The Big Budget Picture
Over the last several years, the City Council has worked to reduce the City’s recurring costs and make responsible investments in infrastructure. However, the City still depends largely on property taxes to pay for services, and the drop in houses sold in Berkeley has meant a significant amount of lost revenue. Other revenue sources that can be used for services, such as the sales tax and the utility users tax, can’t make up the difference.
The City Council anticipated some of these challenges last year, and planned cuts for the FY 2009 budget. They added more cuts this year and once the state’s budget is passed, they may have to cut again. Standard & Poor’s has recognized the City’s tough choices by increasing our bond rating.
“This is good news for residents because it’s an objective measure of how the City is managing taxpayer dollars,” said City Manager Phil Kamlarz. “It doesn’t mean we have extra money to spend, but like a personal credit rating, it shows that we’re making the right choices.”
The City’s goal is to use its resources to maintain quality of life for residents and to have reserve funds to help us respond to future fiscal and natural disasters. To keep moving projects forward, the City also aggressively pursues other sources of funding, including federal and state grants.
City Expenditures-- Where Does the Money Go?
**If for any reason you can't read this chart, please click here for a description of the contents**
The City’s revenue comes from many places, including state and federal funds, property taxes, fees, and restricted funds, like the library and parks taxes. When people talk about the budget, they usually mean the General Fund but the services that residents receive actually come from many sources (see Budget Basics, below).
This chart reflects the total amount the City spends on services, divided by department. A few things to note about this graph:
- General Government includes eight departments: City Manager, City Attorney, City Clerk, Finance, Information Technology, Human Resources, City Auditor, and the Police Review Commission.
- The Housing category includes the City’s Housing Department, the Berkeley Housing Authority, and the Rent Board.
- Some services are funded primarily through special funds (such as the library or the marina), while others are funded by the general fund (such as Fire and Police).
- The percentages in this chart are based on the FY 2008 & FY 2009 biennial budget.
Budget Basics- A Few Key Definitions and Facts
Fiscal Year: A fiscal year (FY) is the 12-month budget cycle; it’s usually different from the calendar year. In Berkeley, FY 2009 runs from July 1, 2008 to June 30, 2009.
Biennial Budget: Berkeley is on a biennial budget cycle, which means that our City Council passed a 2-year budget in 2007 for FY 2008 and FY 2009. The City Council did an update in June for the FY 2009 budget and will likely make quarterly adjustments until the economy stabilizes.
General Fund: FY 2009, $146 million: When people talk about the City’s budget, they usually mean the general fund. The general fund is a combination of property, sales, and utility user taxes that are unrestricted. The property transfer tax also goes into the general fund. The amount of property transfer tax funds has shrunk from $16.4M in FY 2007 to $12.5M in FY 2008, a 24% decline in one year.
Special Funds: The balance of the City’s budget is made up of special funds (restricted funds), which are revenues that are already dedicated to specific projects. Examples include federal transportation funds, state public health funds, local marina fees, and the parks tax. Just because the revenue is dedicated doesn’t mean it’s guaranteed: special funds also shrink in tough economic times.
The City of Berkeley Total Budget: FY 2009, $321 million: This combined total includes the general (unrestricted) fund and all the special (restricted) funds.
For a more extensive list of budget definitions, please visit the budget terms page. To see current and past adopted budgets, please visit our budget introduction and documents page.
November 2008 Ballot Measures
Two revenue measures are on the November ballot that will give residents the option of providing funding for important community services.
- Fire Protection and Emergency Response and Preparedness Tax
This revenue would be used to keep fire stations open, improve and expand paramedic services and medical service response, improve community disaster preparedness for the community, and invest in a unified communication system that will allow Berkeley police and firefighters to better coordinate with other agencies.
- Library Bond
This would be limited to renovation, construction, seismic, and disabled access improvements, and expansion of program areas at the City’s four neighborhood branch libraries, but not the Central Library downtown. The improvements will address serious structural and infrastructure needs, alleviate current overcrowded conditions and improve Library operations and the ability to better serve the community.
The General Fund provides for many City services, but other special funds also provide services to residents. These funds can be described in these broad categories:
Special Revenue and Grant Funds are legally restricted to a specific purpose, service, or program and include tax-based revenues. For example:
- Parks Tax Fund
- Library Tax Fund
- Paramedic Tax Fund
Special Assessment Funds are related to the financing of public improvements or services, such as:
- Clean Storm Water Fund
- Streetlight Assessment District Fund
Enterprise Funds come from the collection of the fees associated with providing the service or program: