing it. By the way, Cassidy is currently standing in front of the library quoting your blog

  4. Yes, I was there last night. I even tried to get a plastic firefighters hat from the fire department,too. First, you're wrong. Here's what happened: Early in the discussion Prola made the case the city had other reserves, if needed. He didn't want to use them, but said they were there. At this point it is not clear whether he is taking a stand on either option or using the argument in support of both scenarios. Santos agreed.

    When Prola follows Bill Stephens later in the discussion, he made the same case and said, "I'm not saying to use that, I'm just saying there's things behind that to protect us and I think with the mid-year adjustments that we can go with option two."

    Santos immediately followed saying, "Again, I concur. Actually the internal service funds are somewhat higher than the data itself. That is a fall back." Then, after Starosciak, Souza and Stephens backed option one, he again said he "concurred" with Prola.

    Once the council voiced a consensus to direct the finance department towards option one, Santos joined the majority and at one point asked Prola if he wanted "to join us." In the interest of comity, Santos ended up supporting option one, but it was not his first choice.

    I hope Mr. Cassidy was giving out the correct web address when quoting The Citizen. Every little bit counts.

  5. "Steve, were we at the same meeting? The Mayor twice said he supported option 1, and when he tried to move on, stating "we have a a consensus for option 1", it was other councilmembers that wanted to keep discussing it. By the way, Cassidy is currently standing in front of the library quoting your blog."

    That was from Charlie Gilcrest, the former campaign manager for Tony Santos. Charlie and I chatted at the library tonight as I was handling out a flyer on the Mayor and Vice Mayor's financial legacy of $21 million in deficit spending. Every year under Mayor Santos the city has run a deficit, starting even before the recession hurt city finances.

    I said to Charlie I hear the Mayor wants to spend tax money that the public has not yet approved. Charlie denied that was the case. I responded that I was not at the meeting and was relying on this blog for what occurred.

    Later in the evening I chatted with a council member who confirmed that this blog's summary of the meeting was accurate.


  6. Tony Santos has chased out San Leandro business and taxed the hard-working business owners and working residents for too long--thus leading to San Leandro's decline. Passing a sales tax would kill small local business owners and worsen San Leandro's economy.

    Who will want to shop in San Leandro when it is more expensive than Castro Valley, Alameda, Hayward and Oakland? Prola is a socialist who has done nothing but suck on the gub'mint teet his whole life, and hasn't met a do-nothing union member or gub'mint employee or tax increase he didn'nt like.

    If Santos wants to show some "leadership," he'll drop out of the Mayor's race, endorse Cassidy and give his horde of campaign cash to cash-strapped San Leandro schools. Then people might respect him and name a street or school after him some day. As he's going now, his legacy will be a city hall toilet named after him. As in "I wouldn't go in there--someone just took a Santos."

  7. So Cassidy and his ilk have the school district strapped for cash and someone else is supposed to bail them out? Seems Cassidy should be held liable for the schools money woes.

  8. School finances are dependent on money from Sacramento, whereas city finances are dependent on the city. Cassidy did fight back against corrupt school board members' $800,000 legal fee payola to their lawyer friends--resulting in the election of three new school board members. When Cassidy is elected, hopefully, Faggory, Starosciak, Prola and Souza will also turnover in the elections.

  9. Help us if any of the three bozo's are elected. I'd rather that ranting raving loon Filipovich get it. At least he's honest.

  10. No word yet on any end to this insane spending.