Independent audit: Richmond faces $22.7 million deficit by 2021

State of the City: Richmond faces difficult financial road

Richmond faces a $22.7 million budget deficit by 2021 if the city doesn’t take significant steps to cut expenses and increase revenues, an independent consultant said Tuesday.

Russ Branson, a public finance expert with the National Resource Network — a federal program assisting cities with ongoing financial challenges — presented a five-year financial forecast at Tuesday’s council meeting that recommended  big spending cuts starting next fiscal year, actions that will unavoidably impact employees and reduce city services.

Excessive overtime for city employees, particularly police and fire, is part of the problem. The police department is budgeted for over $4 million in overtime per year, but is on pace this year to spend $6 million. Richmond also spends the most on public safety among Bay Area cities, Branson said.

About 75-percent of Richmond’s expenditures go toward personnel. Either city positions will have to be cut, or employees will have to agree to cuts in their salaries and benefits. As the Contra Costa Times pointed out, the cash-strapped city gave several labor groups salary increases this year, including a 4-percent hike for Firefighter Local 188 and fire management and a 3-percent increase for SEIU employees.

Cuts to staff will indeed be painful. Right before Branson delivered the grim financial forecast, City Manager Bill Lindsay said Richmond has seen a 27-percent reduction in city employees since 2007-8.

Branson also said the city needs to set its reserves at a minimum 10-percent, a figure approved by credit rating agencies.

Tuesday’s forecast, which included no decisions by council, follows months of outside scrutiny about Richmond’s financial situation, including downgrades by Moody’s credit rating agency earlier this year that only added to the city’s debt.