PIEDMONT — Ahead of an expected June 15 City Council vote to approve a 2020-2021 city budget, Piedmont officials said things have improved, at least a tad, since a May 16 budget session, thanks largely to higher-than-expected real estate sales.
Home sales give the city “real property transfer tax” revenue, and while the COVID-19 coronavirus health emergency has cut that revenue from the 2019-2020 fiscal year, home sales in the past few months have been stronger than projections made just over two weeks ago showed. Mayor Robert McBain said Monday night that transfer tax revenue, projected a few weeks ago to be about $2.8 million, will now likely come in at about $3.1 million.
Still, Piedmont’s 2020-2021 budget is going to take a major hit thanks to the COVID-19 pandemic. An estimated $1.9 million reduction in revenue for 2020-2021, combined with a $400,000 reduction in expenses, and a $100,000 reduction in transfers out, are expected to combine for a decrease in net income of $1.3 million for the coming budget year.
Piedmont is projecting General Fund revenues in 2020-21 of $28,479,500, down 6.5 percent from the original 2020-2021 projection of $30,342,000.
Part of the reason the economic picture isn’t more bleak, city officials said, is that its general fund is about 72 percent funded by relatively low-risk property tax-related income, rather than the more volatile sales tax income that has decimated the budgets of some East Bay cities. But that, too, could change if the local real estate market remains below COVID-19-related levels for a prolonged period.
Recreation Department revenue is projected at $1,757,500 for 2020-2021, $774,500 less than last year’s budget.
Recreation revenue was severely impacted by cancelled programs and facility closures in the late third and fourth quarter of FY 2019-20 because of the COVID-19 coronavirus and related shelter-in-place orders. The proposed 20-21 budget assumes the full gamut of activities will resume in January. Also, the city is assuming income from renting facilities like the Community Hall and the Veterans Hall will also be at full strength starting in January.
While these numbers are significantly worse than what Piedmont officials were predicting before the coronavirus emergency and its widespread economic damage set in, Piedmont’s situation is not as dire as that of other cities where sales taxes make up a bigger part of the budget.
Council members and others on Monday night also credited past frugal spending and general careful budgeting for putting the city in position to weather the current economic storm.
“The city’s done a commendable job getting us into good financial shape heading into this recession,” Bill Hosler of Piedmont, chairman of the city’s Budget Advisory and Financial Planning Committee, told the council Monday.
Nevertheless, council members said that long-deferred major projects, including major renovations or replacement of some public buildings, will continue to be deferred.
The council is scheduled to have one more public hearing about the budget at its June 15 meeting, where a final adoption vote is expected.
Sewer System Work
Also on Monday night, the City Council voted to approve a construction $148,934 contract with Concord-based APB General Engineering for the next phase of Piedmont’s Priority Sewer Rehabilitation Project.
The city is in the midst of a complete replacement of its underground sewer system, being done to comply with an Environmental Protection Agency consent decree to eliminate groundwater infiltration and storm water inflow into the sanitary sewer system. Piedmont is now about 80 percent finished with the years-long project, Public Works Director Chester Nakahara told the council, with two or three more phases of work coming after this.
The ongoing sewer rehabilitation is being done in chunks big and small, and this is one of the smaller pieces, in the Littlewood Drive and Dudley Court neighborhoods in the eastern part of the city. This project, Nakahara said, will include about 1,000 feet of 6-inch sewer pipe.
The work is expected to begin in July or August, and should take about 30 days to finish.
Contact Sam Richards at sam.richards4344@gmail.com