Sacramento City Manager Pushed for $20K Raise Before Delivering Bad News: $50 Million Budget Black Hole

The City of Sacramento is facing a budget deficit of more than $50 million this year – up from a $24 billion deficit last year – resulting in a hiring freeze, and a travel and office supply freeze, City Manager Howard Chan announced.

Restricting travel and office supplies will really close that $50 million budget black hole, right? But how did the city rack up another $26 million in debt in one year?

Wasn’t it just last month that City Manager Howard Chan was pushing for a $20,000 a year salary increase? The Globe reported that Chan was initially granted a $20,000 raise by the Sacramento City Council, as well as 10 weeks of leave time (which he can cash out), on top of his actual $493,655 salary/benefits of 2022. But this was done in a special meeting in December in violation of the Brown Act, which says salaries, compensation and benefits can’t be voted on in special meetings.

It was a done-deal before members of the public learned of it. And then it was undone.

The city of Sacramento has a $1.5 billion budget, with 5,075 full-time employees, for a city population of 518,161 residents.

According to the city, the “increase of services offered over the past years – including the City’s ongoing response to the homelessness crisis,” caused the budget deficit to grow from $24 million to $50 million in one year.

Whoa Nelly.

Sacramento has spent more than $200 – $300 million? on “homelessness”. Where did that money go? For a start, because the governor and Mayor claim homelessness is a housing crisis, they spent millions/billions on housing for homeless drug addicts – and sometimes at more than a cost  $1,700 per square foot, when other home building projects cost $300 – $400 per square foot.

State funding amounting to $191 million was received by Sacramento between 2019 and 2021, most of it spent on homeless housing projects, according to an Assembly report on statewide homeless spending last year. Since 2021, the spending – and homeless population – has only increased.

As the Globe reported, despite its budget deficit, Sacramento claims the budget is “balanced,” but also claims it is facing “future deficits.”

How is that even possible?

The city claims it has “increased services” offered over the past years — not really except redirecting funds and staff to the vagrant homeless population. And they admit “the City projects that expenses will surpass available funding in fiscal year 2024/25.”

I know my neighborhood isn’t receiving increased services. What “services” does the city provide?

They aren’t increasing services by the agencies – The City is just spending more on these services – and increasing “services” to the homeless drug addicts.

And despite a hiring freeze, and that 50% of its budget already goes to labor costs, the city is hiring, which they called “investing in staffing” in the last budget – “This Budget reflects investment in staffing and programs to reflect community needs.” What a bunch of bull-pucky.

Residents didn’t ask for additional city employees – hiring new employees reflects what the city wants – government expansion.

Despite receiving $200 million total  of COVID Relief Funds ($89.6 million) and the American Rescue Plan Act ($112.2 million), which the city says it is still spending, the City Manager admitted to the City Council, “the City projects that expenses will surpass available funding in fiscal year 2024/25.” Federal COVID funding was used by the city to make up for lost revenue… one time funds.

So, it appears that because the city is adding employees (labor) and paying out salary increases for existing employees, there will be a bigger budget deficit next year, the Globe reported in December.

The city reports:

“Sacramento has continued to recover from the financial challenges caused by the COVID-19 pandemic, and we are pleased that the worst of the pandemic’s fiscal impacts are behind us,” Chan said in his transmittal letter to the Mayor and City Council. “However, economic headwinds persist due to rising inflation and interest rates and the overall slowing of economic growth.”

Pete Coletto, the City’s finance director, said, “The City in its annual budget forecasts has been projecting a deficit for some time now. This deficit is not due to one thing. Instead, it’s the result of multiple causes including inflation, increased pension liability and insurance costs, new labor agreements, expansion into new service areas and voter approved ballot measures that direct general fund spending.”

“The City’s deficit is not due to a recession,” Coletto continued. “This is a structural deficit, meaning the City’s expenses are outpacing its revenue growth, and it will need to be addressed by a combination of increasing ongoing revenues and reducing ongoing costs. It’s worth noting that Sacramento isn’t the only city in California currently facing this type of structural deficit,” Coletto said. “For example, San Francisco, Oakland and San Diego are currently facing similar deficits.”

Well bless Pete’s heart – every Democrat run city in the state is “facing similar deficits.”

This should be more accurately called mismanagement (blunder, failure, miscalculation) and corruption (crime, fraud, graft, malfeasance).

City officials knew the budget deficit was going to be larger in 2024-2025. And what did they do about it if recession is not to blame? They spent more money they did not have.

“The city spends between $40 million and $50 million annually on the shelter beds — about the same amount as the projected deficit,” the Sacramento Bee reports.

Quadruple Sacramento’s spending on the homeless vagrant population. And it’s a bottomless pit of spending we can’t track because it’s going to shady non-profits and well-paid developers.

To his credit, City Manager Chan tells the City Council they approved raises and department increases the city can’t afford:

“What you all approved we can’t afford,” Chan said during Tuesday’s council meeting, referring to the new labor contracts. “It’s not sustainable … These are not going to be easy discussions to be had. But if we do this collaboratively with the council, labor partners and departments, we’re going to end in a place where we can minimize as much pain as possible.”

As Pete Coletto, the City’s finance director, said, “the City’s expenses are outpacing its revenue growth, and it will need to be addressed by a combination of increasing ongoing revenues and reducing ongoing costs.”

“Increasing ongoing revenues” means new tax increases, new fees on utility bills, new ballot initiatives cloaked as “it will help the children,” and myriad other funding schemes to take more money out of your pocket.

Government has become nothing more than a poorly managed shell game. And even though City Manager Howard Chan is being paid a king’s ransom, he’s just the city manager, tasked with dealing with the fairytale spending the City Council approves. But they are politicians, and he’s the City Manager. Someone needs to tell the Mayor and council members to stop spending the people’s money on programs that don’t benefit the people.

And then they need to be replaced with council members who understand that government is here to serve the people, and not their own narcissistic schemes. They’ve clearly demonstrated that they don’t think they should have to cut back, tighten their belts, and stop spending, which is the only way to a real balanced budget.