Taxes down, city looks at cuts

Tapping into reserves, repayment to the general fund from previous loans to other city accounts and additional belt-tightening are proposed to fill the $1.3 million shortfall facing San Bruno this year. At a meeting last night, the City Council was split over banking on the one-time funds versus cuts. As a compromise, the budget cuts will come back before the council Feb. 23 showcasing what cuts to personnel would look like to address the problem immediately.

"I get concerned when we keep using one-time this and one-time that. … We’re going to be short come July 1 by $1 million. Doing this doesn’t resolve the problem with the budget,” said Vice Mayor Rico Medina.

Councilwoman Irene O’Connell wondered how the losses would be addressed without using these funds, a question Medina could not answer having just heard the proposal an hour earlier.

Reserves split the council opinion. About $300,000 came from the general fund reserve while two payments of over $200,000 would be repayments — $200,700 from a previous loan to the Redevelopment Agency and $250,000 previously earmarked for the equipment reserve.

O’Connell was not bothered by the redevelopment repayment, comparing it to a payment from a tenant.

"I’m not too keen on using reserves,” said Mayor Jim Ruane. "It’s a relatively small amount, but it could be a huge amount if we have to use those reserves.”

Despite this, he was OK with doing it to get by.

O’Connell asked staff to further study areas where services could be shared not only with neighboring cities but also school districts.

San Bruno approved a $30.9 million budget this year with a built-in $768,000 imbalance, which was balanced by using a state reimbursement and redevelopment funds, according to a report by Assistant Finance Director Kim Juran. Now it anticipates over $1 million less in revenue, Administrative Services Director Jim O’Leary explained last night.

Revenue declined across the board, O’Leary said. Property tax is down. Sales tax has dropped from $7 million to $5 million since 2007. In that time, the city’s top 10 businesses have seen a 24 percent decrease. Auto dealership revenue has been cut in half during the same time frame. Sales at The Shops at Tanforan dropped 8 percent since 2007.

These cuts will be in addition to the $2.7 million made already for this year’s budget which included the loss of vacant positions, belt-tightening by all departments and employee furloughs.

These figures do not take into consideration the additional payment the city will be obligated to pay in 2011 toward increasing into the California Public Employees’ Retirement System. City Manager Connie Jackson explained the payment increases after the statewide investment fund took a hit in the stock market. That impact took a delay in becoming a reality.

Jackson presented her $1.37 million plan with hesitation as it did not match direction previously given by council. It included a small amount of additional revenue scratched together from developer fees, redevelopment loan repayments, business reimbursements, fee increases and the voter-approved 2 percent hotel tax increase. The tax, which passed in November, was projected to bring in $270,000 annually and so far realized a $10,000 gain because of a decline in hotel guests.

Smaller items — like savings from sharing some police positions with Millbrae, lower-than-anticipated election costs, salary savings from frozen positions, and not spending the amount projected on recruitment and training — will mean a $150,000 savings.

Residents called for a review of overtime, particularly that paid to police and firefighters.  

Resident Hank Chaff felt overtime costs needed to be examined. Ruane noted often firefighter overtime is the result of sending employees to large, out-of-the-area fires. In those cases, the money is reimbursed to the city.

A number of tax options could be considered to boost revenue down the road. Jackson was only comfortable with exploring a lighting and landscape benefit assessment, a per parcel tax for park, median lighting and lighting maintenance that would need to require a property owner protest period. Such a measure could result in $400,000 to $1 million annually.

Chaff was also against any tax increase.

"There’s a lot of people hurting today,” he said. "Times are tough.”

Heather Murtagh can be reached by e-mail: heather@smdailyjournal.com or by phone: (650) 344-5200 ext. 105.