Rainy day funds Rainy day funds (June 17, 2005)

Council passes budget amid debate over reserves

By Jon Wiener

Vice Mayor Nick Galiotto delivered on his promise to lobby hard on behalf of police jobs in the city's new budget. It just was not hard enough.

Galiotto pleaded unsuccessfully with his fellow city council members to use surplus city revenues to retain several public safety positions slated for the chopping block in the budget passed Tuesday night. Reading from a prepared statement, he again questioned the need to save an extra $1.3 million at a time when violent crime appears to be more of a threat than financial solvency.

The additional $1.3 million, contained in the Economic Stabilization Contingency (ESC), is an estimate of how much revenues will outstrip expenses in the next fiscal year. Other extra dollars were allocated to various one-time projects, but city finance director Bob Locke told the Voice that there was no assurance of an ongoing revenue stream to pay to keep the police jobs.

While other cities are dipping into what is left of their reserves to avoid further layoffs, Mountain View has socked away nearly $90 million in various reserve funds for a variety of purposes.

"That is a great accomplishment, but the cost of this achievement has been a great negative impact on our workforce," said Galiotto. He said the city's decision not to fill a mechanic position has caused a three-month backlog in repairs to city vehicles, including emergency vehicles.

Council member Laura Macias agreed with Galiotto. "We're looking at an increase in violent crime, and this is not the time to take away police jobs," she said.

Council members said that $90 million could suddenly look like a lot less, when the city finds out how much it will cost to cover its commitments to public safety pension funds and health care coverage for retired employees. In the case of retiree medical costs, the city is holding $13 million in reserve, but could wind up facing up to $40 million in liabilities.

"It's important to look at the other side of the equation," said council member Greg Perry. He said the city could increase its service levels in two ways -- adding positions or increasing efficiency. "I'd rather take a look at efficiency."

Others said they had concerns about the cuts to the police department but did not feel comfortable dipping into reserve funds to restore suggested budget cuts, especially on the night they were scheduled to adopt the budget.

Utility rate hikes approved

The budget itself totaled more than $193 million, including several large capital projects like the child care center and the downtown parking garage.

The budget also includes the city's three utility funds: water, sewage and trash.

Of those three, only water rates will remain the same as last year. The San Francisco Public Utilities Commission, which supplies most of the water to the city, cut its wholesale rates in spite of the prospect of doubling them in the future to pay to protect the Hetch Hetchy system against a major earthquake.

The council voted to raise rates an average of 10 percent for sewer service in order to make up for revenue lost when major businesses left town after the dot-com bust. The reduction in revenue in commercial water use actually offsets the attendant costs savings, according to city officials.

Likewise, the city's trash rates will jump an average of 6 percent, to cover Foothill Disposal's labor costs and the expense of collecting recycling for free.
E-mail Jon Wiener at jwiener@mv-voice.com

E-mail a friend a link to this story.