Through the depths of the Great Recession, Sacramento survived a painful budget crisis. Even with the local economy picking up, the City Council’s budget committee is getting a blunt warning Tuesday that it’s about to happen again.
According to the newest projections, the city’s general fund – which pays for public safety and other basic services – is likely to start running a deficit next year. The red ink is expected to rise from $1.8 million in 2016-17 to $13.1 million in 2017-18 and $11.9 million in 2018-19.
Those numbers are worse than projections before the City Council adopted the 2015-16 budget in June, partly because of new labor contracts and new spending approved by the council. Even scarier, the figures don’t include the eventual demise of Measure U, the half-cent sales tax that generates more than $40 million a year and is set to expire in March 2019.
Approved by voters in 2012, the tax restored many police, fire and parks programs and employees slashed during the recession. If the tax isn’t renewed, the city will have to come up with the cash somewhere else to keep service levels the same. Or it will have to again cut services, though the city is setting aside a reserve of about six months.
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In their report, Finance Director Leyne Milstein and Budget Manager Dawn Holm warn that current spending commitments are “unsustainable.” To lower costs, they say that the city should avoid hiring new employees, look at cheaper ways to provide services, and negotiate with labor unions to share increases in pension and retirement costs. To increase revenues, they suggest looking at raising development fees and seeking voter permission to raise business operations taxes.
None of these steps are likely to be politically popular, and next year the mayor’s office and four council seats are on the ballot.
It’s easy to talk optimistically about Sacramento’s future and propose popular new programs, as former state Senate leader Darrell Steinberg and Councilwoman Angelique Ashby did in kicking off their campaigns for mayor.
But one test of leadership is the ability to talk honestly to voters about unpleasant matters – like a looming budget deficit. The candidates ought to at least say whether they support continuing the sales tax.
Also, both Ashby and Steinberg have close ties to labor unions, which are well-funded players in local elections. So another measure is whether they’re willing to drive hard bargains with unions. Voters should play close attention to how they do on those tests.