Sunnyvale in 2010

As some of you know, I’m on the Board of Library Trustees for the City of Sunnyvale, where I live. Or at least I am for a few more weeks — my 4 year term ends next month. I’ve really enjoyed my time on the Board — I’ve contributed a little, learned a lot and generally was just more involved in civic government than I had been before. (I heartily recommend getting involved in the running of the city/county/state/country/place/community/neighborhood in which you live. It’s important.)

Anyway, I come to the end of my involvement as convinced as ever that public libraries are critically important to our lives as citizens, but also just as convinced that we’ll see a massive reinvention in many of the functions that libraries perform.

But that isn’t really what I want to write about today — what I want to talk about instead is the budget work that’s going on for the City of Sunnyvale in 2010 — the topic of our Library Board meeting tonight.

At the end of last year, Sunnyvale hired a new city manager, Gary Luebbers, who inherited, like so many other city managers around the country, a government facing massive shortfalls in revenue among other problems. The preamble to his budgetary response for the coming year is fantastic work, and let’s start with some of the context:

  • Sunnyvale’s overall budget for 09/10 is something like $150M (plus the costs for the water treatment facility and the golf course)
  • We’re expecting a decline in revenue of $13M, primarily due to a shortfall in sales tax — people & companies aren’t buying things like routers and cars as much as they used to — so we’re seeing dramatic drops
  • Beyond that, the California Public Employees Retirement System (CalPERS) has seen equity declines of around 25% this year, which is leading to increased employer contributions — about $8.5M more in Sunnyvale personnel costs starting in 2011/12

So we’re seeing a 10% revenue shortfall and another 7-8% increase in costs — not to mention that after the ballot initiatives failed earlier this week, there’s an expectation that the State of California will borrow up to 8% of local property taxes (that they’ll repay eventually, but has an impact of nearly $4M in near term cash flow).

Any way you cut it, that’s a brutal context for any city to deal with — even a larger city of 100K+ residents like Sunnyvale — between revenue shortfall & increased expenditure, you’re looking at $15-20M a year.

But here’ the thing: Sunnyvale, while we’ll see cuts, is basically okay because of the extremely conservative and long-range planning that it’s done since reinvention in the 70s. We’ve got a $36M budget stabilization fund, for example — and we can draw down on that for a few years — and because of that, the cash flow interruption from the State doesn’t matter overmuch.

I have some concerns about the conservative nature of Sunnyvale city planning — I think in any normal times it’s over-constraining — but in this particular situation, facing such a brutal and cascading financial meltdown, it’s incredibly, incredibly helpful to have this strength, and is a reassuring bulwark against the effects of the broader economy.

5 Replies to “Sunnyvale in 2010”

  1. How can such planning be over-constraining in normal times but incredibly helpful when faced with “financial meltdown”? Surely it’s only able to be incredibly helpful now because it was conservative in the past, and thereby built up the budget stabilization fund? You can’t have it both ways 🙂

  2. John’s right in his description. Sunnyvale’s 20-year budgeting process helps minimize disasters like this one. But it makes it extremely difficult to do new things, because you have to provide for the added cost of the new thing for the next 20 years right when you want to add it. So it makes the City resistant to new things, not by philosophy, but by inertia.

  3. Right. But my point is that you can’t call it _over_-constraining without repudiating the benefits of that constrainment. You can either have “easy to do new things” or you can have “safe in a crisis”. Or a mix which is half and half. But you can’t have the full benefits of both.

  4. Hey Gerv — What I mean specifically, is that the benefits of dealing with this (hopefully) once-in-a-lifetime downturn do not outweigh the negative consequences of the financial straitjacket that happens in all of the other periods.

  5. This is very, very interesting. Do you have any insight on how much progress is being made to restart the Sunnyvale downtown efforts?

    Not sure I love seeing that $7-$8M in additional costs are due to pensions. In some ways, having 20-year planning is almost insufficient compared to having 30-50 year liabilities on your books.

    Adam

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