2009 State of the City Address
For those of you who attended last year’s State of the City Address, you will remember a story we called “The Daffodil Principle”. It’s an inspiring story about a couple, Gene and Dale Bauer who had a vision to plant the largest and most spectacular daffodil garden on the planet. Their garden was so magnificent that people traveled from all over the country just to visit it.
From the very beginning, the couple planned and cared for their garden planting one daffodil bulb at a time and staying focused every step of the way and visualizing the rewards their labor would bring once they completed it.
Planting the daffodils involved hard work and dedication as the ground consisted of some very rocky soil. A total of 50,000 bulbs were planted and it took the couple over thirty-five years to complete their garden.
Then, on one hot summer’s day, a catastrophic wildfire swept across the mountainside, destroying 63,000 forested acres, including the couple’s beautiful garden and cozy A-frame home. The Bauers were truly devastated because they had worked so hard and so long to create their masterpiece.
In the face of misfortune, although strong and resilient, the Bauers found themselves in a situation that truly was beyond their control. Although they planned well and worked hard, the unforeseen fire brought immediate devastation to their spectacular garden.
And, as we told you last year, the City of Newark, just like the Bauers, was faced with its own metaphorical wildfire. Although we planned well, worked hard, and accomplished something special and unique, we had our own wildfire to deal with, thanks to the economy.
Last year, we said that the City was faced with declining revenues that created fiscal challenges for Newark. There was a projected deficit of $4.3 million in our current fiscal year 2008-09, and a deficit of $3.6 million projected for fiscal year 2009-10.
We knew balancing the budget wasn’t going to be easy. Due to the significant size of the deficit, we took a multi-faceted approach to bring the budget into balance.
In the past two years, the City has made $3.2 million in cuts to the annual operating budget. This included across the board cuts in all departments including police and fire.
We reduced the number of full-time equivalent positions budgeted from 308 to 255. That’s a total of 53 full-time equivalent positions or 17% of our workforce that was eliminated. This included 16 employee layoffs just last year, and also included significant reductions in our part-time, seasonal, temporary, and contract positions.
We also reduced salary costs by cutting all employees’ salaries 5% with the exception of Dispatchers, Police Officers, Firefighters, Community Service Officers, and Police Records staff. We also eliminated funding for much needed capital projects.
We made cuts in our contractual services, cuts in our library subsidy, cuts in programs and services, and cuts in park maintenance and street maintenance.
In addition to these cuts, we were also forced to utilize our reserve funds to help cover the remaining deficit.
When we told you the daffodil story last year, our hopes had been to see Newark bloom once again, just as the Bauer’s garden re-bloomed after their wildfire. Despite our actions and cost cutting measures, we’re still faced with a wildfire that’s worse than last year, just as the world’s economy is now mired in the most severe financial crisis since the great depression.
We have seen the increase of homes in foreclosure, increased unemployment rates, business closures, stock market and credit market turmoil, and the State of California facing a shortfall of over $40 billion.
The loss of critical revenues in Newark has made balancing the City’s budget a real challenge. Sales tax revenues have declined almost 10% over last year. Hotel tax revenues have declined 10%, and interest earnings declined significantly at 35%.
While we anticipated a reduction in revenues and took steps to balance our budget, we didn’t anticipate how deep the recession would be and how much of a toll it would take on all of us.
Although the City adopted a balanced two-year budget last June, the declining state of the economy is taking a further toll on the City’s finances. We are now estimating an additional deficit of $725,000 for the current fiscal year and an additional $2 million deficit for next fiscal year.
The gap between our expenditures and revenues, also known as our structural deficit, is $2.1 million for the current fiscal year and $3.3 million for next fiscal year.
The declining state of the economy is also taking a toll on City Department personnel. Departments are working below minimum staffing levels and we’ve seen reorganization within departments and employees being given new job assignments on top of their already heavy work load.
We feel blessed to have such hardworking and dedicated employees working for the City. Their commitment and pride to a job well done has enabled us to move forward. We know this has been a difficult time for them, as it has been for all of us and we truly appreciate the support they have given.
We are fortunate that we have been a City that practices fiscal conservatism and careful planning. Because of this, we placed ourselves in a little better position by implementing cost cutting measures early in the process. Other cities today are implementing cost cutting measures and practices that we put in place years ago.
Although we’ve been proactive and aggressive, this recession has hit us hard just as the wildfire the Bauers faced hit them hard. The metaphorical wildfire in Newark is burning so hard we are now in the fight of our lives.
To inform the community about our budget situation, City staff and community leaders went out earlier this year and began speaking to community service groups, associations, parent/teacher groups, the Chamber of Commerce, and service clubs about the City of Newark’s budget situation and solicited suggestions and ideas on budget balancing solutions.
We also made phone calls and mailed out survey questionnaires asking the community what their priorities are in Newark. We received over 500 survey responses and comments that tell us that the community truly cares and is taking an interest in the direction of their City.
Many residents are telling us public safety and a well-maintained community is a priority, along with the desire to continue programs for every age group.
Some of the responses suggested the City utilize volunteers and make cuts to staffing. As I mentioned earlier, we have already made cuts to staffing that are greatly affecting our service levels, and as for volunteers? Well, we can’t be more grateful to the many individuals who already volunteer in our City.
We do know however, that most jobs in the City cannot be accomplished by volunteers. We have specific job requirements and qualifications that are necessary to perform the job duties, but for those positions where we can utilize volunteers… we are more than open, and have been, to signing up additional people.
Some people have asked us, “what about the Federal Stimulus Package?” and “won’t that help?” I along with a group of 80 Mayors from the U.S. Conference of Mayors, had the opportunity to meet and hear President Obama and Vice President Biden this past February as they discussed the stimulus package and the needs of local governments.
It was a very productive meeting and I believe very beneficial in gaining first-hand knowledge of the stimulus bill. We know that the stimulus will provide Newark with:
- $900,000 in Highway Infrastructure Funds to be used for resurfacing streets and roadways.
- $173,200 for Energy Efficiency projects.
- $97,000 for Byrne Justice Assistance Grant Funding to be used for law enforcement support.
- And $94,000 in Community Development Block Grant Funds.
These are the funds we know we will get. We will be applying for the following Grants:
- Clean Cities Grant – Refueling infrastructure for alternative fuels (Compressed Natural Gas).
- Energy Efficiency and Conservation Grant for an In-depth City facility energy study.
- Summer Youth Employment Program Grant.
- 1 fully funded Community Service Officer position through the Byrne Memorial Recovery Act which will focus on crime prevention and crime analysis work.
- And we’re asking for 5 fully funded Police Officer positions through the COPS Hiring Stabilization Program which provides funding for 3 years.
Although the stimulus funding will help, we do know that it is not the solution to our budget problem. It’s merely a band aid on a major wound.
So now the question is...what do we need to do to see our way through this troubling recession after digging as deep as we already have?
Without new revenue sources, expenses will have to be cut further and we know that will seriously impact our already reduced service levels.
It comes down to this: we need to generate new revenue which could come in the form of a Utility User Tax, Sales Tax, or Emergency 9-1-1 fee which we hope to put before you on the November ballot.
At this point, this is our only option to see our way through these challenging economic times.
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