Last week, the City Council voted to implement Alameda's first two-year budget. This was an important step for the city.
A two-year budget encourages more prudent revenue and expense projections as finance staff is forced to look further into the future when putting those projections together. Having a two-year cycle also provides the public with confidence that programs the city is running -- for example, Mastick Senior Center, libraries or our many recreational opportunities -- will not be under constant threat of cutback or closure. Under this new, two-year schedule, City Hall will use each biennial period to look not only at how much we are spending but, more important, whether we are spending taxpayer dollars effectively. Accordingly, over the course of the next year, city staff will engage the City Council and the community in a process to develop objective performance measures for individual city departments. Finally, with a two-year budget, city staff can begin efforts to boost Alameda's woeful performance in the category of sales tax. This "leakage" of sales tax from Alameda residents to surrounding communities is a major cause of the city's financial crisis.
There is an adage in public management: "What gets measured is what gets done." Like every level of American government, the City of Alameda will be under financial stress for the next 25 or so years. Tight budgets demand that we prioritize which and how municipal services are delivered because we cannot have everything we want. Objective performance measures, while not the only indicator of successful operation, are an important tool in judging whether money is being spent efficiently. While performance measures are an administrative tool, the decision regarding which three to five outcomes are to be prioritized for each department is a choice with deep policy implications for the city. What gets measured is what gets done. Once these measures or benchmarks are in place, city executives will know that their individual performance will be judged in part upon hitting these publicly set benchmarks. In this difficult fiscal environment, it is especially important that we institutionalize the concept of public accountability.
Accountability matters -- and it produces results. Over the past two years, City Hall has managed to close each fiscal year with a significant surplus. Largely this was due to extremely conservative revenue projections and stricter controls on departmental spending on things like overtime. We've also established ourselves as a leader in having our city employees pay for larger shares of their own health care and pension premiums, while tying any pay increase directly to the performance of the General Fund revenues. There is much more to do, but we have made significant and undeniable progress in the area of cost control.
But city budgets, like family budgets, are not just about how much money you spend; they are also determined by how much money is coming into the family checkbook. Alameda doesn't just have an expense problem with issues like pensions and health care; Alameda has a huge revenue deficit. For the next two years, while continuing to work on our long-term expense issues, we must begin improving our revenue shortfalls as well. In no area is this problem so stark as in Alameda's dangerously weak performance in the category of sales tax.
Alameda is the laggard in the east shore area of the East Bay in sales tax performance -- and not by a little, but by a lot. A state Department of Finance report for 2010 shows that the City of Alameda's per capita sales tax revenue is about one-third of average for the seven east shore cities of Alameda County. Some may say: "That figure includes Emeryville, which is a unique case, and Oakland, which is a much larger city than we are." OK, if we remove Emeryville and Oakland from the sample, we find that Alameda's sales tax revenue is still only one-half of average for the remaining five cities. Were Alameda just at the average for these five east shore cities, we would increase our sales tax revenue by nearly $4 million -- not enough to solve all of our financial problems, but enough to solve, say, the pension gap, or long deferred maintenance of our city parks and buildings.
The point is this: The city does need to mind expenses; the city does need to tackle the long-term obligations that threaten our financial integrity; but we have to look at both sides of the equation. We can't solve these problems through cuts or employee givebacks alone. In the coming months, especially as we begin making real decisions about the future of the Alameda Naval Air Station, staff will keep this sales tax deficit front and center. The city's financial future depends upon it.
John Russo is the city manager of the City of Alameda.