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Vallejo files for Bankruptcy
Expenditures Exceed Revenues
Revenues are dwindling due to housing market plummeting
Depleting General Fund Reserves rather than making cuts
74% of the budget goes to police and firefighters
The City can no longer meet their financial obligations or defer costs. -
Cuts Have to be Made
City-wide Budget total expenditures $223,109,783
Primary emphasis is the General Fund covering 1/3 of expenditures. The General Fund is for discretionary spending on Public Safety, Public Works, Community Development, general administrative services.
Closed two fire stations, reduced police officers to 124, community services, youth services, neighborhood services and the narcotics team have been eliminated. Salaries are frozen at current levels and even rolled back to 2005 rates. -
Fiscal Crisis
Vallejo cannot look to California to help and California cannot look to the Federal government for help. Massive deficits prevent stimulating the economy. The General Fund has a 25% revenue loss. Further reductions: police officers from 155 to 92, fire companies from 9 to 5, little infrastructure maintenance, no General Fund bond/lease debt payments anticipated for 3 years, no community/quality of life program support, and employee/retiree compensation cuts. -
No More Reductions
Good news: No further reductions. However, labor agreements were renegotiated and services are unacceptably low in order to balance the budget. 4 positions are added: 2 public works maintenance workers, 1 information support technician and 1 senior building plan engineer. Unemployment rate remains high at 14.8%. Many businesses have closed and consumer confidence is low. Residents agree to a 1% sales tax to help rebuild the city. -
Slow Progress
Unemployment data is slowly improving, sales tax revenue is increasing and the economy is growing modestly. However the Vallejo housing market continues to show little signs of recovery.
On April 17, 2012 the council made the decision to allocate 30% of the first 15 month of Measure B revenues utilizing a Participatory Budgeting process. The remaining 70% will be applied to rebuilding reserves, public safety, quality of life, infrastructure, community aesthetics, generating new revenue etc. -
The Worst is Over
The city is modestly recovering, however facing increased cost. Most significantly $1.5 M in medical retiree benefits, $1.9 M for PERS pensions, $600 K to subsidize the Marina, $486 K to subsidize operations at Blue Rock Springs Golf Course, $145 K to subsidize Vallejo Station Parking Garage, $250 K for Municipal Election and $260 K for legal costs associated with bargaining units. To balance the budget more adjustments are needed. Measure B is used and deferring hiring for vacant positions. -
Making Strides
For the first time in over 10 years, the City Council is presented with a structurally balanced budget, where expenditures do not exceed revenue. The City’s bankruptcy is over and all reporting requirements have been addressed. Successfully issued an $18 M water bond, the City’s first since 2006. As a part of this bond issuance received an “A+ rating with Stable Outlook” from the ratings agency Standard and Poors. Received Government Finance Officers Association Financial Reporting Award. -
Growing Financial Stability
Structurally balanced budget and received the Government Finance Officers Association “Excellence in Financial Reporting” Award. Five year financial forecast: Escalating CalPers pension costs of $6.3 M, health care costs of $1.6 M, and increased self-insurance rates of $1 M. Continue efforts to be efficient and save costs. Focus on economic development which generates new revenues. The improving economy creates optimism. The state allows for property taxes to increase by a max of 2% each year. -
Continuing on the Road to Fiscal Sustainability
Balanced budget for the third year in a row. City was ranked #2 in real estate markets in the US. Many new businesses are opening in the city.While the future looks bright, there are still risks. Highly dependent on sales tax. The top 10 tax-paying businesses produce nearly 40% of the City's sales tax revenue and the top 30 produce 60%. If a business has economic difficulties it will impact revenue. The rising and falling gas prices pose an additional risk. Unemployment rate is at 7.2%. -
Doing More With Less
Balanced Budget for the 4th year in a row. Reserves are replenished to 17%. Made CalPers obligation payments to better position the City's long-term liabilities. Self-Insurance Fund Reserverves are replenished to 80%. Property values continue to rise - ranked as top 3 real estate market in the US. Embracing PB with a great level of community involvement in governance. Staffing needs are a focus. Police officers increased from 98 to 122. Implemented Crime Reduction Task Force program.
