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June 21, 2011 > Biennial budget

Biennial budget

By Raju Rajesh

Over the past six years, the City of Newark has had to achieve budgets cuts through staff reductions, furloughs, use of contract services, closure of city-owned facilities, like Newark Community Center, the delay of capital projects, closure of the library on Sundays and a significant reduction in administrative support and public-access hours. The operating budget for FY 2010-11 is $4.7M less than for FY 2009-10. Staffing is at 175.8 Full-Time Equivalents (FTE), down from 308.

Fire services were contracted to Alameda County Fire Department (ACFD) on May 1, 2010. Newark Fire Department is expected to be fully integrated with ACFD by May 2012. According to Deputy Fire Chief Demetrious Shaffer, budget projections, which include up to $600,000 of savings for the City of Newark, have been met for the first year. They are on track for the first two quarters of this year and are 1.7 percent under budget. Much duplication arising from multiple, small agencies - fire chiefs, assistant fire chiefs, fire marshals, clerical staff, etc. - is eliminated to create economies of scale and greater efficiency, such as the purchase of equipment.

The Biennial Budget does not anticipate reductions in property tax revenue. The median home value in Alameda County is currently $360,000. Although it has risen since March 2009, it is 40 percent below its peak of $619,000 in August 2007. In FY 2009-10, for the first time since the 1950s, the assessment roll declined. The FY 2010-11 local assessment roll saw a year-on-year 1.4 percent reduction, reflecting a $2.9 billion drop in assessed value.

Property taxes account for approximately 90 percent of Alameda County's discretionary revenue though the county retains only 15 percent of the property tax collected. The balance goes to other jurisdictions, such as cities and schools. Despite the substantial impact on local government finance, the worst is yet to come. Most foreclosures remain bank-owned, with banks still paying the higher property taxes associated with the original values. The fall in the county's discretionary revenues will impact the county's ability to fund vital services as the repossessions are sold. Further foreclosures are likely to arise as mortgage interest rates rise and federal support for home-owners ends. Salary concessions by staff and some non-salary savings have helped to balance a reduced budget.

The passage of Measure U, a 3.5 percent Utility User Tax (UUT) on electricity, natural gas, telephone/cell phone and cable TV for five years, in November 2010, has enabled the re-opening of the Senior Center, scheduled for July, revival of the Ash Street Summer Program and the retention of school crossing guards. Although Measure U does not solve Newark's fiscal problems, it is expected to generate $2.3M, annually.

Taking into account UUT revenue, $500,000 gas tax transfers from the state and special funds transfers, such as federal transportation funding administered by the Metropolitan Transportation Commission, adjustments and service restoration expenses, modest surpluses of $239,000 and $203,000 are projected for FY 2010-11 and FY 2011-12, respectively.

The FY 2010-11 Capital Improvement Plan (CIP) budget is $4,082,800 which includes a $500,000 transfer of gas tax funds to balance the General Fund budget. Major 2010-11 CIP projects include a city-wide pavement overlay and an update to the City's General Plan. The 2011-12 CIP is $3,237,800; a $500,000 gas tax transfer to the General Fund balances the budget, again. Major projects in the 2011-12 CIP include pavement rehabilitation of Cedar Boulevard and Jarvis Avenue and an update to the city's zoning code.

Administrative Services Director Susie Woodstock presented the amended FY 2010-12 Biennial Budget to Council on May 26, 2011. The approved budget includes $450,000 for public safety [a School Resource Officer, a full-time Police Special Assistant, a part-time Police Service Aide and Vehicle Abatement Aide]; $237,000 for landscape/parks and street maintenance [two full-time positions in Landscape Parks Division and resumption of monthly street sweeping]; $334,000 for Senior Center/recreation services; $330,000 for equipment replacement (radios and routine vehicle replacement); $100,000 for fire apparatus replacement by the city; $250,000 per annum for five years to replenish the Fiscal Uncertainty Fund; $100,000 for Capital funds.

Newark's CIP has approximately $110M of unfunded projects. It has not been possible to set aside funds in the past six years; the Executive Team evaluated 151 projects for possible funding in FY 2010-12. Projects, whose design and/or construction phases last beyond a single fiscal year, include Arterial Streetscape Beautification Program; design and construction of City Administration Building; Document Storage/Retrieval System; George M. Silliman Recreation Complex. Phased development and completion are necessary because of funding limitations.

Over the past three years, almost $5M from the General Reserve Fund has been used to balance the budget; reserves are now depleted. $371,000 for other resources include re-establishing seven crossing guards, a 24-hour Regular Part-Time Community Preservation Officer, a 32-hour Regular Part-Time Accountant, additional Administrative Support Services and a Design Consultant for the Lakeshore Park Seawall Project.

City Manager John Becker updated Council about issues discussed at the February 24 Budget Work Session. The city and Newark Unified School District will share the costs of the crossing guards as the School District currently cannot fully fund the positions. Additional traffic control services will be employed. The Pedestrian and Bicycle Master Plan will utilize new technology to enhance traffic safety near schools and ensure its cost-effectiveness. The Drug Abuse Resistance Program will be scrapped; Becker recommended an "Adopt-a-School" program through which a police officer can spend time with an assigned school and build a positive relationship.

The Service Restoration Plan includes funding for a part-time Special Assistant to help re-establish the Neighborhood Watch Program and facilitate an active Police Department Volunteer Program. The Alameda County Healthcare Services Agency's Healthcare Portal Pilot Program, which will provide healthcare services to low-income groups at medical centers at local fire stations, is in its nascent stages; costs and locations of fire stations to be used have yet to be determined.

Voter approval of Measure U and prudent financial management by Council and the city in a tough economic environment have led to a balanced biennial budget which includes the restoration of many public services. Expansion and relocation of businesses is highly anticipated as the economy recovers. Mayor David Smith is cautiously optimistic about the future and return to fiscal stability which is expected to be gradual over several years.

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