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Campbell official blames loss of tax revenue for financial crisis

Published: Wed, May 12, 2010 @ 12:01 a.m.

By Jeanne Starmack



The city is running out of money mainly because of a decline in revenue, says its finance director.

Sherman Miles says hard decisions lie ahead as the city tries to avoid running out of money by November.

The city, which is in fiscal emergency, is spending more than it should for the year in some areas of its budget, but the revenue decline is two-thirds of the problem, Miles said.

The chairman of a state commission that oversees the city’s finances has said that if the trend continues, the city will have to shut down in November.

Miles said that $75,000 of the $80,000 in revenue decline is in income taxes. The other $5,000, he said, is in shares of intergovernmental revenue the city gets from the county.

He said that the city can take steps to collect delinquent income taxes, but he believes the decline is largely due to the bad economy.

“They have no income, there’s no income tax,” he said.

Miles gave examples of the city’s overspending. Spending should ideally be at 25 percent for the year, he said.

Wages and benefits are up 51 percent for the safety forces, he said, though that will improve when money from the safety forces levy is allocated. He reiterated, though, that there isn’t enough money for a recalled firefighter. The city recalled the laid-off firefighter in January even though no money was budgeted for him.

Another unbudgeted expense is nearly $16,000 in health benefits for the mayor. Mayor George Krinos began taking his benefits in March after saying in January that the money for them would be put back into the general fund so he could afford a full-time secretary. There isn’t money in the budget for both.

Spending is 10 percent over what it should be for benefits for council because of a bookkeeping issue, Miles said. He added that part of the council clerk’s benefits were not allocated to the park fund. He said the allocation is proper because the clerk also works at the community center at Roosevelt Park. He said that once he makes the allocation, the problem will be corrected.

Miles said the city administrator’s salary is at 38 percent for the year, but a recently passed ordinance allows two-thirds of his salary to be allocated to the water department. Miles said the allocation is proper because the administrator is the manager of the water department.

Miles said overspending is also showing up under the budget’s administration, land and buildings category. He said natural gas is at $15,000, with only $20,000 budgeted. Telephone service is at $7,000 out of $22,000 for the year.

In building repairs, $12,000 out of $14,000 has been spent.

The street department is already at 103 percent for overtime. Its operating budget is 77 percent for the year. Miles said bad weather this winter is why.

Miles said the city must reduce expenses, because it can’t control the revenue decline.

“I want to see the city stay in existence,” he said. “But serious changes have to be made.”

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