“The City’s budget is a reflection of City policies, goals, and priorities. The budget process assigns resources to address the goals, objectives, and community priorities set by the City Council.” Christine Daniels, City Manager
When the parks tax (Measure F) was passed by an overwhelming majority last fall, most residents probably assumed that the revenue raised would go toward finally fixing the dilapidated state of the city’s parks. After all, all the city council members were firmly on board and former Councilman Gordon Wozniak, writing in an editorial in Berkeleyside, stated “Measure F will provide over $1 million a year to fix indoor and outdoor facilities that are deteriorating and hazardous.”
What most residents didn’t realize when they voted for Measure F was there are well over $30 million in park projects that are in need of improvement and that a large portion of the new tax revenue (approximately 1/3) would go toward paying the structural deficit in the Parks Department. (The word “structural deficit” refers to a deficit that persists due to fundamental imbalances.) So while the Parks Department may now have an additional $1.7 million per year in revenue, $500,000 of that will go directly toward paying employees and their benefits, and only $750,000 will be available for major maintenance projects — a very small amount by any measure. The remaining $450,000 will be spent on “recurring maintenance projects like asphalt replacement, electrical upgrades, exterior painting and irrigation system repairs.”
This is important background for those in the city, and for District 6 residents in particular, who may wonder why another four to five years must pass before the Berkeley Rose Garden, a city jewel and designated landmark, is made whole again. It is also why the John Hinkel clubhouse in District 5, also a designated landmark but “attractive nuisance” (per Councilman Laurie Capitelli), will never be rebuilt after a fire gutted it this past January.
In a recent presentation to the City Council, Scott Ferris, the parks director, outlined the spending plan for the $1.4 million over each of the next five years. Starting sometime in fiscal year 2016, the Rose Garden’s existing trellis will be torn down and a small section of the new trellis will be constructed. This work, in FY2016, will not be paid with revenue from the parks tax but rather $350,000 from Measure WW (a grant from the East Bay Regional Park District that was approved as a bond measure in 2008). It is not until over four years from now — FY2019 — that money is slated to be spent from Measure F for the Rose Garden ($1,050,000) for a total cost of $1.4 million.
I recently inquired about the cost and timeframe. From my vantage point, the cost and the more than four-year time horizon to replace a trellis seemed worthy of question. I was first told by Councilwoman Susan Wengraf’s office that it was a “complicated matter” because the Rose Garden is a designated landmark and any new work must adhere to ADA requirements. In a follow-up conversation with Ferris, he told me that the cost of replacing the trellis would be approximately $420,000, and making the garden ADA compliant would cost $500,000 to $800,000. The total cost of the trellis would therefore be approximately $350,000 plus $420,000 (an amount that still baffles me given it is a wooden structure).
After speaking with Ferris, I understood how another project in the city was prioritized over the trellis. The James Kenney Community Center in West Berkeley is in dire need of attention and, in contrast to the Rose Garden, safety is a major issue. It is in such bad shape — and has been ignored for so long — that it literally might collapse. In 2013 it received a “D” (or critical rating) for the condition of its facilities by professional engineers and architects. (Note: There are numerous “C” and “D” ratings of buildings in the city.) Consequently, all Measure F revenues for the first two years (FY2016 and FY2017) are earmarked for the demolition and reconstruction of Kenney. What makes the delay in fixing Kenney disturbing is that it serves as a designated emergency shelter. We can only hope the work will be completed before a major earthquake strikes because it will be closed during construction.
So we assumedly must sit patiently for four if not five years before the Rose Garden, a “regional destination” (per the city’s website), is fixed. The neglect of this landmark is symbolic of our city leaders’ indifference to the public good over the past decade with the closing of clubhouses, swimming pools and senior centers (Table 1). Other parks and recreation centers in Berkeley are not budget priorities either. And sadly, things will continue to continue to get worse regardless of how much our taxes and fees increase every year because of the burgeoning structural deficit.
Over the past decade there has been an increase of only 26% in funding for the parks compared with the 222% increase in health care spending for city employees (Table 2). The significant increase in health care spending is attributable to the fact that city employees and their families receive effectively free health care — they pay no premiums, no deductibles and no co-pays, although they do pay $5 per prescription. In contract negotiations with the unions, the city manager and her predecessor never pushed for cost-sharing (possibly because they have a conflict of interest – they receive the same benefits as well).
To make matters worse, according to recent statements by the budget manager, starting in FY2018 Berkeley taxpayers will pay an additional annual excise tax of 40% on the health care plans employees receive, or approximately $800,000. This amount will increase annually by the CPI plus 1%. The excise tax is per the Affordable Care Act’s provision for “Cadillac Plans” (health care plans valued at more than $25,000 for a family). In 2009, President Obama said he wanted to add a penalty to “these really fancy plans that end up driving up costs.”
So why isn’t the increase in the amount spent on parks (or community agencies for that matter) proportional to the increase spent on salaries, benefits and running the city? Why are clubhouses, public swimming pools and senior centers routinely being closed in Berkeley — one of the richest cities and most highly taxed in all of California? The money is clearly in the city’s budget, but City Council has set it aside for other priorities.
In a presentation to council in February on “Projections of Future Liabilities,” the budget manager stated that over the next 10 years health care costs would increase $10 million (she emphasized that this was a conservative estimate and didn’t include the new 40% excise tax), and personnel costs will grow $25 million (assuming no increases in salaries), for a total of $35 million in increases. (The increase in personnel costs reflects a “fringe benefit rate” that will increase from 66% in 2015 to 90% in 2024. That means for every dollar an employee is paid, an additional 90 cents will go toward the employee’s medical and dental costs, commuter checks, health club memberships, cash-in-lieu, life insurance, shoes and other benefits.) Assuming no changes are made, by 2030 the fringe benefit rate will well exceed 100%. In other words, for an employee making $80,000 in salary, an extra $80,000 must be set aside for benefits.
With revenues from the general fund (the “discretionary” fund of the city) projected to increase by $32 million by 2024, it is clear that every dime, plus some, will be needed to cover the increased personnel costs of $35 million (assuming no salary increases). However, if employees receive even a 1% raise in 2015, 100% of the general fund increases will be expended on the increased personnel costs beginning in FY2017.
Simply put, growth in obligations to employees outpaces revenues. This warning was issued in the 2005 adopted budget by the then city manager: “The City’s projected revenue growth is not expected to keep up with increases in salaries and benefits – representing a structural deficit… we cannot grow out of this problem by simply adding more revenue.” And in a 2010 audit report, “Employee benefits: Tough decisions ahead,” the city auditor stated that, “Government employee benefits represent a rapidly increasing cost to the City.” In every year’s budget from 2005 through 2015, the City Council has been informed, in one way or the other, that the city cannot “grow out of this problem by increasing revenue.”
In summary, assuming the city opts out of negotiating with employees in terms of their health and retirement benefits (they are in contract talks now), the only way the city will be able to pay its employees in the future is by further neglect and/or shutting down of more pools, parks and senior centers. It doesn’t matter how much we say we love our parks. If you care, please contact your city council member, mayor and friends. We can change the trajectory of our city if we wish to.
Adopted FY2014 and FY2015 Biennial Budget
Special worksession on parks, recreation and waterfront five-year plan
Special worksession on future liabilities
FY2006 and FY2007 adopted budget
Employee benefits: Tough decisions ahead
Tough budget decisions Four years later
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