City officials are considering traffic safety improvements at Stuart Street and Martin Luther King Jr. Way. Image: Google Street View

It’s that time of year again: when Berkeley officials review the budget to make sure the city’s June financial projections were on track and decide exactly how to spend — and save — its extra revenue.

The Berkeley City Council has had several discussions recently about the budget and plans to make final decisions about allocations in December.

The bulk of the money officials are talking about came into the city’s coffers in fiscal year 2019 — which ended in June — from property transfer taxes, money the city gets when a property or title changes hands. Those taxes totaled nearly $20 million, about $7.5 million more than the city had budgeted. According to city policy, the City Council is supposed to designate anything above $12.5 million raised from those taxes to “capital infrastructure needs.”

One issue that regularly comes up in any discussion of the city’s budget is unfunded pension and infrastructure needs. As of May, the city had about $665 million in pension and retiree medical needs and another $786 million in infrastructure needs. That was an increase since 2017 of $460 million, with the vast majority of the jump on the infrastructure side.

In the May memo, staff said the city has created an “aggressive capital improvement program” to spend about $335 million through June 2024 to fix storm drains and sewers, roads, public buildings, the waterfront and more.

On the pension side, council created a trust fund earlier this year and put more than $9 million into it, and committed to putting $4.5 million into the fund annually. At the time of that decision, which was lauded as long overdue, council did not say exactly where that money would come from going forward. As part of the current discussions around finances, the city’s budget director has urged officials to put half of the city’s salary savings each year — the money the city budgets for staff positions that go unfilled — toward that trust fund. That would be about $2 million this year. Council should also raise the transfer tax threshold from $12.5 million to $15 million, she said, to cover $2.5 million for the trust each year.

In addition to pension needs, council has also been building up the city’s General Fund reserves, which are at nearly $21 million for the “stability reserve” and almost $14 million for the “catastrophic reserve.” Together those two funds make up about 17% of the General Fund, which has been described as a healthy amount.

Items that are already on council’s shortlist for funding (see page 10 of a recent budget report) — which officials had already earmarked in June — include about $1.5 million in capital needs at the Berkeley waterfront, $600,000 for EV charging stations, $500,000 for sidewalk improvements and $250,000 to relocate the HQ for city parking enforcement operations to the marina. There’s also money to add engineering staff and make some improvements at Martin Luther King Jr. and Stuart Street, where a driver struck School Board member Judy Appel and her wife Alison Bernstein in a crosswalk earlier this year, causing serious injuries.

The city manager has asked council to fund several projects, including the relocation of IT staff to 1947 Center St. ($500,000) and the rehabilitation of the Dwight Triangle on Telegraph Avenue ($100,000).

As part of the budget process, Mayor Jesse Arreguín compiles a list of priority projects that are put forward by his office and the rest of the City Council. He picks items from each district and puts them forward for consideration. Ultimately, council members discuss the suggestions and vote on their agreed-upon allocations.

Items on Arreguín’s current list — which includes about $1.8 million in asks — include approximately $270,000 to implement the city’s new natural gas ban (which has just been challenged in court); a rapid flashing beacon at Shattuck Avenue and Prince Street ($100,000) and improvements on Oxford Street downtown in to help with bicycle and pedestrian safety ($75,000); a 24/7 public restroom for Telegraph Avenue ($100,000); $150,000 for the Capoeira Arts Foundation; and $200,000 for council’s “Clean & Livable Commons Initiative”, which it approved in February to address illegal dumping and related issues.

The mayor has said the city should also put $550,000 toward wildfire mitigation measures on the recommendation of Councilwoman Susan Wengraf and $250,000 toward the BART planning process related to development at the Ashby and North Berkeley BART stations.

In response to a request from Councilwoman Cheryl Davila, the mayor is also urging his colleagues to put $100,000 toward a Strawberry Creek Lodge food program for low-income seniors that is reportedly in jeopardy.

Officials are still discussing how to spend nearly $3 million generated by the Measure P transfer tax increase approved by voters in 2018. The city’s Homeless Services Panel of Experts has put forward its recommendations for the money by suggesting several different buckets, which are each tied to a percentage of the revenue: permanent housing (30%), shelter and temporary accommodations (30%), street conditions and hygiene (14%), supportive services (14%), flexible housing subsidies (10%) and infrastructure (2%).

Council members said they would take those recommendations seriously but may review them and make some tweaks in light of other money officials have set aside already, or are planning to spend, on related services.

Arreguín noted recently that there should be more than $3 million available from the Measure P tax increase from the second half of the year, which will include a big boost from Equity Residential’s recent deal to sell six of its student housing developments to The Dinerstein Companies.

As part of its budget decisions this year, although it is not part of the upcoming allocation process, council has already set aside a significant amount of the Measure U1 money — which totaled $5.8 million in the fiscal year that ended in June — for several affordable housing projects in the works: $500,000 for new construction by Satellite Affordable Housing Associates at 2527 San Pablo Ave.; $1.2 million for new construction by Resources for Community Development at 2001 Ashby Ave., which is now Cooperative Center Federal Credit Union; and $50,000 for the Northern California Land Trust’s renovation of 2321-2323 10th St.

City officials have said they’d like more information from staff, as they consider the budget, about what the city anticipates in terms of salary savings so they can get a more accurate picture of how much money the city may have at its disposal. They’ve also said they’re keeping a close eye on how Alameda County is approaching money for homeless services because that is likely to impact the city significantly in the future.

In a budget meeting Friday with several city officials, City Manager Dee Williams-Ridley lauded the City Council for the work it has done setting aside money for unfunded liabilities and General Fund reserves. She said, going forward, officials should keep in mind the impending labor negotiations — coming soon with all of the city’s labor unions — along with pension costs that continue to grow and “looming litigation issues” for the city with “costs that are unknown.”

“We are in very good, stable times,” she told officials. “I want to make sure that we stay there.”

Arreguín, in his remarks Friday, credited city budget director Teresa Berkeley-Simmons for her work trying to make city finances more transparent for the public and officials alike.

“Only recently,” he added, “have we actually been able to understand what’s in the budget.”

The full City Council is set to discuss the budget and possibly take action on it at its Dec. 3 meeting.

Correction: This article originally misstated council policy for how excess transfer tax money can be spent. The story has been fixed.

Emilie Raguso (former senior editor, news) joined Berkeleyside in 2012 and covered politics, public safety and development until her departure in 2022. In 2017, Emilie was named Journalist of the Year...