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$70 million budget deficit in San Jose

OAFC BBS - All Topics: Archive: $70 million budget deficit in San Jose
Top of pagePrevious messageNext messageBottom of pageLink to this message   By chris_d on Friday, June 11, 2004 - 10:44 am:

San Jose is a good place, and hopefully it and the whole Bay Area enjoys a strong rebounding economy. But with problems like these, how will they afford a new $400-$500 million ballpark?

From the June 11 Mercury News:

Posted on Fri, Jun. 11, 2004

S.J. mayor eyes financial reserve


By Aaron C. Davis
Mercury News

Mayor Ron Gonzales on Thursday proposed doubling to $20 million the amount of city reserves that San Jose would tap to close next year's projected $70 million deficit.

The move would keep the doors open for two popular community centers and dozens of city park restrooms that officials had threatened to close amid the city's deep economic downturn.

The mayor also said that for now, he would not be proposing a $1.75 monthly fee on each telephone line to pay for 911 services. That fee still would be imposed later this year, however, if the state follows through with plans to take an additional $12 million to $15 million in city revenue to help close its deficit, Gonzales said.

``Failure to enact the emergency response fee,'' the mayor said, ``would require drastic additional reductions of service that I could not recommend.''

Those cuts could include layoffs in every city department including police and fire, city officials said.

Gonzales' budget would reinstate many community programs that would have been cut if the city council adopted the proposed budget that City Manager Del Borgsdorf unveiled last month. The mayor's plan relies much more heavily than in years past on the money San Jose set aside to keep the city afloat during the downturn. But as many as 60 city employees still face layoffs, Gonzales said.

The mayor's recommendations are subject to city council approval. The council has scheduled a public hearing on the total $725.2 million plan Monday night, and is expected to vote on the mayor's budget plan Tuesday.

Some council members said they are wary of tapping into the city's rainy day reserves given that the region's economy has not begun a sustained rebound.

``We don't need to spend $10 million in reserves when keeping the bathrooms clean costs less than a million,'' said Councilman Chuck Reed. ``It rolls the snowball of a deficit a little further up the hill, but the snowball keeps getting bigger.''

The city expects a deficit of $25 million in the 2005-06 fiscal year, and Gonzales' proposed use of reserves could make it harder to close that gap, said Budget Director Larry Lisenbee.

Emergency fund safe

None of the mayor's anticipated use of reserves this year, however, would touch the city's $23 million ``contingency reserve,'' a separate emergency account that helps the city maintain its sound financial standing on Wall Street. The remainder of the city's deficit next year would be balanced by a combination of layoffs, fee increases and 12 percent budget cuts to most city departments, excluding police and fire.

On Thursday, Gonzales spoke before a cheering crowd of about 75 people at Olinder Community Center on East William Street; he was greeted by 20 elementary students who chanted "gracias mayor for saving Olinder.''

The group praised Gonzales for his decision to tap city reserves. Council members Cindy Chavez, Forrest Williams and Terry Gregory, as well as Borgsdorf and acting Redevelopment Agency Director Harry Mavrogenes, flanked the mayor as he spoke at Olinder.

Of nearly 20 community centers that face closing or funding cuts next year, Olinder and McKinley were spared under Gonzales' plan because of high attendance at their after-school and summer programs, said Joe Guerra, the mayor's budget and policy director. The cost to keep the two centers open next year is $140,000.

Some not impressed

But community leaders elsewhere in the city were not impressed.

``I'm really disappointed. It seems like the neighborhoods that are already behind are being hit the hardest by these cuts,'' said Randi Kinman, president of Sherman Oaks Neighborhood Association, whose community center is to be closed.

``I understand the cuts have to be made, but it seems inequitable,'' she said. ``We don't have the attendance because the city's never helped us provide the programs.'' Gonzales' plan also would restore $300,000 to city neighborhood watch programs and return $900,000 to the city's Parks, Recreation and Neighborhood Services department, part of which would be used to keep 45 park restrooms open on weekdays.

Borgsdorf's budget called for closing the restrooms to save money.

``The mayor did a good job of reconciling the most problematic service cuts,'' Borgsdorf said. ``But by using more one-time funds, we'll be having this conversation again next year.''


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