City budget faces $1.8 million mid-year shortfall

City Manager Phil Kamlarz

The City Council tonight will hear a report on mid-year budget revisions for the current fiscal year, designed to respond to a revenue shortfall of $1.8 million. According to City Manager Phil Kamlarz, planned savings are already on track for $1 million. The remaining $800,000 of the deficit will be covered by deferring capital expenditures, primarily from the street rehabilitation budget. An increase in projected expenses from the adopted budget is being covered from $4.62 million from the reserves.

The trimming of the budget comes on top of the effort to close an expected $16 million deficit in the FY2011 budget before it was adopted by the council last year. The original plan was to eliminate 77 jobs, 47 of which were unfilled at the time. Because of the voluntary work reductions by staff and other cost saving measures, including a hiring freeze, that gap was closed with only seven layoffs, Kamlarz explained during a briefing meeting with the media this morning.

The drop in revenues compared to the adopted FY2011 budget came from a wide number of sources:

  • Secured property tax: down $528,083 because the expected 2% cost of living adjustment actually was -0.24%
  • Utility users tax: adjusted downward by $494,084 because of declining natural gas prices
  • Parking fines: projections lowered by $200,000
  • Ambulance fees: down by $463,370 because of change to a national fee schedule and lower transport volumes
  • Sales tax: down by $216,136 even though revenues are beginning to creep up
  • Franchise fees: decreased by $279,844

On the positive side of the ledger, business license tax has been adjusted upward by $149,434, interest income has been increased by $300,000 and other revenue has soared by $1,037,592, largely because of one-time late billings of FY2010 fire inspection fees, residential preferential parking fees and delinquent business license taxes.

Tonight’s report also contains projections for the FY2012 and FY2013, which show deficits of $3 million and $4 million respectively in the general fund. Those projections assume no additional federal or state cuts, no funding for new programs, no further decreases in revenue and no cost of living increase. In addition, many of the city’s special funds — which have restrictions on use of the revenues — are facing deficits. In FY2012, the report estimates a $2-3 million deficit in the public and mental health fund and $2 million in the refuse fund.

Kamlarz said that the city is tackling the deficit in the public and mental health fund, in response to a report last fall which was highly critical of the way the mental health division was run. “The punchline,” Kamlarz said, “is now we have to change how we do our work.” A report on the refuse service is due in March.

The effort to tackle the budget deficits will also need to be joined to the struggle to bring the city’s unfunded liabilities under control, as detailed by Budget Manager Teresa Berkeley-Simmons last month. Kamlarz said this morning that the kickoff meeting for negotiations about the police department had taken place recently. “Everyone understands the problem,” he said. Police and fire comprise 52.5% of the city’s general fund expenditures, as well as the majority of the unfunded liabilities.

Kamlarz and his deputy, Christine Daniel, also said that there was considerable uncertainty over state funding. Governor Jerry Brown’s proposed state budget requires a vote on new revenues in June. “It’s a migrating target for us,” Daniel said. “If the election doesn’t get set, half the solution [for the state budget] is revenues and those won’t be available.”

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  • Hyperlexic

    I appreciate the detail on the revenue changes. I’d be interested to know the changes on the cost side as well. How much are expenses going up, in what areas?

  • Mike Z.

    All city staff whose incomes are over 150K could all take a 10% cut in pay and probably balance the budeget.

  • Bruce Love

    And what’s left in the reserve?

    Hyperlexic, see attachment 2 in the report. They are currently projecting 0.7% over budget by the end of the fiscal year. The police department and the Parks and Waterfront are projected to come in over budget. Everyone other line item (at this level) is projected on or under budget.

    It comes at a cost. For example, roadwork and sewer system work scheduled for this fiscal year but not yet started has been postponed until FY2012 (which starts 7/1/11, I guess).

    None of the actual revenue numbers seem to model the (very high) risk of the state and federal government not sending nearly as much our way, or the risk of serious food and fuel inflation and further real estate deflation and low sales. To my mind, these remain highly optimistic revenue projections. FY2012 (which starts this summer) is going to be pretty hard.

  • Name Withheld

    I wouldn’t count on voters extending the taxes Jerry is asking for.

    Needed or not, if the comments on the Chronicle are any indication Jerry’s requests will go down in flames just like Governor Arnold’s did.

    Considering all the high-profile news stories we’ve been hearing lately about early retirement, high pensions, & golden parachutes for government employees at a time when private workers are taking pay cuts or getting laid off, I don’t think the public at large is going to vote for any tax increases until there have been some drastic cuts in pension plans.

  • Bill

    I think there is a possibility that the voters MAY vote to maintain the current state taxes but only if they see that our idiot legislature is getting off the dime and doing something substantive. The last polling numbers were positive but it’s early.

  • Name Withheld

    @Bill ––– Maybe. But it’s frustrating to see that the potential cuts to budget consist primarily of slashing education funding instead of addressing pension reform. I know it’s a “drop in the bucket” compared to some other things, but allowing State & City employees to retire at 56 with full pensions is ridiculous. Everybody else has to work until they’re in their 60s and most people don’t get pensions at all, so why do public employees expect to get benefits that the taxpayers who pay their salaries don’t have?

  • not gruntled

    “But it’s frustrating to see that the potential cuts to budget consist primarily of slashing education funding …”

    Politics 101: Put the things people want on the ballot–education, libraries, public safety–but not the programs they’d vote down like corporate hand-outs, pension perks, “special programs” for friends, etc. Berkeley politicos do it all the time and we usually fall for it. We need a statewide law to sunset all special taxes so at least we’d get another crack at them periodically.

  • Patricia

    It’s quite simply time to cut high wages and big pensions for Berkeley City Employees. I’d vote for anyone who ran on such a ticket and I know a lot of other people would too.

  • On the revenue side, the $4.6 million overrun relates to prior year encumbrances which were reported in the first quarter report to the city council in December.

    The city’s reserves are currently about 8% of general fund revenues and the announced policy of the city is to maintain the reserves at that level. Transfers to the reserves to maintain that are in the budget.

  • Peter

    Why is the City Manager smiling? 1. He lives in Oakland. 2. He has a guaranteed pension that EXCEEDS his salary. 3. The Mayor manipulates the Council into giving him raises without following procedure. The Council says running Berkeley, population 100,000, is equivalent to running San Jose, Oakland or San Francisco, and pays Kalmarz over $300,000 per year. And he has an assistant AND a budget director. And who knows how much he’s getting in graft from the SEIU!

  • Peter

    Why does Berkeley have a mental health department? Doesn’t it just duplicate what the Alameda County Mental Health services is supposed to do? They’d be crazy not to get rid of it.

  • Jack Hoff

    Patricia said, “It’s quite simply time to cut high wages and big pensions for Berkeley City Employees. I’d vote for anyone who ran on such a ticket and I know a lot of other people would too.”

    In District 7, his name was George Beier. He lost by 500 votes. Because you Berkeley liberals can’t get it together. Oh, and the SEIU ran a stealth smear campaign against him so Kriss Worthington could get another 4 years. You deserve it.

  • Jack Hoff

    Hope the Council can get to the budget after the Gitmo and Manning resolutions!

  • E. B. Friedman

    Peter: Berkeley does not duplicate the mental health services that Alameda County provides. Many years ago, Berkeley (and, I believe, Santa Monica) opted out of County services and, instead, receive money directly from the State that would otherwise go to their respective counties to provide outpatient mental health services for their residents. It was hoped that the City would be better able to target appropriate services for its population than would the larger County entity.

  • T.T.Nhu

    I agree with Peter. Start cutting the budget with the city manager’s ridiculous salary.
    $20,000+ a month is crazy for a city of 100,000 people.

  • Voxhumana

    Since the COLA did not increase, why did the City Manager get such a huge raise? Who’s running this place? (Ans: No One.) City departments are non-responsive and entrenched in poor customer service, financial reports are misleading, promises that are never followed through on and inflated benefits and salaries. And no one seems to manage performance (or non-performance.) This, while the rest of the community struggles with the family borne costs of health care increases, rising fuel and food prices, increased property taxes, and fewer bus routes and public transportation choices. City employees need to get with the rest of the world and off their high end, undeserved benefits and salaries. It’s not like these perks are attracting the best and the brightest, so that argument has not produced the results it promised.

  • David L.

    Weatherford BMW generates about $800,000 of tax revenue a year in Berkeley. Sales tax on purchases of vehicles is big source of revenue. Berkeley has lost numerous car dealerships over the years. This has hurt our finances. We need more new car dealerships in Berkeley. When you look at the millions of dollars Berkeley residents spend on cars it is a shame that almost all that revenue goes elsewhere. If there were more auto dealers in Berkeley (not just repair shops) we would be able to shop locally for more brands of cars, and it would be easier to get factory service in town. The old Cadillac dealership on San Pablo appears to be vacant. American car companies generate more American jobs than foreign companies. If we got a GMC dealer to move to Berkeley people could buy Chevy Volts right here, help support the city, and generate more jobs in Berkeley and the USA!

  • David L.

    The cost of Berkeley’s Fire Department could be offset by sending a bill to property owners for large emergency fire responses. The majority of property owners are covered by fire insurance that would pick up the whole bill. The current system of not charging for large fire responses is in effect a huge subsidy to insurance companies like State Farm etc. We could exempt people on low or fixed incomes from the bills. I’d really like to see the fire insurance companies help pay the costs we pay to reduce their liability. If we didn’t have such a good fire department fire damages would be more severe, and insurance companies would pay for even more losses.

  • Tor

    I don’t really understand the point of singling out Berkeley city employees. Kamlarz salary is pretty much the same as that of his counterparts in most other similarly sized Bay Area cities: Concord, Daly City, Sunnyvale, Vallejo. He makes a lot less than San Ramon’s City Manager. And frankly, I would argue that Berkeley needs a much more talented and experienced City Manager than Sunnyvale does.

    According to latest published figures, Berkeley has 39 city employees making over $150K (many are just barely over that mark), totally about $6.6 million. So a 10% cut saves you $660K, which doesn’t cover the deficit and reduces your talent pool.

    Plus, the Mayor works for free.

    It simply costs a significant amount of money to run a 21st century municipal bureaucracy. It’s complicated business. This silly rhetoric about how we’re going to root out waste and inefficiency in public expenditures persists even after it’s disproven year after year after year. I mean, come on people. We’re closing swimming pools and packing students into temporary classrooms.

    Taxpayers need to grow up and accept that there’s no such thing as a free lunch. The problem, obviously, is that revenues are just insufficient at the local, state, and federal level. Somebody please raise my freaking taxes.

  • Bruce Love

    @Tor you say “Berkeley has 39 city employees making over $150K (many are just barely over that mark)”

    Are you sure?

    In 2009, the SF Chronicle reported that over 67 past the $150K mark with 12 of those over $200K. In that year, the Chief of Police made around $386K and the City manager made about $249. I didn’t count them up but it looks as though most (by far) of the top 100 earners are with the police or fire department.

  • Tor

    I’m looking at Base Salary here:

    San Jose Merc’s got the same database on their site. The Chron article looks at total compensation. But you can’t really cut total compensation by 10% in your budget because a) not all of the compensation over base salary comes from the city’s budget and b) you don’t know what total compensation is going to be until the year’s over.

    Thanks for noting that it’s mostly police and fire. You can see, therefore, that a great deal of the compensation over base salary is overtime, which is what you get from insufficient staffing for public safety.

  • Name Withheld

    @ Tor ––– People are singling out Berkeley City employees because this is a Berkeley community website. While the pay & benefits of workers in other cities & at the State level may be equally out-of-step with reality, there isn’t much Berkeley residents can do about it.

  • Tor

    I meant, why single out public employees as the source of the budget deficit when the data shows that Berkeley city employees are fairly compensated?

  • Name Withheld

    Because private sector employees would be willing to do the same work for less. We can argue about qualifications all you want, but decently qualified individuals would be willing to do the same work for less, particularly when you consider that most public sector employees with “excellent qualifications” seem to be just as inept at running things as someone with no experience at all.

    And the salaries themselves aren’t the problems, it’s the pensions. If they continued to get the same annual salaries & health benefits but didn’t get pensions, I doubt there would be as much outrage about public sector employee benefits as there is right now.

  • Tor

    It seems like if private sector employees would be willing to do the same work for less, then they would be. There continues to be this belief that public employee compensation is the result of some massive conspiracy amongst bureaucrats and not simply market forces at work.

    If I’m reading the budget right, Berkeley has about 1,600 city employees. They’re currently hiring an auditor to oversee all city payroll and the salary range is about $103K-134K. If you know a private sector auditor willing to take the position for less than $100K, you should send them over. Do you think a 1,600-person firm providing essential services to 100,000 customers could find a COO for less than $250K? I haven’t worked in the private sector since the late 90s, but executive salaries were a lot higher back then.

  • Name Withheld

    That’s a load of horse flop, Tor.

    Most of these jobs demand ridiculous an unnecessary prior experience, are often open solely to current hires, and are frequently set up to favor Union workers.

    Take BART as an example. I was interested in working for them at one point because I have skills, education, and a viewpoint that they clearly lack when it comes to making stations, signage, & literature clear, legible, and accessible for non-English-speaking individuals.

    Other than BART PD, virtually every single job they have requires ungodly amounts of previous experience that heavily favors people who are already members of transit unions or the SEIU. Is this experience actually necessary for Station Agents who are just glorified cashiers? Or for Train Operators whose main responsibility is to push a button to close the doors on the almost-entirely-automated trains? Of course not. But it makes it so that private-sector employees cannot get these jobs, or at least it makes it so difficult for private-sector employees to get these jobs that they become Union-only positions by default.

    City & State workers always like to point out only the high-end jobs when they make these comparisons, and always focus only on take-home pay and completely ignore pensions, health care, and other compensation. Looking at a list of currently available positions won’t tell you anything, because the workers who are the most overpaid are the rank and file, which is why those jobs are the ones that have the shortest vacancy times.

  • Maureen Burke

    How about finding out the total labor costs, including benefits, for Berkeley and compare it to the annual budget and number of residents, then compare these ratios to other California cities? That would be useful information. Do other California cities have 1600 employees per 100,000 residents? That strikes me as a very high number even for government, much less private sector.

    Re Tor’s comment that kids are in temporary classrooms because we’re not giving the school district enough money, that is not the case. We voted for Measure AA in 2000, which provided $19.1 million for more classrooms at Berkeley High. Those high school classrooms were the very first item on the ballot measure and the first and largest line item in the bond budget. They were never built. It was due purely to incompetence (or I suppose fraud, but I doubt that), not lack of funds. Supporters of the recent school bond measure have tried to excuse this failure to deliver the classrooms promised by Measure AA, claiming there were “unanticipated events” such as the fire that burned down Building B on campus. That fire was the entire impetus for Measure AA as well as its primary selling point, it was not an unanticipated event. When people don’t bother to independently and thoroughly analyze issues, they become apologists for and supporters of the ultimately harmful policy decisions that find fertile ground in this town.

  • Name Withheld

    Tor says: “Taxpayers need to grow up and accept that there’s no such thing as a free lunch.”

    Absolutely. But the way it works right now, I’m already getting charged for a lunch that I’m not eating, and now I’m being asked to pay even more for it. I don’t have any kids in school. I’ve never used the services of the Police or Fire Department. Every time I deal with the City on permitting issues I spend countless hours fighting with idiots who can’t understand simple concepts. The only service I ever use is the Library. Why are homeowners constantly being asked to pay more and more through parcel taxes for services that renters have equal access to? Why shouldn’t renters have to pay their fair share?

    Tor says: “Somebody please raise my freaking taxes.”

    There’s no law against giving more money to the City than you owe. If you feel so strongly about it why don’t you put your money where your mouth is and donate to the City instead of whining about it. It’s impossible for those of us who are dissatisfied to pay less, but it’s easy for you to pay more taxes if you feel like it.

  • DC

    It is completely naive to say you have never used the service of police or fire. They are responsible for general public safety in the public way as well as your property. Additionally, we do not have a fee-based system in which when you have a fire, you pay the firemen when they show up to put it out. You cannot look at city taxes that way.
    If you don’t want to live in a place with public schools, police, or fire, buy some land on unincorporated property and live there. If you want to live in a town with public services, then your taxes pay for those public amenities. You can’t obtain the benefits of city/town life without paying for them.

  • Bruce Love


    Why are homeowners constantly being asked to pay more and more through parcel taxes for services that renters have equal access to? Why shouldn’t renters have to pay their fair share?

    They do. For one thing, increased costs to the landlord are reflected in higher priced offers to rent vacant units. For another thing, according to the rent stabilization board, increases in real property taxes are included in the calculation of the allowable annual rent increase for tenants in rent stabilized units as determined by an independent consultant. You are simply mistaken about that one. Apparently a lot of people in Berkeley share the same misunderstanding.

    You also suggest that you aren’t getting what you pay for because you don’t have any children in school and have never called the police and fire department. To make that argument persuasive, please quantify it in a realistic way. For example, what impact do you think that BUSD and the public safety departments have on your property value, on your property insurance rates, on your health insurance rates, on your access to secured credit (if you use such), and so forth? And if the costs of those services were significantly shifted to parents, crime victims, and fire victims — saving you on your tax bill — what do you anticipate would be the impact on the crime rate, the annual amount of property damage due to fire, and so forth (and, thus, your property value, insurance rates, etc.)?

  • Name Withheld

    @ DC ––– I’m making a point, not arguing for a change. But we already have some of the highest taxes in the Nation in Berkeley, and the quality of life here is NOT better than in other places.
    Why is it that the City of Berkeley can’t seem to make ends meet when they’re already taxing the living hell out of their residents? Why should we assume that if we give them more money they’ll suddenly learn how to manage it and learn how to budget when they aren’t able to do it now?

    @ Bruce ––– No, I’m not mistaken. I’ve been a renter in Berkeley a hell of a lot longer than I’ve been a property owner. The rent control board can say whatever they want, but the reality is that renters do not see the same increases in the prices of their rental units that property owners do as a result of new parcel taxes. I really don’t care what biased sources you want to cite on the issue. I’ve been in both situations.

    And health insurance rates? Really? Red herring if I ever saw one. Read my reply to DC for response to the rest of it. I’m not actually advocating change, I’m just tired of constantly being taxed for the benefit of others, and then hearing those who are taxed the least whine about not paying enough in taxes.

  • Name Withheld

    And before we trek off onto the whole “WELL IF U DON’T LIKE IT JUST MOVE” trail of idiocy (“Don’t like President Bush? Then GTFO America, commie!”), I bought a home in Berkeley because it is convenient for my current job, and primarily because it is convenient to where my elderly parents live. If neither of those were issues I wouldn’t have bought in Berkeley. Even with those issues, most of the homes I bid on were in El Cerrito.

  • Bruce Love


    Re: “And health insurance rates? Really? Red herring if I ever saw one. ”

    To double check, I just called the California Department of Insurance and, indeed, health insurance rates may and do vary depending on where you live within the state.

    You also write: “renters do not see the same increases in the prices of their rental units that property owners do as a result of new parcel taxes.”

    Will you please give an example? I’ve pointed out to you specifically how renters do in fact collectively absorb their share of parcel taxes. You repeat that they don’t but you don’t explain yourself – so please explain.

    I will agree that a typical rental household will “feel” a parcel tax increase less – in monthly housing cost increases – than a typical homeowner household of comparable family size. That is not a very meaningful comparison, though.

  • Name Withheld

    @ Bruce

    1.) I don’t really care who you called, nor am I particularly inclined to believe you. My rates have never fluctuated based on location, no matter where I have lived in California. And I’ve lived in some bad parts of California. Changes in rates are far more likely to have to do with age or occupation.

    2.) Rent control.

  • DC

    Berkeley is rent controlled, so mostly the raises are not passed on. A friend of mine had his rate raised a whopping $0.50/month this year according to the formula. I’m very happy for him, as he cannot afford a raise in rent, but I’m sure the property taxes went up a heck of a lot more than that.

    But all that is beside the point. We are talking city budget, not renters vs. owners. There are far more substantive issues here than that old saw.

  • Bruce Love

    Some neat trivia on whether or not the taxes you pay towards the police have anything to do with your health insurance rate:

    It turns out that the U.S. Department of Health and Human Services has conducted a series of annual surveys (The “Medical Expenditure Panel Survey”) that that show that health insurance expenditures (among the insured) vary considerably by zip code in California. For example, in Riverside, insured families in 2009 (and their employers) payed an average $11,491 for insurance. In Oakland, an average $13,223 (which is $1,732 per year more — about 15%).

    Out of curiosity I obtained three insurance quotes for identical and allegedly popular health insurance policies for an identical 40-something year old male here in the more expensive region, and there in the Riverside area. The insurance rates here averaged about 8.8% higher. Therefore I hypothesize that insurance rate differences (for identical policies) account for about half of the difference per year in insurance expenditures between the two regions. For a family, that’d average around an $850 year difference for identical coverage. Certainly there is enough data around to test the hypothesis but I don’t claim to have more here than a reasonable hypothesis.

    Hypothesizing the importance of local crime statistics, paramedic response statistics, and fire response statistics is more difficult. I do note that the Riverside area is not exactly a low crime area according to the FBI but, Oakland (for example) is much, much worse in terms of violent crime. I continue to guess that the worse your metro-area violent crime rate, the higher your health insurance — but a couple of datapoints like Oakland v. Riverside don’t prove it.

    In any event, if you say that the taxes you pay for police you never call don’t help keep your health insurance rates down – at least at first glance the data is tilted against you.

  • Bruce Love

    @DC, “Berkeley is rent controlled, so mostly the raises are not passed on. ” Berkeley is rent stabilized. Rent control was outlawed at the state level, partly in response to Berkeley’s (former) rent control system. To established tenants, parcel taxes are passed on but can be offset by other operational cost changes. To newly filled vacancies, they can be passed on disproportionately. Indeed, per the letter of the law, renters enjoy fewer protections against increases in real property taxes than home-owners. I agree with you that tired old arguments about the nature of rent stabilization in Berkeley aren’t central to the budget issues but I do wish there was less misinformation floating around, particularly when it comes out as “blame the renters”. It is annoying when homeowners who seem to not have any notion of who gets hit how by taxes spread the myth that its all a bunch of feel-no-pain renters putting the screws to homeowners.

  • Name Withheld

    That’s interesting, Bruce, because I just checked Anthem Blue Cross’ page and got identical rates for someone living in the Berkeley Hills as someone living in Oakland’s West side. Do you think that the Police Departments and crime rates in Berkeley are identical to those in Oakland?

    Here’s an interesting factoid – I found that rates are actually CHEAPER in cities like Sacramento, Frenso, and San Jose.

    But I fail to see how any of this indicates that homeowners in Berkeley need to be taxed more and that the Berkeley City Government should not have to learn to live within its means, especially considering that our county has some of the highest taxes in the State.

  • Name Withheld

    Bruce Love says:
    “Berkeley is rent stabilized. Rent control was outlawed at the state level…”

    Stop being so god damned pedantic, Bruce. The City of Berkeley’s website refers to it as “rent control.”

    Bruce Love says:
    “To established tenants, parcel taxes are passed on…”

    Where are you getting this information? Have you ever rented in Berkeley?
    In all my years renting here I never once saw an increase in rent that reflected new parcel taxes.

  • Bruce Love

    @Name, Sorry I wasn’t clear. I had spot checked a few regions. Yes, Oakland and Berkeley prices are essentially the same. So too elsewhere I checked. They seem to not discriminate block by block – they discriminate by metropolitan region. You can draw your own conclusions about what would happen to the crime rate in our metropolitan region if BPD were slashed and what impact that would have on health insurance rates in our region.

    You wrote: “Here’s an interesting factoid – I found that rates are actually CHEAPER in cities like Sacramento, Frenso, and San Jose.”

    That’s right. You can. On average, however, overall health plan expenditures are larger in San Jose than in Oakland and Berkeley, and both are quite a bit larger than those in Riverside. For the case of a single male, middle age, the rate differences for identical policies can explain about half the large expenditure difference between Oakland/Berkeley and Riverside.

    You asked: “But I fail to see how any of this indicates that homeowners in Berkeley need to be taxed more ”

    You denied that rates varied much by zip code and I looked into that question. You were mistaken, they vary considerably. The issue arose because I pointed out ways that BPD most likely saves you money, even if you yourself never need to call them.

    I make no claims about whether or not BPD budget should go up or down. I was only responding to what you said earlier.

    On the rent control issue, I’m sorry, but you lost me when you wrote “Stop being so god damned pedantic, Bruce. ” We’ll save that discussion for a calmer thread, please.

  • Name Withheld

    Bruce Love says:
    “The issue arose because I pointed out ways that BPD most likely saves you money, even if you yourself never need to call them.”

    Except that rates in Berkeley are higher than in most of the State, which means that BPD doesn’t save me money in my health insurance.

    Bruce Love says:
    “On the rent control issue, I’m sorry, but you lost me when you wrote ‘Stop being so god damned pedantic, Bruce.'”

    How convenient that I “lost you” right before you visited the link showing that the City of Berkeley refers to it as “rent control” even though you feel the need to knit-pick and take swipes at people who refer to it as such.

  • Bruce Love

    I found some neat data about Rent vs. Property Taxes in Berkeley.

    Ira and Carol Serkes published a rule of thumb (back in 2008, mind you) that homeowners should anticipate about 2% a year increase in taxes. I’d love to see a chart of actual numbers from 1981 to 2010 but I’ll use that 2%. It’s not fair to blame them if things have changed, if I misunderstood them, etc. There’s was the only hopefully credible number I found, is all. I’m sure they didn’t mean it to be used in a “renters vs. homeowners” debate so all blame is mine! That said, let’s go with that number.

    The City published a study of the effects of rent stabilization that had a table of Annual General Adjustments, 1981 to 2010. Of those years, 22 are listed as percentage increases. I ignored the years with screwier formulas — which is a suspect simplification, sure, but not all *that* suspect.

    In the 22 years easily calculated, the annual general adjustment to rents permitted averaged 2.5%. That’s HIGHER than the Serkes’ rule of thumb for tax increases on real property.

    The Serkes’ number is on their blog in 2008.

    The city study (which has lots of other evidence of how renters help the city’s economy) is:

    So, go figure. It’s starting to look like the even “controlled” rents for tenants who don’t move go up faster than real property taxes in Berkeley. We haven’t even considered here the much steeper rent increases seen by new tenancies during that period! Maybe that is why the real estate value of Berkeley rental properties tends to keep apace or exceed the regional average.

  • Name Withheld

    Parcel. Taxes.

    It would also appear that the study you’re citing focuses on rental properties, and does not compare the tax burden placed on renters versus that placed on owners of single-family homes.

    In my experience when a renter begins a tenancy they “lock in” their rate and it can only be raised a small amount at a time, no matter what gets passed in the way of parcel taxes. Nothing you’ve provided thus far challenges that.

  • Bruce Love

    @Name, the Serkes’ rule of thumb includes your parcel taxes and such (“bonds/assessments”):

    Harder numbers than their rule of thumb, especially for a 30 or so year history would be welcome. Got an accurate chart? I’d love to see it… I haven’t found one. The apples to apples comparison here would be something like “Suppose you bought a house in 1981 … what’s the average annual increase in your tax bill”. The rent adjustment – with the qualifications I mentioned – looks about a 2.5% annual increase, average. There are about a gazillion different ways to compare the two rates but I’m interested in the simple-minded one that if you paid $X in one year, and $Y the next… what is that percentage difference (average over, say, 1981 – 2009).

  • Bruce Love

    Also, re “In my experience when a renter begins a tenancy they “lock in” their rate and it can only be raised a small amount at a time, no matter what gets passed in the way of parcel taxes. Nothing you’ve provided thus far challenges that.”

    Over time, it appears, the rents go up faster than the taxes by various measures.

    I think you might be talking about how a homeowner might see a few hundred bucks increase in taxes, all at once in one year, and a landlord see the same, but an established tenant not feel that impact immediately. What I am trying to point out to you is that, on average, even tenants who enjoy rent ceilings by not moving have historically been paying rent increases faster than home owners seem to have been paying tax bill increases. And, of course, renters who move within Berkeley absorb these things even more. The weakness in my argument here is the reliance on the Serkes’ rule of thumb numbers from 2008 so if you can help discover some some solid numbers to replace their 2% figure, that would be interesting.

  • Name Withheld

    2011 rent adjustment was 0.7%
    2010 rent adjustment was 0.1%
    2009 rent adjustment was 0.1%

    Haven’t found easy to access numbers from the City of Berkeley prior to that, but to be honest I’m not looking too hard.

  • Name Withheld

    Never mind, here it is:

    Can you find a similarly laid out list of property tax increases for the City of Berkeley, including parcel taxes?

  • Bruce Love

    @Name, that chart you link to is a cut and paste of the same chart that I used to come up with the 2.5% average figure from 1981 to 2009, ignoring those years where the adjustment was specified in ways hard to interpret as a percentage. The link I gave was to the study that chart comes from and there is tons of interesting data in there for you to chew on.

    It would be damn nice to have some solid historic data on homeowner tax bill increases per household, perhaps along with other stuff like square footage, assessed value, consensus market value, and so on. You say you aren’t working on it that hard. Ok. That’s cool. But then don’t be so quick to make your claims. That rental report helps make it quite plausible that renters in the aggregate are paying higher increases than the taxes on the real estate … and although we only have the 2% rule of thumb to compare with, we can very tentatively find plausible that a stable tenant over these past many years — enjoying a slowly growing rent ceiling increase — has nevertheless seen their rent go up faster than a stable homeowner over the same period, parcel taxes and all.

    It’s an old myth, in Berkeley, that tenants are lousy free-loaders, as far as I can tell. I think it goes back to the early days rent control in the ’70s. Shortly after the time of the mayor nationally known as “Berkeley’s Radical Mayor Loni Hancock” and her husband in the state assembly, that radical Black Panther fanboy named something-or-other “Bates”. If there is truth to the old myth I think that report I linked to helps to show that vacancy decontrol at the state level fixed the problem and that the remaining rent stabilization plus vacancy decontrol is, so far, working well for the City, the homeowners, the renters, the landlords, etc.

  • Mike

    My parents’ Berkeley property taxes went from $3000 in 2007 to $3600 in 2010. There has not been an equivalent 20% increase for renters in Berkeley who stayed in their units during those 4 years. Besides taxes, owners of rental properties need to absorb increased utility bills, repair costs, management fees, etc.