Creating – and sticking with – a municipal budget is tough in the best of times, but add in uncertain pension costs, an still-rocky economy and troublesome implementation of new financial software, and you get a perfect storm of monetary woes for the cities of Concord and Clayton.
As the fiscal year 2013-14 dawned on July 1, both Contra Costa’s largest city and its much smaller neighbor moved to implement new spending plans, but it hasn’t been easy.
For Clayton, the city council in June agreed to “keep paying the bills,” according to City Manager Gary Napper, until the city could catch up with a backlog of financial statements and a new budget could be proposed. He hopes to have a 2013-14 budget in the city council’s hands by its July 16 meeting.
“I have never had to do this in my professional career,” Napper said, citing a string of set-backs that made it impossible for the city to prepare a budget, while at the same time fixing some internal problems that required auditing of the last three years.
Clayton tackles backlog
The problems started back in 2010, when the city converted to new financial software. However, Napper says that city staff did not receive adequate training on the software. “It set us backward, and we got behind.”
Adding to the problem, Clayton Finance Director Merry Pelletier became injured from using a computer mouse and required surgery – and in a city the size of Clayton, that loss was significant. The result is that the 2010-11, 2011-12, and 2012-13 budgets all needed auditing, while at the same time staff needed to put together correct numbers for this year’s budget.
To get the accounting back on track, the city hired former Oakley executive Rick Sanders – who has expert knowledge of the computer platform and small city budgets – to catch up on the past years’ audits, while Pelletier focused on this year’s budget – hence the unprecedented delay.
“We’re doing well now, in that we’re getting caught up,” Napper says. “By divvying up the duties, we can get back on track.”
“The ship wasn’t sinking,” he says. “It’s just that it’s taking us longer to row to where we need to go.”
The total Clayton budget is about $3.7 million – about the size of a city department in neighboring Concord. And much like household budgets these days, the city must figure out how to generate more revenue with increasing expenses and a fairly stagnant property tax base.
“We don’t have big-ticket businesses like Concord’s car dealerships to bring in a lot of sales tax, so most of our revenue comes from property taxes,” Napper says. “And they are not growing as quickly as we would like them to.”
Meanwhile, expenses continue to rise, including increases in water rates, workers compensation and general increases that he sees every year, Napper says.
Over half of the Clayton budget goes to police services, Napper says.
“It’s a challenge to put together a budget each year, but this year, because we got behind, it was even tougher,” Napper says. “The loss of one person can have a huge impact.”
Fees increase in Concord
Next door in Concord, the city council in June approved a $121 million budget for 2013-2014 as well as a 10-year financial plan, but the big question mark is what is known as “unfunded liabilities” – such as the massive pension costs to a city its size.
Both City Manager Valerie Barone and Budget Officer Jovan Grogan said that it is difficult to do long-range financial planning when they don’t have all the information – in Concord’s case, its predictions on how much the city will spend on pensions for city employees, information that has not yet been provided by CalPERS, the public employees retirement system.
Grogan told the council that his staff is hoping to get that information from CalPERS by the end of the year, but the delay has been disconcerting to the city leaders like councilman Edi Birsan.
“I am tired of being scared of the unfunded liability in the closet,” Birsan told the council at an earlier budget review meeting in May.
Birsan was also concerned about the many fees that were approved as part of this year’s budget.
The budget calls for a new business application fee of $72, a home business administration fee of $90, and an annual business license renewal of $48. Birsan wants to get rid of the application and home business fees, and consider offering multiple-year business licenses if it can be done without sacrificing other city services.
Barone said that eliminating the $72 new business application fee could cost Concord $100,000 annually.
But Birsan said that it wasn’t just the cost of the fees. “It is the message we send through the Bay Area. It is worth $100,000 to get those businesses,” he said.
At the June 25 meeting, he also asked the council to lower or eliminate some fees altogether, besides the business licenses, including proposing that lap swimmers who are age 65 and above get a 20 percent discount at public pools, as Concord provides for golfers at city courses. All motions went down to defeat.
Still, the other members of the city council were not ready to shut the door on examining city fees altogether, but didn’t want it to be a “knee-jerk” reaction. “Maybe it is a good idea,” said Councilman Ron Leone, “but we just need to study it further.”