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The Pleasanton City Council adopted its two-year operating budget and four-year capital improvement program during last week’s council meeting following months of budget workshops and deliberations.
Based on a recently completed 10-year infrastructure plan, as well as input received from the City Council, the budget includes other city priorities such as the adoption of a new citywide strategic plan, implementation of the city’s Diversity, Equity and Inclusion program and continued technology improvements to modernize operations.
It also includes the implementation of programs to promote energy conservation and environmental sustainability throughout the community, continued support of programs that provide services to community members and a complete water alternatives study.
Funding for the next two years includes $26.7 million for various transportation and streets projects; $5.5 million for parks projects; $3.8 million for facilities projects; $7.8 million to maintain and improve infrastructure for the water, sewer, and storm drain utilities; and $2.6 million for other projects, including updating of city infrastructure for fleet electrification and development of an Asset Management Plan.
According to city staff, the total expenditures in the two-year operating budget are $234.4 million for 2023-24 and $235.7 million for 2024-25. As for the CIP, the timeframe over the next four years for capital expenditures total $78.7 million for 43 capital projects, of which $32.2 million for 2023-24 and $14.2 million for 2024-25 is allocated.
“Notwithstanding the escalating costs and a slow return to some revenue post-COVID — things like hotel tax haven’t quite bounced back — the city does have a balanced budget for funding for operations including those employee contracts, repair and replacement efforts (and) capital projects as well as special funds to fund our enterprises,” City Manager Gerry Beaudin said during the June 6 meeting.
The 4-1 vote to approve the budget, with Vice Mayor Jack Balch dissenting, came after a long discussion on how city budgets work and why things like an expanded skate park and renovations to the historic Century House would not dip into funds for things like police salaries or water infrastructure.
“We’ve had an uptick in public comments about how some of our capital projects relate to our police officers association contract as well as investment in our water system,” Beaudin said.
Beaudin was referring to the emails he and others on the dais have received from residents who either supported certain CIP amenities like the skatepark or who wanted those projects to be deferred so that money could be spent on better police salaries and benefits in light of the Pleasanton Police Officers Association declaring an impasse during labor contract negotiations.
“Why are we spending cash and placing the entire burden of the rehabilitation of the skate park and the Century House on current residents?” said Vicki LaBarge, a longtime resident who suggested that the city could maybe take out a loan to pay off those amenities.
“Please don’t take the cash out of our reserves when we have pressing issues,” she added. “It’s time to stop or pause or rethink the nice to have amenities and focus on (our) must have priorities. Rethink the budget, spend the $10 million where it’s desperately needed.”
The $10 million she referred to was the total combined funds that would have come from deferring the skatepark and Century House.
Another big issue that many residents wanted to see be funded instead of the skate park expansion at Ken Mercer Sports Park or the efforts to restore the 150-year-old historic Century House, was Pleasanton’s water infrastructure, which has seen more PFAS, otherwise known as forever chemicals, in the city’s groundwater wells over the past few years.
“It’s all a matter of priorities,” said Arne Olson, who served on the Pleasanton City Council from 2014 to 2018. “The four of you are just bound and determined to improve that skate park and I don’t see what it does for infrastructure in this city when those funds could be applied to what you say is your top priority, which is water.”
However, Beaudin — along with several of the other members of the dais — spent a good amount of the discussion talking about how residents have to understand that money going toward rehabilitating the skatepark at Ken Mercer or renovating the Century House is not taking away money from police salaries or water infrastructure.
“Setting capital projects up against police or our water system is a false dichotomy. We have to do all of these things,” Beaudin explained. “Capital projects are mainly one-time money and while there are operational and maintenance costs associated with a capital investment, they’re not the same as the salary and benefits which live forever in our budget and are compounded over time.”
He also explained that while the city could in the future decide to look at capital or general fund reserves as a way to solve near term financial issues in regards to water infrastructure, it is not a preferred route to take.
“If we had a hard time finding money to start some of those efforts, then we could look at the capital reserve, essentially, as a way to do that,” Beaudin said. “We could also look at the general fund reserve as a way to solve a near term financial issue. But that’s not, again, the preferred approach.”
“There are funding sources available that are market-driven funding sources — they’re not internally moving money around in our pots of money — that we have available to allow the water enterprise fund to get up on its own two feet,” he added noting the water enterprise fund that city staff previously said has been projected to fall below the minimum reserve level.
One of those sources include raising its water rates, which the city is currently working on as part of a water rate adjustment study.
Councilmember Valerie Arkin also made the point that even if the council were to defer certain capital projects, that money wouldn’t make a dent in the $46 million that was previously projected for the construction of a PFAS treatment and rehabilitation facility, which the council voted to push pause on to consider other long term options.
“I know there have been people that have said, well, delay this project, don’t do this, whatever to help with the water infrastructure,” Arkin said. “The option that we were potentially going to consider a year ago had a price tag of about $46 million. So a $5 million, $6 million project, I mean, it can’t even begin to address that.”
She also reiterated that the city is working on looking at long-term — and even short-term — options for how to deal with Pleasanton’s water infrastructure and that they will continue to do so even after these budget discussions.
“Whether we (go) forward with any particular capital project or not, we are going to address our water infrastructure issue in the best way possible,” Arkin said. “It’s not going to deviate because we don’t do one capital project or don’t do the other.”
But Balch, much like the last few budget workshops, held his ground on opposing the budget for reasons including economic uncertainty, revenue projections not increasing as fast as expense and inadequate reserves.
“The city’s expenditures are projected to increase at a faster rate than the revenue — pure and simple,” Balch said. “It’s putting pressure on the budget.”
“The city budget indicates there’s a growing consensus amongst the economists that recession in the next 12 to 18 months is likely, which is the planned period for this budget,” he added. “The budget relies on assumptions (that) we have debated them in tedium and it is okay to disagree and have a different viewpoint … Mine is simply that there are several (projects) in here that make me concerned personally.”
And while a number of public speakers showed up to voice their support for the Century House and skate park capital projects saying they are both essential amenities for all ages, Balch hammered down on his request to defer those items until the city can assess those priorities after dealing with the main one — its water infrastructure.
“I think it would allow us to have a better clarity as to what we’re going to do for our water situation and how we are going to pay for it,” Balch said. “I believe it’s important to take care of what we have before we add new amenities.”
“I respect everyone’s opinion on the Century House and the skateboard park,” he added. “It’s not my concern about what amenities we choose. I understand that issue. It’s when we choose our current challenge financially over any amenity.”
The council majority ultimately outvoted Balch and approved the budget, with Mayor Karla Brown ending the meeting with updates on how she had worked to obtain $3 million from the U.S. Rep. Eric Swalwell’s (D-Livermore) office for its efforts on PFAS and is currently working with Assemblymember Rebecca Bauer-Kahan (D-Orinda) to obtain another $3 million.
“These monies are going to continue to come in,” Brown said. “I’m very proud to do this as a leader for the city of Pleasanton to do outreach and to continue to bring funds into this community.”
The way the City Manager and the Council majority think and speak about budgeting is bizarre to me. Their attempt to spin and contort their decisions, by implying that people don’t understand how budgeting works, are just offensive and out-of-touch.
1. From City Manager Beaudin: “Setting capital projects up against police or our water system is a false dichotomy. Capital projects are mainly one-time money and while there are operational and maintenance costs associated with a capital investment, they’re not the same as the salary and benefits which live forever in our budget and are compounded over time.”
While it’s true that capital projects have a big, one-time expense up front – operational and maintenance costs *also* live forever! They’re just as permanent as salary and benefits, and they *also* compound over time! Costs go up as things age, and so operational and maintenance costs shoot up over time. See: our aging roads, water infrastructure, and buildings. (Oh, and by the way, who does the operating and maintaining of capital projects? Staff! Staff who come w/salaries and benefits – the very costs that Mr. Beaudin felt the need to point out live forever and compound over time! )
So, no, the people who expressed concern about the costs of capital projects vs. other costs — they’re not setting up a false dichotomy. Mr. Beaudin’s statement either proves his odd approach to budgeting, or he’s being purposely obtuse.
2. From Councilmember Arkin: “The option that we were potentially going to consider a year ago had a price tag of about $46 million. So a $5 million, $6 million project, I mean, it can’t even begin to address that.”
What’s $5M, or $6M? Apparently that’s nothing to CM Arkin! (I think most taxpayers would say otherwise.) You know who else might say otherwise? Mayor Brown! Because she then ended the meeting wanting credit for $3M (she claims) she got to address PFAS + the $3M more she might get for it. So, is $6M a lot? Or is it not? I’m confused.
Also, for the record, the amount that Congressman Swalwell secured for the City of Pleasanton to deal with their PFAS infected water is $2M, not the $3M the Mayor continues to cite. And the money came for a very specific intended use, which was: “to construct a new water well in order to offset the loss in clean water and pumping capability that has been lost due to other wells being decommissioned because of dangerous PFAS chemicals.”
The document from Congressman Swalwell making the $2M budget request, and specifying its intended use, can be found below. (Note: You may need to copy and paste the link address to a new tab or window, as it links directly to a PDF document and clicking the link below may not open the link correctly.)
http://swalwell.house.gov/sites/evo-subsites/swalwell-evo.house.gov/files/documents/Financial%20Disclosure%20Form%20PFAS%20Final.pdf
I applaud Dean Wallace for his very thorough comments on this article.
Vice Mayor Jack Balch, who is a CPA, demonstrated his extensive experience with budgets and finance when he pointed out his concerns with the budget assumptions and priorities. The council majority, instead of considering and understanding these concerns, brushed them aside as they rushed to spend cash on new amenities.
Spending cash with so much uncertainty in the near term is not in the best interests of the taxpayers of Pleasanton. As Vice Mayor Balch pointed out, the majority of economists are predicting a recession. I have to ask, what cuts would Pleasanton be forced to make if a recession hits, clearly we won’t be cutting spending on a skatepark.