At the June 12 City Council meeting Finance Director Jim Goins and City Manager Bill Lindsay made a presentation on the local economy and the proposed 2012-2013 City budget. Click here for the entire presentation PowerPoint.

The good news is that in Richmond sales tax revenue continues to improve, unemployment continues to trend down (18.7% in January 2012 to 14.9% in March 2012), the  Chevron tax settlement is still providing over $12 annually for the next three years and bank foreclosures continue to trend downward. The City maintains S&P credits ratings of A+ (strong) for the general fund and AA- (very strong) for the wastewater fund.

On the other hand, foreclosure sales by owner are up and home sales prices are still falling slightly. Federal and state subsidies for municipal projects and programs has fallen significantly, and the Chevron tax settlement revenue will taper off significantly after three more years. The worst news is that without fundamental adjustments, the City’s expenditures over the next five years will outstrip revenues by $65 million. Like most California public agencies, including the State, the main driver of the projected gaps is the current cost of post-retirement benefits.

In order to balance the 2012-2013 budget, every City department will have to tighten its belt, and the result will be felt as a reduction in City services that people have come to depend on. Some reductions will be internal, such as less training, less involvement in professional associations and less participation in conferences. Others will be more tangible, including:

• Fewer business hours for services such as business license processing.
• Longer response time for public works repairs to infrastructure.
• Reduced park maintenance.
• No more tree planting.
• Less street maintenance.
• Lower response time for police and code enforcement.
• Reduction of Library hours.
• Reduction of community center hours and programs.
• Reduced youth summer employment program and reduction in job training programs.
• Delayed implementation of new zoning ordinance.

 

Some pension reform relief may be coming from the state legislature, which is expected to take up the issue in the next couple of weeks and possibly adopt policies that will affect both state and local public employees.

The City is waiting to see what the state will do and then look to see what the City will have to do to balance future City budgets.