California’s record $68 billion deficit for the 2024 fiscal year is a national newsmaker. State government isn’t the only administrative body facing a budget shortfall, though. A number of cities are also finding they have insufficient funds. Officials are busy trying out plans to resolve their financial troubles, but balancing the books is going to require a hard look at the bureaucracies.
Just up the street from the capitol, the city of Sacramento is running straight into a projected deficit of nearly $25 million in its 2024-25 fiscal year that has likely grown worse given the grim state budget picture. Yet the City Council has begun “discussing a $1.5 billion budget proposal,” reports Capradio, which “includes adding roughly 60 positions.” City Manager Howard Chan has also received his sixth pay raise in the past seven years.
Other high-ranking employees, including the city attorney, auditor, clerk, treasurer and director of the Office of Public Safety Accountability, also got cost-of-living raises.
According to Transparent California, total city employee compensation in Sacramento is $1,138 per resident, an increase of almost 43% over the $796 figure from 2015.
Meanwhile, Oakland Mayor Sheng Thao says the city “is facing the largest budget deficit in its history,” roughly a “$360 million shortfall over the next two fiscal years.” There are apparently no plans to trim staff. Somehow savings will be found through “strategic spending reductions” and “a realignment of City government to be more streamlined and efficient.”
Total city employee compensation in Oakland is $1,787 per resident, a full $500 higher than 2015, a nearly 39% increase.
The finances across the Bay are no better. San Francisco is headed toward $1 billion deficit “in the next five years if nothing is done,” says to the San Francisco Standard. So what’s to be done?
Mayor London Breed is proposing to put “a number of city programs on the chopping block,” says the Standard. She suggests that vacant positions go unfilled, but her Office of Public Policy and Finance does not recommend staff cuts. At least the city, says Law Enforcement Today, “has gutted its Office of Reparations’ proposed multi-million-dollar budget.”
San Francisco’s total city employee compensation is a staggering $6,654 per resident, nearly 40% higher than it was in 2015, when it was $4,765.
California’s largest city also sees red ahead. CityWatch reported in December “that this year’s budget for the first four months is $390 million below plan because of over-expenditures of $297 million and a revenue shortfall of $93 million,” and that “next year (2024-25), the deficit is projected to be more than $400 million because of the budget busting labor agreements with the police, fire, and civilian unions.”
Reporter Jack Humphreville noted that “Mayor Karen Bass, City Council President Paul Krekorian, and Budget Chair Bob Blumenfield approved these budget busting labor contracts knowing full well that these contracts would create a hole in the budget.”
The total city employee compensation per resident in Los Angeles is more reasonable than that in San Francisco, but at $2,228, it’s no bargain, and it’s also more than twice as costly as 2015’s $1,072.
If these city governments were private businesses, significant employee cutbacks would be necessary. But that’s not going to happen when government employment is in many cases a jobs program.
In instances when staff cuts are off the table, governments at all levels could at least wherever possible renegotiate with bargaining units as well as high-priced staff to achieve much-needed salary and benefit savings to prevent painful cuts to core services. Taxpayers deserve that much.
Another important point: These cities aren’t suffering from revenue problems. They are hurting because they habitually spend too much. It’s the same at the state level, where “per-capita spending has more than tripled over the past 50 years, even when adjusted for inflation,” says Teri Sforza of the Orange County Register.
Sforza also points out that David Crane, a Democrat who advised Gov. Arnold Schwarzenegger and has extensive experience in California public administration, recently showed that per capita general fund expenditures “have climbed 63.9% since Governor Newsom took office, growing at more than twice the annual rate at which those expenditures grew under Governor Brown (10.4% vs. 4.7%).”
As Howard Jarvis Taxpayers Association President Jon Coupal says, the state’s political leadership is guilty of “gross fiscal malfeasance.” It’s not limited to just the capital, though. It’s a practice that runs wild throughout the state.
Kerry Jackson is the William Clement Fellow in California Reform at the Pacific Research Institute.
