When Richmonders voted last November for two new City Council members, many of them probably thought they had elected independent individuals who just happened to be members of the Richmond Progressive Alliance (RPA). These two then joined two others to form a bullet proof RPA City Council majority.
What voters may not have known is that they also elected a new city shadow government called Lift Up Richmond Coalition, made up of unions, non-profits and the RPA that, collectively, will actually control public policy in Richmond for at least the next two years.
We saw the power of that new shadow government on March 9, 2021.
On March 2, 2021, City staff presented a set of “Proposed Guiding Budget Principles” compiled by a consultant, Management Partners, a consulting firm that provides services to 1,700 cities in 40 states. Click here for the PowerPoint slides. The Proposed Budget Guidelines were offered as best practices for sustainable budgeting, including such common sense advice as “Ongoing expenditures should be supported by ongoing revenues.”
Although I had nothing to do with retaining Management Partners, other than being part of a unanimous vote to approve their contract on November 17, 2020, Lift Up Richmond described their presentation as “Mayor Tom Butt’s consultant’s budget proposal.”
The Proposed Guiding Budget Principles were attacked by RPA City Council members and their supporters as not representing the will of the public. RPA City Council members insisted on a follow up meeting on March 9 that would feature a presentation by Lift Up Richmond Coalition, supposedly representing the true wishes of the people of Richmond.
Lift Up Richmond coalition strongly opposes Mayor Butt’s budget proposal … Saying “Richmond’s residents deserve better”, community and labor groups united in the Lift Up Richmond coalition reject Mayor Tom Butt’s consultant’s budget proposal as vague, misguided, anti-democratic, and bad for Richmond’s residents (Contra Costa Herald, February 23, 2021)
The Lift Up Richmond Coalition was the only organization invited to present – neither the business community nor the neighborhood councils, nor any other organization, was invited.
According to the introductory slide of the March 9 presentation, Lift Up Richmond coalition consists of two public employee unions -- SEIU Local 1021 and IFPT Local 21, three non-profits – ACCE, APEN and RYSE, and, guess who – the Richmond Progressive Alliance!
The Lift Up Richmond Coalition, dominated by public employee unions, has a singular vested interest in employing as many union members as possible and paying them as much as possible. Moving as much money as possible from the city treasury into the pockets of employees is their highest priority. Maintaining a healthy reserve and fund balance is a policy that clashes with the union priorities and grinds on them like fingernails on a chalkboard.
"Budgets are not just numbers in a spreadsheet,” said Gregory Everetts, a Parks and Landscape Division worker with the City of Richmond and president of the Richmond chapter of SEIU Local 1021, “Budgets show what our values really are. The City of Richmond needs a fiscal policy, but the residents of Richmond need that policy to reflect their needs, not just the administration’s desire to fatten up the reserve fund while the people of Richmond are suffering. Richmond’s residents deserve better than this.”
Virtually all credible sources recommend a minimum fund balance for cities of about 60 days, or two months, of operating expenditures. This is about 16.5 to 16.7 percent of operating expenditures. “The GFOA best practice recommendation has changed to consider the many variables of local government, but at a minimum the fund balance for the general fund should be no less than what will meet the average cash flow needs of your entity (GFOA Best Practice, Cash Flow Analysis. ” (http://mrsc.org/Home/Explore-Topics/Finance/Finance-Policies/Fund-Balance-and-Reserve-Policies.aspx). This is typically no less than 60 days or two months (about 16.5%-16.7%) of operating expenditures for the general fund and 45 days (about 12.3%) for the enterprise (utility) funds.
The undersigned individuals and organizations call on City Council to reject this proposal and begin crafting a common-sense fiscal policy that puts services for residents first, over building up reserve funds, and is built collaboratively, inclusively, and transparently, with input from the community members with a stake in Richmond’s budget and the values it puts into action. (Contra Costa Herald, February 23, 2021)
For several years, the City Council has observed a reserve policy goal of 15 percent but has never reached it. Currently, we are close at about 13 percent. Lift Up Richmond argues that the 17 percent fund balance recommend by Management Partners is too high and that “The City’s goal shall be to achieve 15 percent of its Operating General Fund expenditures as a minimum reserve policy,” because, “The City must balance the need for adequate reserves with its responsibility to provide services to the residents of Richmond.”
Budget policies have consequences, During the recession, City Manager Bill Lindsay crafted budgets that consumes reserves to retain employees and keep services at previous levels. He rationalized that the City would be better prepared to emerge from and recover from the recession by not going into an austerity mode. He may have been right, but the bond rating agencies didn’t agree, dropping our bond ratings precipitously and costing the city tens of millions of dollars. I had just been elected mayor, and I spent hours meeting with the bond raters trying to convince them of the wisdom of spending down reserves during the recession, but they not only didn’t buy it, they doubled down with yet another cut.
The Charter has only two mentions of the budget:
- III-A.2 (b) The Mayor shall work with the City Manager in preparing an annual budget for submission to the City Council.
- IV.1 (b) (2) Prepare the budget annually and submit it to the Council and be responsible for its administration after adoption;
The sense of the Charter is that preparation of a proposed budget is a duty of the city manager. Clearly the City Council must approve it and can ultimately tweak it, but it starts with the city manager. This makes sense because the city manager is apolitical, presumably trying to balance the needs of the city with its available resources for the long term strategy of a fiscally healthy city.
The RPA wants to reverse and micromanage the process by hobbling the city manager’s discretion. For example, instead of allowing the city manager to creatively deal with annual changes in revenues, the Lift Up Richmond proposed guidelines that go into exquisite detail about various budget allocations, with the following pertaining to Transfer Tax revenue:
For most of its proposed guidelines, the Lift Up Richmond proposal cites either Oakland or Los Angeles as references, neither of which are fiscal icons. Oakland is currently struggling with a $72 million deficit and Los Angeles with a $672 million deficit.
During the Lift Up Richmond presentation, the word most often repeated was “transparency.” Lift Up Richmond probably the worst example you could find for transparency. In 2020, Lift Up Richmond hijacked the Measure U process, and after months of working in a black box, they sprung it on both the City Council and the public one week before the City Council had to place it on the ballot. It was so poorly written that staff and lawyers are still trying to figure out what it means.