Long Delayed — A Budget Reality Check for El Cerrito

A lot of good things are happening up and down San Pablo Avenue in El Cerrito and around our two BART stations.  The future would seem to look bright.  But Covid-19 aside, the last couple of years have been especially tough financially for El Cerrito and other East Bay cities.

In 2019, Oakland, Richmond and El Cerrito were among the 18 communities listed by the California State Auditor as financially high risk.  Richmond and El Cerrito made the Auditor’s top ten of troubled financial cities.  In 2020, the State Auditor announced she would conduct in-depth financial audits of El Cerrito and four other cities in the state.  Overspending and unfunded pension liabilities were listed as primary causes for the financial problems.

This past week, the State Auditor’s report on El Cerrito was released and concluded that past bad financial planning left the city in debt and without reserves.  The report said corrective actions are needed now.  

The audit is far from perfect.  It doesn’t give much history on the past spending mistakes made here for a decade.  It doesn’t focus on the detrimental Covid-19 impacts that have worsened the fiscal health of most nearby cities.  And it doesn’t give much space to the on-going and one-time cuts already made by Council since 2018 — totaling more than $5 million.  

But this report is a sobering wake up call for El Cerrito that can be part of the roadmap back, over time, to solvency.  The City response wisely agrees with (or “partially agrees with”) most of the recommendations — including the need to: 

  • make structural changes to the city that will save money;
  • recover more costs of its recreational, senior and emergency services;
  • conduct a compensation study among local comparable cities;  
  • seek cost reductions in our fire and police departments, and
  • require city departments to establish budget safeguards against increases without authorizations.

In addition to the audit recommendations, Council has asked to cut an additional $1 million from the next Fiscal Year and to seek additional feedback on priorities from our community.  We even discussed cutting twice that amount at our last Council meeting in order to build reserves back sooner.   

The recent passage of the American Rescue Plan of 2021 will certainly assist our efforts by sending approximately $4.8 million over two years.  Most of whatever comes should go directly to our empty reserve fund.  Opportunities like this won’t come again.

I think the most important aspect of the report, however, is the State Auditor’s theme that the last city administrator should have provided more information to Council members – and that more collaboration needs to occur now.  As a non-accountant, I certainly felt left out of the budget loop my first two years on the Council.   The “No Bad News” approach to Council members kept us from the truth about our finances and helping to resolve critical budget problems in a timely fashion. 

The State Auditor has now given El Cerrito a dose of reality for a more scrutinous budget process going forward without raising taxes.   Coming out of the pandemic, it certainly won’t be easy for remaining city staff and the residents who will feel the pain from service cutbacks. 

It will be up to our City Manager of two years to be transparent, to better communicate with Council, and determine if she has the right staff and resources to move forward to achieve the audit recommendations.  She will have the support of this Mayor and, I believe, the entire Council in making the really tough decisions.  

Then, hopefully — eventually — we can get back to assisting the really good things happening up and down El Cerrito.

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