CONCORD -- The City Council on Tuesday received the sobering news that Concord needs about $10 million more in revenue per year to fully fund retiree benefits and pay for a backlog of repairs to roadways and other infrastructure.
The council faces the daunting task of balancing the city's growing expenses with revenues that are still slowly recovering from the recession, either by further slashing services or increasing revenue.
Although council members made no decisions Tuesday, Councilman Edi Birsan said the policy committee should explore placing a measure on the 2014 ballot asking voters to extend the half-cent sales tax increase that expires in March 2016.
"It's a challenge and it's a big one. But it is not a crisis and there is no need to panic," said Valerie Barone, city manager.
Since the recession began in 2008, Concord has laid off 144 employees, cut programs and services, increased employee contributions to health and retirement benefits, outsourced some services and used $24 million in reserves to balance the budget.
With the additional revenue from Measure Q, the half-cent sales tax increase voters approved in 2010, the city has been able to preserve current service levels and replenish its reserves. Under the current 10-year plan, Measure Q reserve funds will fill the gap between Concord's revenues and expenses through the 2021 fiscal year.
While revenues are projected to increase over the next 10 years, by fiscal year 2022 the city will need to dip back into the general fund reserves to meet its obligations, according to Jovan Grogan, budget officer.
"The good news is that the general fund is on the road to recovery, but the other side of that is that an annual shortfall remains," Grogan said.
But the current 10-year plan doesn't include full funding for the city's annual contributions to the City of Concord Retirement System or to retiree medical benefits. Nor does it include money for a backlog of repairs and updates to the city's facilities, parks and roadways.
Concord's full annual $9 million contribution to CalPERS, the state-run retirement system, is included in the current budget and the 10-year plan and leaves an unfunded liability of $83 million or 24 percent, according to Karan Reid, director of finance.
However, the current budget includes just $3 million for retiree medical benefits when the city should be paying $4.7 million each year to be fully funded.
Although a 2010 cost-sharing agreement to split increases in health care premiums equally between the city and retirees provided some relief, $42 million of the city's $61 million total liability for retiree health care remains unfunded, Reid said. Likewise, Concord should be paying $1.2 million more per year to fully fund the City of Concord Retirement System, a closed plan which covers full-time employees who retired before June 28,1999.
Overall, the city should be paying $2.9 million more annually to fully fund retiree liabilities, according to Reid.
"The longer we postpone fully funding, the more it's going to cost in the long run," she added.
Since 2008, the city's Public Works Department has lost more than half its employees and more than a third of its budget, creating a backlog of maintenance projects with an estimated price tag of $6.6 million, according to Justin Ezell, director of public works.
Replacing 3,207 roadway signs with ones that reflect streetlights and vehicle headlights will cost $480,000, Ezell said. The council has budgeted $2.4 million for roads this fiscal year, but Concord needs to spend $5.8 million more each year to maintain the current conditions of its streets, city engineer Robert Ovadia reported.
Overall, the city should spend an additional $7.2 to $7.6 million per year on infrastructure, according to the staff. But that figure doesn't reflect any needs at the city's parks and recreation areas because there is a lack of data about the condition of those facilities.
"We really don't know what we don't know," Ezell said.
A comprehensive assessment of park infrastructure -- including playground equipment, irrigation systems, fencing and lighting -- would cost about $150,000, he said.
The council agreed to ask the Measure Q oversight committee to review the report staff presented Tuesday and develop some recommendations for how the council might address the budget deficit.
Meanwhile, the staff will pursue a number of next steps, including drafting an ordinance to define the council's policy on using one-time and surplus funds, focusing on economic development and working with employee groups to control benefits cost increases.
"The city didn't get into this situation in one year and we're not going to get out of it in one year," Barone said.
Lisa P. White covers Concord and Pleasant Hill. Contact her at 925-943-8011. Follow her at Twitter.com/lisa_p_white.