When I was in college, the progressive eatery was a cooperative vegetarian restaurant. It served first-wave hippie cuisine – always experimental, constantly evolving. One afternoon we were dismayed to find the restaurant shuttered. The perils of nonexistent accounting had caught up with the place. Fortunately, a skilled team and angel investors recognized the intrinsic value of the enterprise and developed a sustainable business plan. Upon reopening, they placed a banner out front which read, “New Under Management.”
Fast forward to Berkeley 2019. Residents may be surprised to learn our City Council has no binding policy for evaluating the cost (“Financial Implications”) of items they are voting on. Often the costs to the city are simply stated as “unknown.” At a recent meeting, Councilwoman member Susan Wengraf acknowledged this gap stating, “historically we have been lax about looking into fiscal impacts” and “very often you see fiscal impacts ‘unknown,’ and they should be known before we vote on things.”
Each year, new spending measures are passed without addressing two basic questions: (1) what is the price tag, and (2) what is the impact on existing services? As a consequence, city departments are given a growing list of mandates without assessment of their capacity to deliver. Invariably, these new mandates siphon resources from existing commitments frequently resulting in service declines, deferred maintenance and infrastructure degradation. This pattern is currently playing out at the Marina where a full-blown crisis is projected to bankrupt operations by 2021.
Can Berkeley find the discipline to consider the consequences of its actions?
There are champions for change. Our new City Auditor, Jenny Wong, made transparency and accountability the centerpiece of her campaign and subsequently has been a forceful advocate for specific policies requiring impact assessments on both financial and resource tradeoffs before legislation is passed. However, the best short-term opportunity lies with the City Council. Council is currently revising their rules and operating procedures. The current draft includes “guidelines” for writing agenda items. With regard to economic impacts, the guidelines state the following:
Review the recommended action’s potential to generate funds or savings for the City in the short and long-term, as well as the potential direct and indirect costs.
This extraordinarily modest proposal is not a requirement because the guidelines are non-binding and voluntary. Despite their modest nature Councilmember Harrison opposed the economic impact language stating, “I don’t want to do this right now.
She objected most strenuously to a proposal to consider “opportunity costs” or tradeoffs of a new measure. Mayor Jesse Arreguín then responded with a motion to send the proposal to the agenda and rules committee. The motion passed, thus further delaying action.
Harrison’s actions made the complex the enemy of the simple. She objected by suggesting actual costs can be “complicated” and may not reflect “all the nuance” of a proposal. However, this nuance can readily be captured by a sensitivity analysis. Distinguishing between known direct costs and uncertain indirect costs was addressed by City Manager Dee Williams-Ridley, who indicated her office could “provide a high-level financial overview” of the opportunity costs and tradeoffs of new measures.
It’s disturbing to watch our city auditor and city manager attest to the utility and feasibility of practical proposals that will enable informed city budgeting, only to meet resistance from a minority of council members. The time for honesty and transparency in city budgeting has arrived. Constituents should demand that all measures, save public health and safety emergencies, include financial impact assessments and opportunity costs or tradeoffs. It’s imperative that we manage our finite public resources effectively so we may also hang a sign outside of City Hall stating: “New! Under Financial Management.”