City approves two-year budget, with eye toward the future

By Peggy Spear on July 17, 2017

Two phrases have been bantered about in Concord’s finance circles in the past few years: “balanced budgets” and “Measure Q.”

That is no different for the two-year budget cycle that kicked off July 1, as the city approved nearly $100 million expense plans for the fiscal years 2016-’17 and 2017-’18 that are balanced, albeit precariously, on the shoulders of Measure Q – the half-cent sales tax voters extended in 2014.

In 2016-’17, the city plans an $84,766,000 revenue plan, aided by $7.5 million from Measure Q funds for a total of $92,266,000. Next year, it increases to $92.8 million, with the same assistance from the sales tax measure.

Unfortunately, the long-term look is a bit gloomier, as the sales tax is set to expire in 2025. That will leave shortfalls of up to $13 million due to rising pension costs.

Concord finance director Karan Reid made that fact glaringly evident in budget reports, which she unveiled in May and were approved June 27.

In the 10-year forecast, Measure Q will aid anywhere from $3.7 million to $7.8 million, but operating expenses are projected to grow higher than revenues.

“Every year it becomes harder,” says Vice Mayor Edi Birsan. “The state’s reassessment of the PERS (the Public Employee Retirement System) is going to cost the city an extra $13 million in the next six to seven years.”

He says he and other council members fear the idea of cutting those funds from city services, and that in the long term it may hurt business development in Concord – which the city is counting on to boost sales tax revenues.

“In the long range, we have problems with funding pensions as well as everything else we do, but we are legally, ethically and contractually required to do so,” Birsan says.

He is also worried about medical benefits the city is legally going to have to pay retirees, since “who knows what is happening to medical benefits on a national level.”

He notes that no matter how robust the economy is now, many people are expecting another downturn in a few years – perhaps greater than that of 2008-09, after which the city was forced to cut services and lay off staff. To offset that and to help balance the long-term budget, the city is maintaining a $30 million reserve.

But for now, the budget remains balanced and growing, thanks to a strong sales tax and property tax base. Measure Q, franchise fees and charges for licenses and permits make up the other major parts of the revenue stream. Reid predicts sales taxes will be $33.6 million in 2016-17 and $35 million in 2017-18.

Property taxes are expected to be $24.9 million, or 25 percent of the budget, this fiscal year, and $25.8 million, or 26 percent of the budget, next year.

Public employee salaries, especially that of Concord’s police force, are the biggest expense both years. That includes hiring a new civil engineer and housing analyst; converting two existing part-time positions in the police department into a full-time community services officer; adding a fourth school resource officer to work at Olympic High School, a cost the city splits with the Mt.

Diablo Unified School District; and turning a vacant position into a new code enforcement officer.

The city is also looking at the new Veranda Shopping Center on Diamond Boulevard on a 30-acre former PG&E site near the Willows to generate at least $665,000 in sales tax by 2018-19.

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