By Rebecca Rosen Lum
CONTRA COSTA TIMES

Just months ago, Richmond officials were stunned to learn the city was $35 million in an ever-growing hole.

But in late June, the same council, having shed most of the outside financial experts hired in March, approved a $193.7 million budget for fiscal 2004-2005 that interim City Manager Leveron Bryant termed "essentially balanced," largely due to the use of one-time revenue sources. It shows $96.8 million in the general fund and nothing in reserves.

The spending plan does not factor in any of the "revenue enhancement measures" Bryant has floated to the City Council in recent weeks, including a half-cent general sales tax hike likely to appear on the November ballot. And it assumes no help from the state will be forthcoming.

"It's a bare budget, but I think it will remain balanced," said Vice Mayor Richard Griffin. "The picture is actually a little brighter than it shows, because we've got some one-time monies coming in. We didn't include the half-cent sales tax and other revenue-generating things coming in. We'll be all right."

Bryant and finance director Pat Samsell credited deep service cuts and the layoffs of some 300 for the gingerly balanced budget.

"We're still asking the employees to do some revenue sharing," Griffin said.

A structural shortfall between ongoing revenues and ongoing expenses of $6 million persists, however.

And a cumulative deficit of $18.3 million is being carried over from the current fiscal year. The council, in adopting the budget, committed to applying any unanticipated revenues to help resolve the shortfall.

Some special funds were tapped to fill in the general fund in 2003-2004.

The council also approved Bryant's request to "true up" those mingled accounts, so it becomes clear which funds are general-fund monies and which are from other accounts.

Fiscal year 2005-2006, the second of a two-year budget, shows a deficit of $6.6 million, due to expected hikes in salaries and benefits, "and demonstrates the need for the city of Richmond to continue the process of negotiating cost sharing and revenue enhancements," says a statement in the budget signed by Bryant and finance director Pat Samsell.

They urge reducing workers compensation costs, selling city-owned properties and obtaining cost shares from employee unions.

The two-year budget assumes no help will be forthcoming from the state.

It shows a soaring cumulative budget, which some critics, including Councilman Tom Butt, have pointed to with alarm.

"They kept saying, 'We acknowledge we're carrying forward a huge deficit, but look at all the progress we've made since this spring,'" Butt said. "They downplayed it like it's not there. There needs to be a culture change."

In fact, the figure grows from more than $18 million in the coming year to nearly $29 million by 2007.

Bryant said he has stressed how tenuous the city's new stability is. But he said a cumulative deficit in and of itself is not necessarily a bad thing.

"You know with your own household budget, each year you budget enough to get through the year -- so much for home mortgage, car payments," Bryant said. "You don't budget to pay off the entire amounts within one year. So the amount you carry over is a cumulative deficit. It's the same with a city."

For the coming year, public safety accounts for 81 percent of the general fund. The remainder is shared by other city departments, the largest portion going to finance at 5 percent.

Officials said at the beginning of budget hearings that no more layoffs would be necessary.

But Maya Schoen, a spokeswoman for International Federation of Professional and Technical Engineers Union Local 21, said both her union and the Service Employees International Union Local 790 have been told they may have to brace for further cutbacks.

Local 21 offered to pay 8 percent of the costs of health and pension benefits, but received no response, said Schoen, prompting the union to file an unfair labor practices grievance

"What they're doing in Richmond isn't labor negotiating," she said. "We came up with $7 million in cost savings and they just don't respond. We were expecting some counter-language, but there was none."