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Concord tackling tough budget losses; Clayton not as affected by sales tax drop

Concord tackling tough budget losses; Clayton not as affected by sales tax drop

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As Concord officials continue to make cuts to an already tight city budget, neighboring Clayton isn’t taking as big a hit from the economic slowdown.

“This is likely the only time Clayton can be glad that sales tax is our No. 3 source of revenue,” Clayton Mayor Julie Pierce told the Pioneer.

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But the steep decline in sales tax due to the shelter in place order is having a devastating financial impact in Concord. Staff told the City Council last month that the city could face more than $14 million in losses this fiscal year, which ends June 30, and more than $23 million in the next.

On April 14, the City Council approved a 13-day furlough for 60 non-represented employees. The city also reduced retirement benefits for non-represented managers, confidential employees and all executive team members.

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“In addition to the employee compensation adjustments, the city has already identified $4.76 million in operational savings, including a hiring freeze, returning some CIP (Capital Improvement Plan) funding back to the General Fund and eliminating non-essential spending,” city manager Valerie Barone told the Pioneer.

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City officials are also in contact with the unions about contract adjustments.

“The city has requested that the unions delay contractually granted pay increases from July 2020 to June 2021 and that the Police Management Association suspend the city’s 401K contributions for the duration of the current contract,” Barone said, noting that any new agreements would come before the council for ratification.

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Concord has canceled Camp Concord and Music & Market for the year and halted all Parks and Rec programs until new orders are issued.

Barone said “more significant cuts” are expected. “We are working on budget reduction proposals for the FY 2020-’21 and will present those to the council on June 9,” she said.

Clayton staying the course

Meanwhile, the city of Clayton is at full staff – even hiring new finance and community development leaders in April. Pierce said finance director Paul Rodrigues is already coming up to speed.

“He has made brilliant progress and has draft numbers out to the departments for their review,” she told the Pioneer. “He is getting regular updates from consultants on sales tax projections to help gauge the impacts the economy will have on our revenue.”

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City manager Ikani Taumoepeau said they will have new budget figures to present to the council in early June.

Pierce said the city’s first two sources of revenue – property taxes and vehicle license fees – are staying relatively stable. Clayton has not eliminated any city programs, though they opted not to hire seasonal workers for landscape maintenance.

In addition to fewer sales tax dollars, Clayton will face a loss of revenue from the gas tax and Measure J return-to-source transportation funds. Pierce said that could mean scaling back the paving program in future years.

“We won’t know for sure until likely August or later how much impact the COVID-19 closures will have on future allocations,” she said. “Since Clayton usually accumulates more than one year of those funds to be able to fund more significant projects, this might require more time. We already have two years banked, so this year we are good to go.”

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Pierce also anticipates a cutback in library hours, including closure on Sundays. “While Clayton normally has paid for additional hours on Sundays, the county has now removed those from our choices. The county is also planning on slightly earlier closing hours in the evenings,” she said.

Hope for HEROES?

Barone said the HEROES (Health and Economic Recovery Omnibus Emergency Solutions) Act passed by the House on May 15 includes support for local governments.

“Local governments employ approximately 10 percent of all workers in California, and to date none of the federal or state relief programs have assisted local governments in keeping people employed and supporting the delivery of essential services within the community,” she said.

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However, Senate leaders have said the measure is “dead on arrival,” and the president has promised to veto it.

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