August 11, 2008

From the Mayor’s Desk

Campbell challenged by deficit

By Mayor Donald R. Burr
Special to the Times

For this month’s column, I’d like to take this opportunity to explain our city’s current fiscal challenge.

What is the situation?
The City of Campbell has struggled with budget issues for much of the past six years. After the “dot-com bust” and the 9/11 attacks, the local economy suffered tremendously. Campbell had to use $5.7 million in reserves over four years to maintain services. After that, significant cuts and budget adjustments (approximately $4 million) were made. As such, the budget has been balanced without the use of reserves for the past two years. Unfortunately, the cost for essential city services is expected to be greater than existing revenues and a significant, ongoing deficit is projected beginning with the current fiscal year.

Why are we facing a deficit?
Due to the renewed weak economy, sales tax revenue is essentially flat and other revenues are negative or growing slowly. At the same time, the city is faced with a significant increase (close to $1 million) in the cost of contracted fire services that becomes effective in FY 09, increases in health care and other staffing costs, higher energy prices, and general inflationary increases. In addition, the State controls a significant portion of our revenue—and has taken $13 million of our money over the past 15 years ($1.3 million is lost to the State this year). With the State facing a $15-17 billion dollar deficit, cities may face further reductions. When all of this is put together, the city is projecting the return of a deficit approximating $2 million in FY 09 that continues through the foreseeable future. Without a significant and sustainable in-crease in revenues and/or further decrease in expenditures, the deficit will not go away.

Did you know…
The City of Campbell gets only 13¢ of every property tax dollar?

Did you know…
The city receives only 1¢ of the 8¼¢ of sales tax?

Is Campbell operating efficiently?
Yes. The Campbell City Council has worked hard to keep taxes low. As noted above, extensive budget cuts and service reductions have already been made. The city is currently operating with 10% fewer staff. However, because of the slowing economy and the state budget crisis, the city has no choice but to seek additional funding in order to maintain our vital city services.

City Council takes action
On July 29, the City Council held a meeting to discuss the input from the community outreach efforts and survey data, examine the implications of further cuts to the budget, and take in comments by members of the public. To maintain current levels of public safety and police services, restore anti-drug programs, and increase neighborhood crime prevention programs, it became clear to the Council that the city needs additional revenue. As a result, to address our fiscal challenges, the Campbell City Council voted to introduce an ordinance placing the Campbell Vital City Services Protection Measure on the November 2008 ballot.

The measure—a small increase in the sales tax—would generate local funds for local needs, and no money will go to other communities or the State. Without a local finance measure, essential City services such as police patrols and overdue street repairs will be further cut.

For more information on the City’s fiscal situation or the full text of the ballot measure, visit www.cityofcampbell.com.