June 24, 2004

S.J. City Council approves $812 million budget
Votes to spend $8 million on state-of-the art phone and computer network

By Sheila Sanchez
Staff Writer

The San Jose City Council has approved an $812 million operating budget that will likely impose a $1.75 monthly charge on most phone bills beginning in January, but spares controversial cuts such as shutting down community centers and park bathrooms during the week.

Council members voted 10-1 for the spending plan, after praising San Jose Mayor Ron Gonzales for leading the city through its third consecutive year of large budget deficits. The mayor relied heavily this year on “rainy-day” reserves to address a $70 million projected deficit.

About three years ago, the mayor began saving millions of dollars in case of an economic slowdown. The 2004-5 budget uses $22.4 million from several reserve funds, including about one-third of a $15.8 million “economic uncertainty” reserve that city officials were reluctant to touch.

San Jose District 4 Councilman Chuck Reed cast the dissenting vote.

Despite severe budget challenges faced by the city from the recession, Gonzales kept the Olinder and McKinley Community Centers open, maintained anti-graffiti and anti-litter programs, kept libraries open six days a week and maintained crime prevention programs.

City officials, however, could not spare eight smaller community centers from closing and avoid raising garbage, recycling, sewer and water rates from 4- to 9 percent.

Due to budget constraints, city officials were also forced to cut library hours, reduce the frequency of watering and trash pickup at parks and spend less money to fix traffic signals and repair sidewalks. They will also eliminate more than 240 jobs, which are vacant, and lay off about 50 city employees.

“In these challenging times we must cut costs and make extremely tough choices, but we also must continue to make smart investments and foster strong partnerships that will keep our neighborhoods strong, our city safe and help us return to prosperity,” Gonzales said in a prepared press release issued before the council officially voted on the budget June 15.

Vice Mayor Pat Dando said, “This has been the most challenging budget in San Jose history, not just with our local economic situation, but with state legislators raiding city coffers to balance their own budget.”

Dando, who represents District 10, said the city officials expect the state will take upwards of $30 million from San Jose, but she added, “I am proud that we passed a budget which closed a $70-million deficit and protected our city’s core services.”

Complicating the city’s budget decisions this year is uncertainty caused by the continuing severe state budget crisis and its negative impacts on communities throughout California. State budget decisions are expected to take another $12 to $15 million from the city’s general fund that supports vital community services such as police, fire, parks and libraries.

Governor Arnold Schwarzenegger has proposed taking $1.3 billion more away from cities, counties, redevelopment agencies and special districts throughout the state in the coming year. This would be in addition to the approximate $5 billion in local tax revenues already diverted by the state each year from local governments to address the ongoing California budget deficit.

In addition, under the governor’s proposal another $18 million would be taken away from the San Jose Redevelopment Agency budget, further reducing the city’s ability to invest in neighborhood improvements, economic development and job creation and affordable housing.

About the $1.75 monthly charge on phone bills expected next year, Gonzales explained it might be imposed as soon as the state announces how much money it will give the city. At Gonzales’ recommendation, the “emergency response fee” is being considered to cover the costs of operating the city’s 911 emergency dispatch center.
“Establishing this telephone fee may be the only way to prevent devastating cuts to public safety services if the state takes more local funds,” he said.

Councilman Chuck Reed, an attorney, warned city officials the proposal would probably fail a court challenge, saying San Jose residents should approve such a telephone fee increase, which officials hope will generate about $10 million in the upcoming fiscal year.

This is the fourth year in a row that San Jose has received less revenue than in the previous year. The budget forecasts 12 percent less revenue for the general fund compared to the current year.

In related news, a controversial proposal that would allow the city to spend $8 million for a phone-and-computer network at the new City Hall building was approved by a 10-1 vote June 22. The new City Hall is expected to open next summer. City officials say the building will provide long-term cost savings, improve public service, reshape the way the public and the city work together and create a downtown landmark for the community.

Critics, however, are outraged over the city’s plan to spend about $45 million for furniture and technology for the $388 million building, which is drawing criticism because the money to cover such lavish expenses will come from its general fund, which also pays for police, parks and other critical programs.

Critics deplored the council’s actions, particularly during a tough budget year, which will cut funding to most city departments by about 12 percent.