Black Cat Brings Bad Economic News to Committee

The Citizen 

You know you’re in big trouble when a black cat strolls into the afternoon finance meeting. The ominous scene actually happened Wednesday as the city finance director announced an additional mid-year revenue shortfall of nearly $2 million.

The revised budget numbers puts the city on track for a deficit of $7.3 million with revenues of $67.5 million by the end of the fiscal year this June.

“We can’t afford to keep doing this,” said Councilman Jim Prola, who also sits on the three-member finance committee. “If you projected out a number of years, we’re in trouble unless we increase revenues.”

Stephen Cassidy, the man hoping to unseat Mayor Tony Santos in November and a frequent critic of the city’s handling of the its finances said, “You’re in trouble now and you’re in danger of going into bankruptcy by early 2011 because you’re running a $7 million structural deficit that you’re going to see next year as well,” said Cassidy. “The house is on fire, but you’re not calling the fire department.”

Cassidy reiterated his call for Santos to take a pay cut as an example to city workers to make wage concessions until the budget stabilizes.

Interim Finance Director Perry Carter told the committee Wednesday a continued drop in tax receipts accounted for the newest shortfall that follows revisions in July and November of last year totaling $3 million. The poor economy is continuing to batter the city budget, according to Carter. Sales Tax revenue is projected to account for nearly half of the shortfall. In addition, the first installment of property taxes this fiscal year revealed a $300,000 reduction to $16.1 million, said Carter.

Another sign of the troubled economic times many are experiencing, Utility User Tax revenue is projected to drop $600,000 which “may be attributed to the overall economic stress communities are experiencing throughout Northern California,” said Carter. Real Property Transfer Tax receipts are also down which could be a sign of the overall real estate market still struggling in San Leandro.

The $7.3 projected deficit follows a similar $7.6 shortfall last year which together will leave the city with nearly $4 million in reserves next fiscal year down from nearly $20 million just a few years ago. Such a precarious financial situation will likely force the city to make further cuts later this year.

The report also bolstered the belief offered by many including Prola and Santos the city’s budget problems lie in poor revenues rather than runaway spending. According to Carter, the budget reflects nearly $2 million less in expenditures primarily from numerous employees accepting “golden handshakes.” The estimate, though, also includes the possibility of a furlough once a month for city employees until June. No such program has been approved by the city.

As for the black cat, Santos said he did not know anything about the furry feline who calmly walked under the conference room table for nearly 10 minutes before startling the assistant city manager. There were also no reports of anyone opening an umbrella indoors nor did anyone walk under a ladder.