Mayor: City Recovering From Recession But Faces Challenges

Pinole Mayor Pete Murray told a tale of two cities on Wednesday. One city might have bottomed out in the recession and is moving toward recovery. The other is a city that could be headed toward desperation, like Vallejo or Stockton.

Delivering a State of the City speech to the , Murray noted that after several years of budget cuts, layoffs and service reductions, Pinole is showing higher sales tax revenues.

Still, the slump in the value of housing continues to translate into flat or low property tax bounty.

Murray warned that if voters don't extend an existing 8 percent utility users tax that expires in December, residents might be living without local police and fire departments.

The city has a balanced budget for the current fiscal year, built on the sacrifice of city staff cuts and in all departments, he said. At the March 20 council meeting, a "modest mid-year surplus" or about $23,000 to $42,000 will be announced, he said.

Over the last two years the city has cut $4.2 million from the city budget. A total of 45 staff positions have been erased or gone unfilled in the last two to three years, Murray said. The cuts come on top of federal and state mandates to to provide certain services, he said.

"The city has been in reduction mode," Murray told about 35 people gathered at . "The council has expected that there be cessation of deficit spending and will be addressing solutions by reductions wherever possible by attrition or concessions in employee costs across the board."

Current cuts and deferred maintenance will affect graffiti abatement and parks that residents likely will notice, Murray said.

The mayor lauded city staff in all departments for enduring cuts and for "towing the line" on budget targets. In all, 14 of 19 department budget categories are at or below 50 percent of spending at mid-year in the fiscal budget cycle, he said.

Going forward, the goals for the city are to maintain the current level of services provided, the mayor said. That requires constant maneuvering of both the ledger and council policies.

Although property tax revenues based on home valuations continue to decline but could stabilize in 2012, Murray said. Building permit valuations increased from a monthly median of $640,000 in the first three quarters of 2011, but rose to $1.4 million in January.

"That's a significant jump," Murray said. "We're hoping that's another indicator that things and times are changing, that people are investing in the community."

With about 20 percent of the city budget depending on the utility user tax, its essential that voters renew the tax to keep Pinole a full-service city, Murray said. He emphasized that with the continuation of the tax the city could not afford to have independent fire and police departments. The utility tax generates about $2 million a year.

Meanwhile, Pinole is exploring consolidation of its fire department with the Rodeo-Hercules Fire District, but that move isn't expected to result in any budget savings.

Murray encouraged business owners to support extension of the utility tax until 2020 as it comes on the ballot in November. He talked about the city's loss of redevelopment agency, eliminated by state legislation. Revenue from redevelopment, collected from tax increments, paid for a portion of salaries for city staff working on economic development in the city.

In light of that fiscal blow, Murray quoted Henry Ford: "Whenever things seem to be against you, remember that an airplane takes off against the wind."

He ended his speech with a quote from journalist Harry Golden: "The only thing that overcomes hard luck is hard work."

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