San Carlos should have used more reserves for pandemic

I never forgot those words. Because in the months leading up to that vote I’d publicly advocated we do more. For individuals and families being hurt by the shutdown. For businesses reeling from a lack of customers. For San Carlos’ public schools, which were thrust into jeopardy by the pandemic.

I failed in that effort. I voted against the budget — the only vote time I did so while on the council — because it did not do enough. The city’s reserves were far more than its immediate needs and, because of good work done years prior, grew significantly year after year and could be expected to do so in the future.

That budget made no sense to me then and makes no sense now. You spend less than you take in during good times so you have resources to get through the bad times. Worrying about using reserves during a crisis — which COVID-19 surely was — is like not wanting to open your umbrella during a rainstorm because it might break.

My aim here is to spark a conversation so San Carlos can be better prepared for the next crisis. Let’s start that by reviewing the financial situation that existed back then.

On July 1, 2020, San Carlos had $19.4 million in reserves, which could be spent on any lawful purpose a majority of the council wanted. It would’ve had over $33 million if it hadn’t previously spent $14 million prepaying pension obligations (prepaying a liability you are reasonably sure you can pay off out of future income would make most financial executives cringe — it’s not a wise use of capital).

A year later, on June 30, 2021, the city had $20.1 million of easily-deployable reserves. And that didn’t include about $9 million of promised federal support that came through shortly thereafter.

While that infamous budget projected spending $2 million more than revenues, the city ended up spending $500,000 less. Put another way, the council could’ve spent $2.5 million more helping the community and been no worse off than it thought it would be. There’s an element of 20/20 hindsight here. But that $20 million reserve could have, should have, provided the confidence more could be done without risking the city’s future.

If you add in the promised federal support — intended to help communities help their residents recover from the pandemic — the extra spending could’ve exceeded $10 million. Granted, that money wasn’t in the pipeline until after the 2020 national elections. But those same large reserves would’ve supported taking a risk — to help people — in advance of it arriving.

Think what that would’ve meant to people struggling to get through the pandemic. To help them keep their homes and make ends meet after being laid off. Or to businesses trying to survive. To kids who needed a computer and internet access to keep up with school. Or to a school district struggling with a sudden shift to at-home learning. With a loan, the city could’ve easily provided, the district might’ve found a way to keep kids’ education more on track, protecting their futures and making their parents’ lives a lot less stressful.

In fairness, it’s human nature to hesitate when confronted by radically changed circumstances. But leaders, particularly elected leaders, must be able to find a way to do what needs to be done despite being uncertain or afraid of the future. Public service is a bigger challenge than those who haven’t undertaken it may realize: you’re frequently damned if you do and damned if you don’t. But being effective requires you accept that as a given and work through it.

I’m not angry about the choice that was made even though I believe the council didn’t protect San Carlos as well as it could have. We are all human, and we all make mistakes. Particularly in the face of something unprecedented.

But I hope our community weighs in on this. And demands its council do more when the next crisis strikes.

Because helping people sometimes means taking chances, even if it risks reserves. That’s what they’re for.

Mark Olbert is a former mayor of San Carlos. He and Seth Rosenblatt host a podcast on the intersection of economics, history, politics, psychology and science at TheBoilingFrog.net.