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October 10, 2006 > Trans-Pacific handshake

Trans-Pacific handshake

by Steve Warga

Milpitas City Council opened their October 3 meeting in a warm exchange of greetings with a large group of delegates representing sister-city, Tsukuba, Japan. With proclamations and an exchange of gifts, the two cities bowed and shook hands in celebration of a ten-year partnership still going strong.

A somewhat less congenial group of city employees then turned the meeting into a challenge to council. "Where's the trust?" union representative, Tim McCormick, demanded? His workers feel deceived in the matter of cost of living adjustments (COLA) which are usually tied to the Consumer Price Index (CPI). According to McCormick, the city asked workers to forgo COLAs in fiscal year 2005 - 2006 because of an expected budget deficit. The union agreed, then suggested modest COLAs of one, two and three percent the following years.

McCormick says the city reported a net revenue gain after for fiscal year 2005 - 2006, which ended June 31. Since then, he claims the city has refused "to even respond to our generous offer to save the city money." (Union literature claims a 3.9 percent rise in CPI during the period in question.) He contends there's been only silence for 16 months. Mayor Jose Estevez thanked the large group of employees for expressing their thoughts.

Later in the meeting, Councilmember Bob Livengood raised the question of budget surplus or deficit, suggesting the facts were getting lost in the rhetoric of current campaigns for the mayor's seat and two council seats on the November 7 ballot. Livengood said, "Nobody seems constrained by the truth." City Manager Charles Lawson asked for the facts from Finance Director Emma Karlen.

The confusion, Karlen explained, arose from original anticipation of a $6.1 million deficit during FY 2006. Budget planners were prepared to transfer redevelopment funds into the General Fund to cover the deficit. By year's end, however, city revenues surged $8.8 million dollars above projections. This welcome surprise permitted the city to balance its budget and report a modest surplus without transferring redevelopment monies. Karlen expects FY '05 - '06 audited numbers later this month. She cautiously suggested the final surplus will be around $3.5 million.

Numerous sources, including McCormick and some candidates, claim the city had a surplus of $8.8 million. Karlen points out that not all the unexpected revenue was surplus, which is a bottom line calculation of all income minus all expenses in a given period of time. What's more, planners are anticipating another deficit for FY '06 - '07. The present surplus will be needed to cover this imbalance, among other priorities.

A balanced budget helps the city maintain its unusually high AA rating from Standard & Poor's. Long-term stability and fiscal soundness remain a primary goal as Milpitas is still reeling from the dot-com crash a few years ago.

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