The City of Concord was fortunate in 2008 that as the Great Recession began to impact our local economy and drove our tax revenues into a significant decline, we had $24 million dollars in the bank or a reserve of 30 percent in what was about an $80 million dollar budget.
From 2008 to today the City has been spending more than it has collected in recurring taxes. That is what is called a Structural Deficit. Recurring tax revenue is LESS than recurring expenses. This fiscal year (12-13) the Structural Deficit is about $5.5 million. About $65.5 million in General Fund revenues versus about $71 million in Operating expenditures.
Between 2008 and 2010 the City Council took numerous measures to reduce expenditures. City employees made various concessions including furlough days and increased contributions to their medical and pension plans. City staffing costs were also reduced by retirements and department reorganization.
By early 2010, as the decline in revenue continued, it became clear that the only way to protect core City services from dramatic cuts was to ask residents to approve a new, temporary sales tax. That became Measure Q and voters approved the additional half-cent sales tax in November 2010. Measure Q expires in 2016.
Measure Q was not designed to eliminate the Structural Deficit, but to buy time for the local economy to recover and produce enough recurring revenue (from improved sales and property taxes) to cover ongoing City expenses. The City is collecting Measure Q dollars for five years and is spreading the spending of those same dollars over 10 years to protect services until recurring revenues can meet ongoing expenses.
Hopefully a recovering economy can make it possible to match recurring tax revenue with ongoing spending without some additional cuts in services and/or staffing. But that will only be possible if the recovery is stronger than what is assumed in the City’s last Ten Year Projection – and near-term Council decisions about employee compensation and other spending also address the goal of eliminating the Structural Deficit.
Review the City’s last Ten Year Projection