With a little over three weeks until the start of fiscal year 2004-2005, the preliminary General fund budget for FY 2004-2005, as well as forecast for the following two fiscal years, has been distributed to City Council members. A copy is attached to this email as a PDF file.

 

There will be all-day meetings on June 7 and June 9 in the City Council Chamber for presentations by each department. Meetings are open to the public.

 

With projected revenues of $96.8 million matching projected expenditures of the same amount, the administration purports to have a balanced budget for FY 2004-2005; however, there remains a $10.4 million special funds deficit resulting from shifts to the 2003-2004 General Fund, and the budget for the following year, 2005-2006, would show a deficit of $6.6 million. This doesn’t exactly look like a document that would give the financial community the warm fuzzies.

 

Richmond’s General Fund budget is like no other. Only portions are straightforward. The bulk of the revenue comes from (rounded) property taxes ($25 million), sales taxes ($13 million), transient occupancy tax ($800,000), utility user tax ($28 million), documentary transfer tax ($6 million), motor vehicle fees ($800,000), franchise fees ($2.5 million) and fines ($600,000). A large one-time revenue of $6 million is projected from the Redevelopment Agency.

 

Then it starts to get complicated. You have the State “triple flip” and the State “motor vehicle fee take away.” Then, they start mixing in revenues for services, such as plan checks, which are really cost recovery restricted revenues, with business license fees, which are unrestricted general taxes. Millions of dollars are mysteriously hidden in line items such as “use of money and property,” “indirect costs,” “other revenue,” and “transfer in.” The General Fund is a giant slush fund with money from other funds moving in and out constantly and impossible to track or identify without a roomful of green eye shades.

 

On the expenditure side, part of it is likewise straightforward, with $71.4 million ($18 million less than FY 2003-2004) going for salaries and benefits. Then expenses get tricky, with line items for unidentified “contractual services,” “internal service funds,” and “operating transfers out.” The budget also anticipates savings of nearly $3 million for a controversial plan to refinance the PERS contribution with a one-time savings that will saddle future generations of taxpayers with higher costs.

 

As in previous years, large line items amounts have been moved into other funds and redistributed, making it difficult to compare any previous budget with future budgets.

 

Whether or not this is a balanced budget is largely an exercise in perception and wishful thinking, and the administration admits as much. It has no reserves and is built on a long list of “assumptions,” which might be better described as speculations.

 

With budgets like this that are difficult to comprehend and impossible to track, one wonders how the City Council could ever really take responsibility for the type of fiscal fiascos we have seen this past year.

 

Finally, there is a rumor that the State of California has either offered or has ordered an audit of Richmond’s books by the State, but certain Richmond officials want to derail it. It seems that any audit would be welcomed, but the State is not exactly a shining example of money management, itself.