City Budget: Revenue Up, Spending Down, But Cost of Losing Redevelopment Funds Still Unclear

September 4, 2012

Finance Committee Recommends Community Input on Priority Projects for Capital Improvement Pool

The Finance Committee took a close look at the economic state of the city at its meeting last month.  What did the quarterly figures show?  Eight of the top 10 budgeted revenue sources showed increases over last year.  Sales tax revenues were up 14 percent, hotel occupancy tax revenue up 18 percent, and business license tax revenue up 29 percent.  These are the three biggest income producers for the city, and increases here suggest at least a modest local recovery from the recession.  Only the two smallest revenue producers, fines and vehicle license fees, showed decline, the first down 4 percent, the second 7 percent. It’s too early to start cheering, but the tide of up-ticks in key areas is encouraging.

How about expenditures?  Taking the 12 categories of our spending in aggregate and comparing what was spent last year to the same time this year, we find a decrease in spending of about $1.5 million.  Revenue is up, expenditure down, and that helps explain why the city’s credit rating is excellent despite a considerable debt and the cost of financing it.

So, what’s to worry about?  Here in California we still don’t know exactly how the ending of redevelopment agencies will affect local communities, and that includes Emeryville.  The Finance Committee discussed a legal summary of AB 1484, the so-called “Redevelopment Dissolution/Unwind Trailer Bill” – the June 27, 2012 measure designed to speed up transfer of redevelopment agency assets to the state.  It was not an easy read, and what price we may have to pay locally to meet its complex requirements is not clear.  Add continuing uncertainties about the national and global economies and legitimate concerns still abound.

What to do until the dust settles?  The Finance Committee is recommending that we take advantage of the present favorable income to expenditure balance and any future tilts of this sort to build a capital improvement pool for projects that will help keep the city vibrant.  We are also recommending that staff and the City Council develop a priority ranking for projects that might draw on such a pool.  Community input on such a ranking is vital.  Look for chances to have a say.

I’ll close with brief comment on the departure of Karen Reid, the city’s Treasurer and Chief Financial Officer.  She has left the city after 14 years of distinguished service to take a comparable job in Benicia, and those of us who have had a chance to work with her will miss her expertise.  A search for her permanent replacement is underway.  In the meantime, Debra Auker, an experienced financial officer most recently employed by the city of Oakland, is holding the fort.  The Finance Committee met her for the first time at our August 20 meeting and found her reporting clear and her answers to questions concrete and informed.

Bill Reuter is Resident Member and Chair of the Finance Committee, City of Emeryville.

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