CONCORD -- The City Council on Tuesday approved an ordinance requiring one-time revenues and budget surplus moneys to be used to fund specific needs, including retiree benefits and a backlog of repairs to roadways and other infrastructure.
Mayor Tim Grayson, who with Councilman Ron Leone worked with city staffers to draft the ordinance, said using surplus funds wisely is the best practice for the city and residents.
"We feel like this is a very strong ordinance that will provide fiscal stability for the city," he said.
The ordinance requires the council to use one-time and budget surplus funds for the annual contributions to the City of Concord Retirement System and retiree medical benefits, the infrastructure backlog, unfunded liabilities for retiree benefits, special or one-time nonrecurring expenditure needs or to replenish the general fund reserves. Deviating from the policy set forth in the ordinance would require a supermajority of the City Council.
From fiscal year 2004 through fiscal year 2008, Concord had an average net budget surplus of $4.2 million, according to the city staff.
Before the unanimous vote, the council members engaged in a spirited back and forth about the merits of the policy and the definition of fiscal responsibility.
Councilman Edi Birsan said he reluctantly supported the measure because he believes a better policy would be for the city never to miss making the required yearly contribution to pension and retiree health plans. The ordinance, he added, essentially gave the council license to skip a payment knowing that any surplus funds would be used to cover it.
"We have a situation where, strategically, we are enabling a nonpayment of an annual required contribution," Birsan said.
Leone strongly disagreed, saying that when money is tight the city must balance paying down unfunded liabilities against providing essential services. For example, Leone said he isn't willing to cut the police force in half to erase the city's unfunded liabilities.
"Unfortunately, we don't have that kind of money," he added.
Birsan countered that the council should engage in better fiscal planning which begins with making its required annual payments toward pensions and retiree benefits. Doing so may not require police layoffs, he added, but might mean not giving the 136 rank-and-file officers in the Concord Police Association a 2 percent raise, as the council recently did.
Councilwoman Laura Hoffmeister said she appreciated putting the policy in writing and the fact that it binds current and future council members. She disagreed with Birsan's contention that the ordinance is an excuse to skip pension and retiree benefits' payments and challenged him to present ideas for possible budget cuts at the June 3 workshop.
Grayson said the council is concerned about financial stability and responsible stewardship.
"We do pay our bills," he said. "(City of Concord Retirement System) was being paid in full prior to the Great Recession and the day will come when it will be paid again."
Funds from Measure Q, the half-cent sales tax increase voters approved in 2010, won't be subject to the requirements of the ordinance. Although Measure Q revenue isn't ongoing -- the tax hike expires in March 2016 -- the city is bound by the ballot language to use the funds to maintain core city services such as police protection, youth and senior programs.
Lisa P. White covers Concord and Pleasant Hill. Contact her at 925-943-8011. Follow her at Twitter.com/lisa_p_white.