City budgets are most often a messy space where math collides with what the community and others with a stake in the budget want.
As a councilmember, it took me a while to get a grasp on the budget process, and as I was doing so I listened to many a report on the impact of the economic downturn ("depression" is closer to reality) on cities.
In 2010, with the city's fiscal sustainability report and presentations to the City Council by city staff, we were warned revenues were declining in the foreseeable future and that expenses, especially the accelerating cost of health and retirement fund payments were rising at a faster rate. Cuts would have to be made. The turmoil around that budget was against the backdrop of Alameda's unfortunate comparable city, Vallejo, which made national news by pursuing bankruptcy. Worries were that Alameda was headed in the same direction.
Add the dismantling of redevelopment, downward reassessment of property values and state funds being cut in the years that followed, and the result is that recovery is not on the horizon anytime soon and things will certainly not return to how they were, defining the new reality for city budgets.
Cities are looking at having to do things differently, and the math is brutally clear: projected revenues, though flat to modestly growing, under current constraints will be outstripped by projected cost increases.
This reality showed up in the city staff budget transmittal letter of June 26, 2012, quoted: "If all of the educations and use of one-time funds are approved, the city's financial picture will improve dramatically, although a significant amount of work remains, as available reserves are still projected to be exhausted by FY16-17."
A compelling picture of this reality was presented in the paragraph on page 2 of the June 26, letter, showing expenses increasing at a far steeper rate than revenues.
This year bodes the same, with the staff report of April 18th grimly stating: "Staff is proposing to balance deficits totaling $2.7 and $4.4 million in the General Fund for Fiscal Years 2013-14 and 2014-15 through a combination of ongoing reductions, increases in existing revenues, the limited use of one-time funds in Fiscal Year 2014-15 and through the carryover of budget savings in the General Fund projected for Fiscal Year 2012-13."
It's clear that without substantial increases in revenues and savings carried over from 2012-13 (it is a stretch that there is any carried-over "savings" since that year's budget was balanced using "one-time funds"), there will need to be further reductions in spending. Even with the increase in the sales-tax revenue with the Target and the future property tax base with new homes at Alameda Landing, the hurdle is high. New property taxes generated when Alameda Point land passes from government ownership to the private sector are well beyond the fiscal year 2016—17 cited in the staff report. All add up to having to make more General Fund cuts to truly balance the budget and spend within the limits of our income.
Though it may not be the most exciting or well attended of council sessions, the Tuesday budget session will be the first of many opportunities to Alamedans to become familiar with the current city's finances. These opportunities can help to educate and provide input to city officials on the tough decisions of how our precious-but-limited resources should be spent.
Frank Matarrese is a former Alameda City Council member.