Council to act on downsized $87.3 million operating budget Tuesday

Details given at workshop session show city locking down projects, payroll

Members of the Pleasanton City Council indicated Tuesday night that they will approve a downsized $87.3 million operating budget for fiscal 2009-10 when it comes before them for a vote next Tuesday.

With sales tax revenue down 10 percent, a zero percent projected increase in next year's property tax revenue and development basically at a standstill with almost no developer fees--once the cash cow of Pleasanton municipal revenue in the late 1990s and early 2000s--the council and city staff already had pared last year's $100-million operating budget to $89 million. The budget for the new fiscal year, which starts July 1, is down 2.9 percent with budget constraints in place.

The council spent 2-1/2 hours Tuesday reviewing financial details in two documents, one with the proposed two-year operating budget containing more than 300 pages of data and commentary, and the other with capital improvement projects under way or proposed through 2013. For both measures, City Manager Nelson Fialho said the brakes are on given the recessionary economy.

"There are six key strategies that we are following given the current economy," Fialho said. "The first one is vacancies. We haven't been hiring since last September, so we've been able to achieve significant savings as a result of that. Second, we've held all of our non-personnel costs flat, so there's been no incremental increase associated with these costs, such as the supplies we use, equipment and even how much paper we order for the copy machines."

Even more significant is the announcement that none of the city's 60 staff managers, including Fialho, will receive a pay increase during the next 12 months. For those in unions, similar actions will be negotiated when their next contracts come up for renewal.

"We're in a dire situation throughout the state and everybody has got to contribute a little to avoid take-backs and layoffs," Fialho said. "Rather than cutting, what we are asking folks to do is freeze salaries."

Also, the new two-year budget earmarks nothing toward capital improvements. With the Firehouse Arts Center now fully funded and under construction, the Alviso Adobe completed this year and $8 million already provided in the current budget for completing the baseball fields on the Bernal Community Park, Pleasanton can move forward at ease without new projects, Fialho said.

Another strategy in budgeting for the next two years is that the city has reduced its annual contribution to a reserve fund which is designed to provide a cushion for recession emergencies and even a likely state take-away of more than $4 million in property and other taxes this year to help pay down the state's deficit. Although that money will be repaid, when is unclear.

Finance Director Dave Culver said he's optimistic that economic improvements will allow a 2.1 percent increase in the operating budget to $88.1 million in fiscal 2010-11, but that half-year reviews are planned to keep check on that financial plan.

City officials said that the economic recession has had a significant impact on General Fund revenues. Over the last seven years, the city had been experiencing sustained revenue growth due manly to an expanding commercial and residential property tax base, expanding retail and business license tax bases and renewed growth in the hotel tax.

"But this fiscal year, revenues declined 4.4 percent and are expected to decline another 2.9 percent in fiscal 2009-10 before they are projected to begin a slow recovery in fiscal 2010-11," he said.

"however, or General Fund reserves remain intact and the conservative financial contingency planning done in the past year will help us weather any additional unknown wildcard such as further state shifts of local property tax," he added.

"The nation, state and East Bay are in the midst of en economic recession the likes of which have not been seen since at least the 1920s," Fialho explained. "The median price of single family homes in Pleasanton has declined 9.6 percent in 2009 and home sales volume is only 70 percent of what it was in 2007."

He added: "In January 2009 there were three foreclosures reported in Pleasanton, down from eight in January of last year. Sales tax declined 10.3 percent in the current fiscal year and is expected to decline another 13 percent in fiscal 2009-10 before any recovery is expected. Both property tax and sales tax revenues have dropped to fiscal 1996-97 levels."

Fialho said that while the two-year General Fund budget submitted to the council is balanced, it will be a challenge to keep it in balanced given the fragile state f the economy. The city's prudent approach has resulted in over $70 million in reserves for anticipated costs and future unknowns.

The council's consideration of the new two-year budget will be part of its Tuesday meeting, which starts at 7 p.m. in the council chambers at 200 Old Bernal Ave.


Like this comment
Posted by PW
a resident of Another Pleasanton neighborhood
on Jun 11, 2009 at 11:00 am

Pleasanton Weekly wrote: "With sales tax revenue down 10 percent, a zero percent projected increase in next year's property tax revenue and development basically at a standstill with almost no developer fees--once the cash cow of Pleasanton municipal revenue..."

Seems to me that the Staples Ranch project should be a no-brainer. The on-going revenue would be welcomed with open arms.

Like this comment
Posted by Very Concerned
a resident of Another Pleasanton neighborhood
on Jun 11, 2009 at 11:13 am

If we were Dublin or Livermore, Staples Ranch would be half built already. We now risk losing a series of auto dealerships, with tax revenue we can ill afford to lose. P-Town City Council, get to work now!

Like this comment
Posted by Do Right
a resident of Country Fair
on Jun 11, 2009 at 11:22 am

I hope the City of Pleasanton quits sitting on this and progresses forward immediately with Staples Ranch. Don't lose or give away the asset of helping to increase our revenue. We are fortunate to have this before us. We cannot lose this opportunity to another entity. Pleasanton could lose big time; especially in these hard economic times.

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Posted by Pleasanton resident
a resident of Another Pleasanton neighborhood
on Jun 11, 2009 at 11:30 am

I'm not too familiar with the Staples Ranch project. I do know that when I have shopping to do, many times it'll be done in Dublin or elsewhere, and that's tax revenue lost. I know I'm not alone. FWIW, I'm on Pleasanton west side where we have the mall and not much more.

It seems by the time I moved here, all the land was already zoned in for office space, office space, and more office space, with a little left for housing. Yet people have to eat and shop somewhere, and good point about car dealerships...I think we have, 4? Alot of lost potential revenue due to focusing too much on business and homes.

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Posted by Johnny
a resident of Country Fair
on Jun 11, 2009 at 11:39 am

Here we go again folks only talking about revenue. Revenue is important but we need to look at cost reduction as revenue will never be able to keep up with all desires for spending.

Like this comment
Posted by It's the Economy, Stupid!
a resident of Stoneridge
on Jun 11, 2009 at 1:35 pm

Does anyone really think that in this economy Hendrick's will build a super-sized auto mall and that Mr. Tong will build his retail center? The Council is not standing in the way. In fact, the majority (Hosterman-Cook Kallio-Thorne) literally stabbed the community in the back by reneging on their Stoneridge Drive commitment in an effort to satisfy the County (aka Scott Haggerty) and push this along. As one of our more intelligent presidents understood, it's the economy, stupid!

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Posted by Franklin
a resident of Danbury Park
on Jun 11, 2009 at 2:01 pm

Its the economy stupid!

What exactly is going on with the Stoneridge Drive and Staples Ranch project as I am unclear here?

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Posted by Joe
a resident of Downtown
on Jun 11, 2009 at 4:01 pm

Pleasanton Weekly wrote: "Even more significant is the announcement that none of the city's 60 staff managers, including Fialho, will receive a pay increase during the next 12 months." with the exception of City Attorney Micheal Roush who just recieved a 4% pay raise retroactive back to Sept 2008. Nice gesture for someone who is retiring in Sept 2009 to increase their single highest year pay to boost his retirement income.

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Posted by klj
a resident of Parkside
on Jun 11, 2009 at 7:40 pm

I believe there are several things that are a problem for Staples Ranch right now. First, I cannot imagine that an auto dealer is looking to build a new facility and expand operations in this economy. That was the project that got Pleasanton interested in Staples Ranch since auto dealers are a large sales tax revenue item. I also think that all of the options on this property are going to be a problem. The county still owns this land, from what I understand, with several entities with options. I imagine the value of this land has gone down in this economy. Don't know if the county will renegotiate the price but that could be a major factor in any progress on this site.

Like this comment
Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jun 11, 2009 at 10:14 pm

Stacey is a registered user.

Go, City!

(What's the dollar amount for 10% less sales tax revenue? How do we encourage ourselves to shop local? My family tries to be very conscious of where we shop. Pleasanton resident above noted that they do a lot of shopping in Dublin due to proximity issues. Would little shops around a "transit village" at the new BART station help? You'll still need parking!)

Sorry, but further commenting on this topic has been closed.

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