UNION CITY — The City Council on Tuesday is to consider declaring Union City in a state of “fiscal emergency” because it faces a $2.2 million budget deficit this fiscal year and almost $4 million the next.
Although staff had urged them to issue such a declaration last week, council members balked after debating whether it was the right move.
Staff had suggested the council find ways to generate more revenue to avoid major service cuts.
According to a staff report, declaring a fiscal emergency would allow the city to place a marijuana tax on the June ballot.
Or, staff suggested, the council could bolster revenue by switching from a general law to a charter city. That would allow a real estate transfer tax measure to be placed on the November ballot.
“We have some very significant troubles in front of us, but you know we’re here to solve them,” Finance Director Mark Carlson told the council.
Vice Mayor Lorrin Ellis argued the council simply failed to control costs over the years, thus putting the city in a bind.
“We don’t have a revenue problem, we have an expenditure problem,” he said at the Feb. 13 meeting.
“I often wonder where this concern has been the last 24, 36, 48 months,” he said. “We’ve continued to add, at an almost 1.5 percent clip, cost into our budget that the majority of the council should have known we can’t sustain,” he said.
He said the retirement and pension costs associated with giving city workers wage boosts have not been taken seriously. “Now we’re going to have to do a cold stop, and a knee-jerk pullback,” he said.
Mayor Carol Dutra-Vernaci agreed in part with Ellis, but still tried to sway him to support declaring a fiscal emergency.
“You’re right,” she said. “We as a council have given employees what we could. We’ve done a lot just to keep things going. But I think a declaration of a fiscal emergency addresses that,” she said.
“It sends a message to all of the employees ‘We’re not fooling around anymore.’ We did what we could and now it’s time to put a stop to it and address the expenditures…But hey, if we have an opportunity to raise revenue to help us as well, why not?”
Carlson told the council that the city this year and next would take the “not normal” step of diverting money typically used for paying pensions to cover the deficit until more revenue is generated.
“Its a stopgap measure, but it’s certainly not sustainable,” he said.
The staff report says if a 10 percent marijuana tax is approved along with a real estate transfer tax, together they would generate $4 million to $6 million per year beginning in fiscal year 2019-20, enough to stabilize the budget.
“To me, fiscal emergency…it’s where revenue just plummets to the ground,” Ellis said, casting doubt on the need for the declaration. “You know when you see Stockton that’s used it, and other cities…that’s an emergency. In my view we have a spending problem.”
Ellis said the council has not offered any tangible measures yet to show how it could firmly hold the line on spending, and he wants a plan in place addressing that in conjunction with any money-making plans.
“And yeah, that’s tough decisions. But…the can’s been kicked down the road for 20-plus years,” he said.
Councilwoman Emily Duncan agreed.
“We need as specific a plan around expenditure control,” she said. “I don’t think we can do one without the other.”
Councilman Gary Singh was wary about declaring a state of emergency.
“Saying fiscal emergency, that sounds bad to me, honestly. I mean, after all it’s an election year. Can we come up with something better name, or something?,” he said.
“And normal citizens, they don’t know what a fiscal emergency is. They’re going to say, ‘Oh wow, what’s going on here?’ ” he said.
The council voted unanimously to discuss the declaration and ideas for controlling costs at its Feb. 27 meeting.
