BERKELEY -- The city will have to issue regular reports on its long-term fiscal obligations like employee pensions and health care if voters approve a local watchdog group's November ballot measure.
Supporters of Measure V say it will spotlight the city's growing financial challenges and could spur solutions. Opponents, meanwhile, worry the ordinance's enforcement mechanism could instead usher in budget chaos.
"The substantive issue is the city of Berkeley is facing insolvency, basically," said Barbara Gilbert of Berkeley Budget SOS, a citizens' group that sponsored the initiative, dubbed the Berkeley Fiscal Accountability, Clarity, Transparency and Sustainability -- or FACTS -- Ordinance. The group has raised about $12,000 so far to push for it, Gilbert said.
The measure requires a certified report listing Berkeley's financial obligations for the next 20 years, plus an accounting of the annual costs of meeting those obligations. Those obligations include employee and retiree expenses, capital improvements, and capital assets, which Gilbert said her group has pegged as worth about $1.2 billion.
City officials would have to update the report every two years, and the city manager would be required to sign off or seek an independent auditor to vouch for it.
If officials don't comply, the city would be unable to raise taxes or borrow money. And it's that part that is ruffling some feathers.
District 5 Councilman Laurie Capitelli said he supports the idea of releasing regular reports on long-term obligations, but worries the city might not be able to raise taxes or borrow money if someone challenged the report in court.
"All it would take is one citizen to challenge the legality of it," said Capitelli, who is writing the ballot opposition statement.
If that were the case, the city's financing mechanisms could be thrown for a loop, he said.
"Also, the city gets its money in spikes," Capitelli added. "We are constantly doing bridge loans or short-term loans to manage our cash flow. We wouldn't be allowed to do that, which could basically put the city in an illiquid situation."
But Berkeley's two-year budget process doesn't adequately address its long-term unfunded liabilities, Gilbert, of Berkeley Budget SOS, contends. What's more, it's not easy to determine just how much the city would need to complete needed capital improvements and meet employee and retiree benefit promises, she said.
"The city has a lot of things it's not spending its money on," she said. "Roads need to be fixed and what not. That's not directly addressed in the budget and not described coherently in one place. It is almost incomprehensible."
She said the enforcement is necessary to hold officials accountable. When the council requested similar information on unfunded liabilities in 2010, she said, the then-city manager didn't produce it.