Tuesday, June 8, 2010

Council considers updated budget

This article appeared in the San Mateo Daily Journal, June 8, 2010

Council considers updated budget  
June 08, 2010, 02:43 AM 
By Bill Silverfarb Daily Journal staff
San Mateo faces a $5 million budget shortfall next year and will lean on its employees heavily to help bridge the gap.

To close the deficit, the city is seeking labor cost concessions to the tune of $2.2 million, City Manager Susan Loftus informed the City Council last night.

“A balanced budget depends on some labor concessions,” Loftus said. “Some labor groups have not voted yet.”

The city has already identified about $2.5 million in savings by not filling vacant positions and through other cost controls.

The city will also use unspent capital project funds, about $2 million, to supplement the 2010-11 fiscal operating budget.

The city’s general fund, which pays for public safety and other essential city services, is approximately $76.9 million, according to a staff report by Doris Koo, the city’s treasury and budget manager.

The overall total city and Redevelopment Agency budget is about $167 million.

The city’s major source of funding, property tax revenue, is projected to remain flat next year, although revenue from sales taxes, property transfer taxes and hotel taxes are expected to increase modestly.

Part of the modest increases to the sales and hotel taxes comes from the passage of measures L and M in November.

The city expects a budget shortfall of about $3 million for its fiscal year 2011-12 budget.

City employees are being asked to give up pay raises once again to close the deficit and the city has to also reallocate about $1.6 million to the worker’s compensation fund. The city is setting aside about $2 million to combat any future state takeaways or in case revenue unexpectedly declines. The city has lost 40 employees in the last year.

San Mateo will suspend facility improvements to save $1.8 million to the general fund. Another $1.9 million in street rehabilitation projects will also be suspended although the city may receive federal stimulus money to apply to road repairs.

This year, the city expects to decrease its full-time equivalent positions, including overtime and part-time, by 9.26.

Without labor concessions, the number of full-time equivalent positions facing elimination could increase, according to Koo’s report.

2010 was the first time the city’s property tax revenue dropped since 1979 after the passage of Proposition 13.
The city has suffered miserably with the collapse in the housing market, having its property transfer tax dwindle from a high of $10 million to about $3.3 million. The revenue comes from the sale of homes.

Building permit fees the city collects are down 40 percent and planning fees are down 50 percent.

Councilman David Lim requested the council hold a special study session next week to take a deeper look at line items in the budget.

“Since our workers are making concessions, the council should look as closely as possible at the budget to find cost-savings,” he said.

His request, however, did not receive support from a council majority.

The city will continue a public hearing on the budget at its June 21 meeting.

Bill Silverfarb can be reached by e-mail: silverfarb@smdailyjournal.com or by phone: (650) 344-5200 ext. 106.

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