When Hayward Councilmember Elisa Marquez campaigned last fall in support of Measure T, the city’s modest increase in raising the Real Estate Transfer Tax, she did so in alarming terms. “We are at the breaking point,” Marquez said last September.
Her rhetoric may have been slightly hyperbolic, but Hayward’s municipal finances have certainly struggled to gain firm footing for most of the past decade. For instance, during the last fiscal year, Hayward used $2.5 million in reserves to balance its budget. The expenditure was initially estimated at $5.5 million before one-time-only funds lowered the amount.
But despite a massive campaign last fall by statewide Realtors in opposition of the measure, Hayward voters approved the rate increase increasing the one-time cost typically split between buyers and sellers when a property is sold from $4.50 per $1,000 of value to $8.50 per $1,000.
Now the estimated $7 million annual windfall is likely to push back any additional short-term drain on the city’s dwindling General Fund reserve, according to the city’s Finance Department.
A five-year forecast conducted by the city last June projected the city’s General Fund reserves would dip to $32.6 million this fiscal year, or 16.4 percent of all expenses. A long-standing council policy mandated this figure stay above 20 percent. Worse, reserves were estimated to drop to 11.4 percent in Fiscal Year 2020, which begins July 1, and continue downwards to 3.8 percent in Fiscal Year 2021, before falling into the red in Fiscal Year 2022 with -4.9 percent in reserves.
A revised forecast Tuesday night’s work session shows the bleeding of the reserves has been momentarily stanched.
With the addition of estimated Measure T revenues and savings from recent labor negotiations, Hayward’s General Fund reserves will clear the 20 percent threshold for this year and next.
However, the city may have to again dip into reserves beginning in Fiscal Year 2021, when the fund balance is estimated to be 16.3 percent, followed in subsequent years by 10.7 percent in 2022, and 5.8 percent in 2023.