June 30, 2006


City council passes $2.6 billion operating and capital budgets

Emergency services telephone fee debated

By Carol Rosen
Staff Writer

San Jose City Council members approved the 2006-07 operating and capital budgets of $2.6 billion during a polite, but somewhat contentious session on June 20.

The budget raises rates and fees in a number of areas including garbage collection, water rates and higher office rent for city departments.

Areas gaining increased funding were police and public safety.

Discussion of the higher fees was mostly absent at Tuesday's session, with most of the debate centered on the Emergency Communications Systems Support. That fee is based on an ordinance, which in the initial budget extended the telephone fee past Dec. 31 of this year to June 30, 2012. Vice Mayor Cindy Chavez amended the ordinance to extend only to June 30, 2009 allowing the council to review it again in two and a half years.

The council first passed the fee in 2004-05. As the name indicates, the fee pays for the cost of all emergency communication services in San Jose. It pays for everything involved in emergency communications from the initial phone call to personnel and dispatch and all the equipment necessary to make such services run smoothly.

All San Jose residents and businesses are subject to the fee, which is paid to the phone company and then to the city. Its exact amount depends, for example, on the number of trunk lines in a business. Residents are charged a specific amount monthly. There are exemptions for lifeline customers as well as some educational and government entities.

The fee brings in about $20 million per year, which recovers 87.5 percent of the emergency costs.

District 4 Councilman and mayoral candidate Chuck Reed made a motion to put the fee on the ballot and let voters decide whether to continue it. The fee, he said, would continue until the voters decided whether or not to keep it. He suggested that it be placed on the November 2006 or March 2007 ballot.

District 8 Councilman Dave Cortese questioned whether the ECSS was a fee or a tax, and City Attorney Rick Doyle noted that the Council has the ability to impose the fee, even if it is put on the ballot. Doyle and others said a ballot measure would be "frivolous."

City Manager Les White noted that the fee was important to the budget. Without it, he said, the city could be out $50- $60 million over a five-year period, money that is "a pivotal resource for the city," and is necessary for public safety, he added.

Mayor Ron Gonzales also spoke against the ballot measure because of the possibility it might lead to budget problems. "The motion to take this to a vote of the people comes at a very late stage," he said. "We've done no research, [and don't know how it will affect the budget]. We should go to the voters when it is required and when we need to, but in this case I'm not sure if we are required or we need to do so."

Reed's ballot motion failed with only Reed and Cortese voting for it.

District 1 City Council member Linda LeZotte then questioned what would happen to the fee if, after the new year when there would be three or four new council members, they did not want to continue it. Gonzales said that there would be no prohibition to the new council changing the fee after June 30, 2007.

The motion to continue the fee passed with LeZotte, Reed and Cortese dissenting.

The proposed budget, according to the mayor’s proposal, closes a General Fund budget gap for the fifth year. The General Fund budget shortfall is $34.9 million. The budget proposes added revenues and limited expenditure reductions to close this shortfall plus the addition of strategic resources to meet critical service and infrastructure needs.

The budget was designed to focus on the council's priorities including essential services and basic infrastructure requirements while taking advantage of economic development opportunities and maintaining the council's commitment to the city's neighborhoods.

This year's combined operating and capital budgets for the city, without redevelopment, totals approximately $2.6 billion. The proposed budget closes the shortfall mentioned above, which comes on top of the combined shortfalls of the previous four years of $263 million.

The budget continues the city's aggressive program to improve and expand neighborhood parks and libraries, fire stations and the Southern Police Substation to complete the projects approved by San José voters to catch up with long-overdue investments in neighborhoods.

It also reflects the mayor and council's goal to extend the city's successful model of neighborhood partnerships by building on the Strong Neighborhoods Initiative framework.

Funding sources include the ECSS fee, which will bring in a proposed $10.4 million (for this half of the year) as well as the 2006-07 future deficit reserve of $18.43 million. Other funding includes about $9.5 million card room revenue, the 2005-06 excess revenue/expenditure savings of $6 million, government and fee reserves of about $3.4 million and transfers from other funds and other adjustments of nearly $8 million.

The funds will be used for technology and capital infrastructure reserves of $9.8 million, neighborhood reserve of $5 million, economic uncertainty reserve of $4 million, miscellaneous additions of about $8.3 million as well as staffing reductions of about minus $5 million and shifting eligible expenses to other funds of nearly $3 million.

The General Fund is about 27 percent of the budget with capital funds at 41 percent and special funds at 32 percent. The general fund is used for regular operating expenses. Special purpose funds are used only for a specific purpose such as the airport. Capital funds pay for infrastructure improvements including transportation, public safety, parks and libraries.