How To Restore San Leandro To Fiscal Health

By Stephen H. Cassidy

Stephen Cassidy is the only candidate for San Leandro Mayor with a solution to the city budget crisis - and his plan does not rely on increasing the sales tax to 10%.

In the current fiscal year, San Leandro is spending nearly $70 million and expects to receive $67 million in revenues, leaving a $3 million deficit in its general fund. This is the fourth consecutive year of deficit spending for the city. Previous budgets ran $6-7 million deficits. In total, over four years, the city has racked up $24 million in red ink, nearly exhausting reserves. At the end of the current fiscal year, June 30, 2011, the city projects to have only a $1.3 million reserve. That amounts to just a week and a half of payroll expenses.

How could the city run multi-million dollar deficits for four years, starting before the recession began? The number of city employees earning over $100,000 annually keeps increasing, up by nearly 50% since 2007. Pay raises were given to certain employees through 2009.

On top of the salaries earned, employees receive, at no cost to themselves, extremely valuable pension benefits that cost the city $10 million annually, or 1 out of every 7 dollars of the city's general fund. Top managers also receive free health club memberships and other perks.

If significant action is not taken, the City will burn through all of its reserves next fiscal year, including eventually reserves for natural disasters and other emergencies. San Leandro could join the City of Vallejo in declaring bankruptcy.

The False Solution: A 10% San Leandro Sales Tax

I appreciate that important services come at a price. I voted for the tax measures the city placed on the ballot in November 2008. But I am opposed to Measure Z which will raise our sales tax to 10%. San Leandro would have the highest sales tax in Northern California, hurting the hardest seniors on fixed incomes and working families struggling in recession. Residents would look elsewhere to shop and dine.

As noted in an editorial in the Daily Review, "Raising sales tax rates in a prolonged economic downturn is poor economic policy. Sales taxes weigh most heavily on lower-income residents and they can do considerable harm to businesses that are struggling with small profit margins. Local governments need to negotiate leaner pay and benefits packages with public employees, who generally enjoy considerably higher total compensation than people with similar jobs in the private sector."

We have the right to expect value for our tax dollars. Without that, any new taxes will not result in greater services. Instead, we will just see another tax measure in 2012 to cover the continued deficit spending.

The Real Solution: Operate City Hall Efficiently

City employees work hard and deserve our respect. Our fighters and police officers put their lives on the line every day they report to work. To resolve the budget crisis, however, city employees will have to do their part, starting at the top.

As mayor, I will not take a salary until the city budget deficit is eliminated. The city council should also take a pay cut. Free health club memberships and other perks for managers need to be eliminated.

Next, I will start asking questions long ignored. We must undertake a comprehensive efficiency review, implement real structural changes, streamline administrative positions, and eliminate excessive overtime and expensive consultant contracts.

In particular, there must be pension reform. The city pays CalPERS, the employee pension plan, $10 million each year. Of that amount, almost $3 million is for contributions owed by employees, but paid by the city. The city payments to CalPERS will significantly increase in the coming years due to losses CalPERS has suffered in the stock and real estate markets.

I appreciate that offering pensions helps attract and retain quality workers. Our city employees deserve good pensions. But in this economy and with city reserves nearly exhausted through $24 million in deficit spending the past foure years, the city can no longer afford to pay 100% of the employee pensions costs.

To avoid a fiscal meltdown, city employees should start contributing to the cost of their pensions. This would eliminate the current city budget deficit - without the need for any cuts to police, fire and city services, while not negatively impacting the amount of pension payments employees will receive when they retire.

Finally, the community should be brought actively into the budget decision making process. Civic engagement is a two-way street. The city council should conduct community forums on the budget where the public can ask questions, offer input and receive answers from city staff.

That is what good government is all about - providing the means and opportunity for the public to have a say in critical decisions affecting the community. As mayor, I pledge to do this and always put the interests of the people of San Leandro first.