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About this blog: I am a native of Alameda County, grew up in Pleasanton and currently live in the house I grew up in that is more than 100 years old. I spent 39 years in the daily newspaper business and wrote a column for more than 25 years in add...  (More)

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Financial hurdles loom for Pleasanton and other cities

Uploaded: Aug 22, 2017
Although the city of Pleasanton’s finances look just fine today, there are challenges looming on the horizon City Manager Nelson Fialho told a Monday gathering of retired church-going men.
The city’s current two-year budget is balanced with about an $8 million surplus of anticipated revenues over expenses. Property tax and sales tax are the two biggest revenue components. Property taxes are sound and a growing at 3-5 percent annually—not so for sales tax, which is flat at about $25 million. That’s about 25 percent of the tax revenue.
There are two key drivers, Fialho said:
1. Regional competition, particularly from the San Francisco Bay Outlets in Livermore that is taking revenue from Stoneridge Shopping Center. The abundance of new retail in Dublin also is a factor. Incidentally, Simon Property Group owns both the outlets and the mall.
2. Online shopping, where people pay no sales tax or pay into a pool that is then distributed county-wide on a per capita basis. For Alameda County, that means Fremont, Oakland and the bigger bayside cities get the lion’s share. When the tax is generated in Pleasanton, the full local share goes to the city.
The online challenge likely will increase as online shopping continues to grow and major players continue to push into speedy delivery, including same day.
On the expense side, with about 76 percent of the expenses personnel-related, the challenge will be employee pension contributions. The California Public Employees Retirement System board had been basing its actuarial assumptions on a 7.5 percent annual return—terribly optimistic. The board has lowered the assumption to 7 percent—some folks, yours truly included—believe a more conservative return in the 6-6.5 percent range would be more reasonable.
The half-point change means increased contributions for Pleasanton that will total $15 million over five years. With its healthy $200 million in reserves (twice the annual operating budget), Pleasanton will be able to cope—he predicted other cities without the strong economic base that Pleasanton boasts will not do well.
The same goes for school districts that are facing increased contributions as well and cannot charge more for services to offset the costs.
During a lively question-and-answer session, Fialho was asked about why Owens Drive was reduced to one-lane where new mixed-use retail/apartment building had been constructed in Hacienda Business Park. He pointed out that a two-year planning effort went into that decision because for retail to succeed, there needs to be parking and it needs to be pedestrian friendly. That’s now true on the southside.
What’s missing is the development on the BART parking lot on the northside with retail, 300 apartment units and a parking structure. He’s maintaining that longer viewpoint, arguing that currently we only have half of the picture. Incidentally, he shared the presentation with Pamela Ott, the city’s economic development director. More later.
What is it worth to you?


Posted by no name chosen, a resident of Downtown,
on Aug 24, 2017 at 9:16 am

no name chosen is a registered user.

The pensions are what will destroy our budget. There is simply NO reason that ALL city employees and ALL teachers should not be making 100% of their pension contributions. Until recently the police and firefighters did not make ANY of the contributions and they will collect 90% of their final salaries as early as age 50 at retirement. With annual COLAs that bring them to more than 100% of final salary within a year or two of retirement. Yet until a few years ago they paid nothing into this system. A sustainable budget requires full contributions to the pensions from all participants and a far lower factor than 3% at age 50 for retirees. Any raises for these employees must go first to their personal contributions to the pension before a single dollar goes into their pockets currently.

Posted by Jan Batcheller, a resident of Downtown,
on Aug 26, 2017 at 2:42 pm

Government has no economic incentive to be efficient like private business. Nor does it understand the cost of the inefficiency.

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