Berkeley expects 12% decrease in city budget; hiring freeze now in effect

The city of Berkeley has frozen all hiring, effective Monday, in preparation for a 12% decrease in general fund revenues that is expected in the coming months.

A parking enforcement officer on Telegraph Avenue. The city has put much of its ticketing program on hold, which could pose challenges down the line, officials noted Monday. Photo: Pete Rosos

The city of Berkeley has frozen all hiring, effective Monday, in preparation for a 12% decrease in general fund revenues that is expected in the coming months.

City staff provided an update to several elected leaders during the Monday morning meeting of the City Council’s budget committee. Mayor Jesse Arreguín and council members Cheryl Davila and Lori Droste are on the committee, which makes recommendations to the full council on city finances.

City staff told officials that Berkeley’s general fund is in good shape for the fiscal year that ends June 30 due to higher than projected revenues this year, particularly from property taxes. But the fiscal year that begins July 1 is another matter. The city is projecting a $25 million shortfall due to the 12% drop in revenue, said Teresa Berkeley-Simmons, who manages the city budget.

“I believe that we can weather the storm as long as we’re deliberate and know what our priorities are going forward,” City Manager Dee Williams-Ridley told officials. On Monday morning, she released guidelines for Berkeley’s new hiring freeze, which were described as “effective immediately.”


To bridge the projected $25 million gap, the city has asked each department to come up with spending “deferrals,” at 10%, 12% and 15% levels. These could be in the form of vacancies, contracts, projects that haven’t started, retirements and more. The only exception to the deferral program is the Berkeley Fire Department, whose costs are covered by Measure GG. The mayor and others said the city might want to carve out the police department from the deferral list too.

The city manager said the City Council will be able to review the deferral suggestions and weigh in before anything goes into effect.

Berkeley-Simmons told officials that the expected 12% revenue decrease is twice what the city saw after the Great Recession, when Berkeley had a 6% reduction in 2009-10 and the fiscal year that followed.

“We have to adopt a balanced budget,” she said. “What we’re facing is significant and immediate.”


The city “will make every effort to avoid service and workforce reductions,” Berkeley-Simmons told officials.

City staffers pledged to share new budget figures monthly and said they would be tracking numbers daily to ensure Berkeley has the best information available about the state of the city’s finances.

There will be multiple opportunities over the next two months for officials and the public to get up to speed and weigh in on the topic. The budget committee plans to meet weekly, on Mondays at 10 a.m., to discuss city finances. On May 12, a public hearing on the budget is scheduled before the full City Council. After that, council expects to have two or three meetings in June to debate the budget before its adoption at the end of that month.

City officials have said they plan to reconsider spending allocations for projects that have not begun, or may not be time-sensitive, to free up money for more critical needs. On Monday, they also got an overview from City Auditor Jenny Wong about her recent report, released last week, which suggested a framework for how officials and staff can look at the city’s tough budget decisions going forward.

In addition to declining revenue streams that are projected nearly across the board, the city has also seen an increase in spending during its emergency response to COVID-19, staff said. The city says it is doing everything possible to document municipal expenses so it can aggressively pursue reimbursement from all available sources, including FEMA and the state.

As of Monday, the city said it had spent approximately $3.8 million on its emergency response since January, including $3 million on the Berkeley Relief Fund — to help small business, arts organizations and rental tenants — and about $725,000 on non-personnel costs.


The city told Berkeleyside it had also spent approximately $772,000 on payroll costs — salaries for staff — from January through late March for workers in the emergency operations center. (Many of those costs include what staff would have been paid anyway, however.)

Arreguín asked staff to come back with some projections that could serve as estimates for how much the emergency response might cost over time, though he acknowledged this is no easy task given all of the unknowns, including how long the current public health crisis might last.

Arreguín described the projections presented Monday as “a bit rosy” and said things may actually be worse for the city than the numbers show. The actual losses could be greater, he said, adding that he wants to ensure there is an adequate cushion going forward.

See highlights on Twitter (no account needed to view!) from Monday’s budget meeting. See complete coronavirus coverage on Berkeleyside.

Emilie Raguso is Berkeleyside’s senior editor of news. Email: emilie@berkeleyside.com. Twitter: emraguso.