Tag Archives: Teresa Berkeley-Simmons
When the Berkeley City Council held a worksession on the budget on Feb. 25, there was good news and bad news.
The good news is that Berkeley’s revenues are up and expenses are down in the current fiscal year. Using very conservative forecasts, Berkeley budget manager Teresa Berkeley-Simmons projected revenues in the 2014 fiscal year will be $800,000 ahead of the budget passed last June, and expenses over $2 million lower. As a result, so-called carryover expenditures — from revenues accumulated in previous years for as-yet uncompleted projects — will be reduced from $6.3 million to $3.3 million. … Continue reading »
Berkeley’s General Fund projections include a deficit of more than $5 million over the next two years, requiring city leaders to take a tough look at its more cash-strapped departments to reign in costs.
To close the gap, the city’s budget manager has recommended recurring 2% General Fund reductions across the board for city departments. Departments will present their recommendations to the city manager and City Council in the coming months.
In a work session last Tuesday night, the city’s budget manager gave Berkeley City Council members a forecast for the next two years, and pointed to areas that may pose challenges going forward. (See a PDF of her presentation.)
Three more work sessions have been planned to allow council members, city staff and members of the public to learn more about, and weigh in on, city finances. Scroll to the bottom of this story to see the dates for upcoming public meetings on the budget.
Some of the scale of the budget difficulties face by the City of Berkeley was painted graphically at a special session of the City Council last night. The city faces a deficit of $3 million in its general fund and $9.5 million in its special funds that could require the elimination of 96 positions over the next two years.
“These are tough decisions and they don’t come easily,” said City Manager Phil Kamlarz, introducing the discussion. City Budget Manager Teresa Berkeley-Simmons described the pressure on the city from shrinking state and federal budgets as “staggering”.
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 … Continue reading »
The Berkeley City Council special session on the $310 million — or higher — unfunded liability on promised employee benefits revealed the difficult choices faced by the city.
A presentation by budget manager Teresa Berkeley-Simmons made the root of the problem clear. The California Public Employee Retirement System (Calpers) assumed annual investment returns of 7.75%. The crash of the Great Recession in 2008 meant that returns in the fiscal year ending June 30, 2009 were negative 24%, producing an annual loss against assumptions of 31.75%. For Berkeley’s city employees, that has produced investment losses of $200 million.
“We can’t grow our way out of this,” Berkeley-Simmons said.
“Even if Calpers gets 7.75% forever now, they have lost $200 million on which we’ll never get 7.75%,” explained City Auditor Ann-Marie Hogan.
City Manager Phil Kamlarz said the money to close the gap has to come from either increased contributions or a reduction in cash available for city services, or some combination of the two. Long term, the gap can be closed by reduced benefits for new employees, but that does little in the short and medium term.
“Rather than cut services, people are asking employees to contribute more,” said Mayor Tom Bates. “That’s the path we have to go down. People will need to start contributing more. It’s unfortunate, but they’re lucky to have a job.” … Continue reading »