EL CERRITO -- Loss of redevelopment, lower revenue from property taxes and other hits to the local economy have left El Cerrito's general fund millions short of its needs next year.
The news, given to the City Council in a report by City Manager Scott Hanin on Tuesday with the city's 2014-15 budget due in June, means that the council must grapple with ways to further reduce expenses after more than five years of austerity.
El Cerrito is now holding 10 authorized positions vacant, including jobs for three police officers and three firefighters, accounting for $1.27 million in annual savings.
Hanin suggested maintaining the vacancies and taking further measures, including increasing employee contributions to pensions and benefits, cutting services, holding more police positions open and layoffs to eliminate an anticipated $2.9 million gap between revenues and expenses next year.
Further pressure on spending is coming from the council's goal of increasing its reserve fund to 10 percent of the city's annual budget, or about $3 million. Deficit spending has reduced reserves to about 5 percent of budget, or about $1.5 million.
"Everything is on the table" in coping with the crisis, Hanin said, and council members seemed to agree.
"This is the worst (situation) I've seen since I've been on the council," said Mayor Janet Abelson, who is in her fourth four-year term. "We can't continue to do things the way we are."
Councilwoman Jan Bridges seconded Abelson's assessment.
"This is almost like an earthquake for us," she said.
Bridges made an additional suggestion, asking Hanin to evaluate cost savings from keeping city offices closed and furloughing some employees every Friday. El Cerrito now has furlough days every other Friday.
The city held four community meetings in March to assess residents' priorities for spending in tough times.
Residents pointed to public health and safety as their highest priority, followed by community identity and financial sustainability, according to assistant city manager Karen Pinkos.
Providing "exemplary government services" came in last among six choices.
The 2013-14 budget turned out to be in line with those priorities, with the police and fire departments receiving by far the largest shares, while public works was sliced by more than half from its historic highs.
Residents can still participate in the priorities survey by going to the city website (www.el-cerrito.org) and clicking on the "Open El Cerrito" option.
Earlier in the evening, the council voted to raise its master fee and development fee rates for most categories of city services by 4 percent beginning July 1.
About 2 percent of the increase was because of inflation and the rest due to increases in employee retirement and benefit costs.
The council also agreed to transfer a parcel of land next to City Hall on San Pablo Avenue to Hayward-based Eden Housing to build a 63-unit senior housing complex.
Besides the land, which Eden is receiving from the city for $1, El Cerrito is providing Eden with a $350,000 loan to be paid back over 55 years. In return, the nonprofit developer has agreed to abide by affordability requirements over the same period.
Construction on the complex, which will also include a medical clinic on the ground floor, won't begin until Eden receives its primary funding from the sale of tax credits for low-income housing, according to Eden.
"(The transfer) is a step in getting us ready for tax-credit financing," said Eden President Linda Mandolini.