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June 15, 2010 > Newark to declare fiscal emergency amid budget impasse

Newark to declare fiscal emergency amid budget impasse

By Meenu Gupta

Newark faces a financial stranglehold after wrestling with budget issues for three years. Failure of Measure L, which would have generated $2.6M annually, has exacerbated the city's fiscal position even as the City has worked to reduce costs and increase revenues to balance its budget. Contract services have been reduced; capital projects have been delayed; staff, service and salary reductions have been implemented. Despite these efforts and use of reserves, the budget has not been balanced.

In February 2010, the City was forced to make additional cuts which reduced the budget by $3.5M. Budget reductions required the City to close the Newark Senior Center, Community Center, except for rentals and the Child Care Program building. The city also eliminated funding for a School Resource Officer and School Crossing Guard Program. These cuts will be effective with the new school year beginning in September 2010. Due to reduced budget resources, significant reductions in park and landscape maintenance have also been made. Streets are now swept every other month instead of monthly and, previously, every other week.

The city's proposed biennial budget for Fiscal Years 2010-12 was discussed at length during a work session prior to the regularly scheduled council meeting Thursday, June 10. Consolidation of the city's Fire Department with the Alameda County Fire Department, from May 1, 2010, will save the city roughly $500,000 annually. Even with the cost-saving measure, Assistant City Manager Dennis Jones said the outlook for the future is bleak. Although Jones expects the economy to rebound, it will not happen as sharply as it has in the past.

"We will expend the remaining $2.8M PERS reserve to help balance current fiscal year," he said.

In response to the grim proposed budget, staff will research ways for the city to generate revenue, including a possible tax. City officials will have to decide whether to propose a new tax or increase existing ones, all of which would have to be approved by voters. City Manager John Becker said there are only a few options the city has in terms of finding new sources of revenue. Among them are increasing existing taxes or going to the voters with another proposed utility users tax.

At the next council meeting on Thursday, June 24 staff will seek approval for the biennial budget along with a declaration of a fiscal emergency.

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