City Council to get budget overview Thursday night

City Council to get budget overview Thursday night

Michele Ellson
Alameda city budget

Image courtesy of the City of Alameda.

The City Council will get its first look at proposed budgets for the next two years at a budget hearing on Thursday night.

The city has prepared an $80.5 million general fund budget for the 2015-16 fiscal year that contains no cuts, a projected $1.4 million surplus and a fund balance of more than $30 million. But salaries and benefits are expected to push the city’s spending to increase to $83.1 million in 2016-17, which could mean some depletion of the balance or cuts are in the offing.

Additional details are expected to be discussed at a series of budget hearings scheduled for April and May, and the council is expected to vote on approval of the budgets on June 2.

The general fund budget covers many of the city’s services, including salaries and benefits; nearly 80 percent of the budget funds safety services. Other city funds cover streets and sidewalks, debt payments and some park services; the library is largely covered by a separate fund, as is the city’s planning department, which is required to be self-sufficient.

The city is on track to bring in $5.8 million more in revenue and spend $2.9 million less than forecast this year – factors which will help the city build a fund balance of 38 percent of its general fund budget. City policy requires the city to maintain a fund balance of 20 percent of general fund spending.

Rising costs could deplete that fund balance by $13 million over the next five years in spite of projected revenue growth, if city leaders choose to forgo cost-saving measures for upcoming budgets, according to a staff presentation to be offered Thursday. City staffers are projecting a $1.1 million deficit in 2016-17 and deficits of between $2.7 million and $5.3 million through 2019-20.

Proposals for tackling those deficits include spending fund balance reserves, departmental budget cuts, putting an increase in the city’s utility users tax on the 2016 ballot and cutting part-time staffing and overtime costs.

The city’s costs for the next few years will depend in part on whether council members approve new contracts for city workers; the council will consider new public safety contracts on April 29 that contain both raises and a new trust fund to save for retiree health costs that both the city and its police and firefighters will pay into, and contracts for non-safety workers expire in December. One other factor: The performance of pension manager CalPERS’ investments.

The city is projected to pay 50 cents per dollar of salary to fund safety workers’ retirement benefits in 2019-20, up from 37 cents in 2012-13, and 24 cents on the dollar for non-safety workers’ retirement benefits, up from 13 cents in 2012-13. Retiree health costs, meanwhile, will increase to $4.4 million in 2020 for all city staffers if the city continues to pay the bills only as they come due without saving for future costs, with $4 million of that for safety workers alone.

Some other factors influencing costs include two new information technology jobs in the city manager’s office, a placeholder for $500,000 in additional overtime costs the fire department could incur if an expiring federal grant funding six firefighters isn’t renewed and elimination of the fire department’s short-lived non-emergency transport service, which ferried patients to and from doctor’s appointments and care facilities.

Outgoing City Manager John Russo put the city on a two-year budget cycle in 2013 in order to give staff and council members more time to deal with other business. The city's fiscal year begins on July 1.

Upcoming budget sessions are scheduled to take place on April 29 – when the city is also expected to consider approving new public safety contracts – and May 12. Thursday’s session starts at 6 p.m. in council chambers at City Hall.

City staff’s budget presentation for Thursday and an overview of the city's budget are attached at the bottom of this story.