The Santa Rosa City Council passed a $340.1 million budget Thursday that represents a 9 percent increase in spending as improved revenues allow the city to begin rebuilding staffing levels after years of cuts to many departments.
The budget adds 22 full-time employees across the organization, including additional police officers and firefighters and new staff in the finance, information technology and utility departments.
Council members made few changes to the budget proposed by City Manager Kathy Millison, but their views on it ranged from cautious optimism to deep skepticism.
"We're not out of the woods completely yet, but I think we're showing some positive signs," Councilman Ernesto Olivares said.
But Councilman Gary Wysocky, who cast the lone no vote, expressed concern that the budget wasn't addressing imbalances between departments or honestly accounting for pension costs.
Millison has called the budget balanced, but Wysocky, a certified public accountant, questioned that characterization.
"I feel this budget is not a balanced budget because we are significantly understating part of our compensation costs," he said.
Wysocky argued that city is failing to fully account for the full long-term cost of paying for the retirements of its workers.
At last count, the city had a $128 million unfunded pension liability as calculated by the state Public Employee Retirement System.
Mayor Scott Bartley said everyone is aware of the long-term challenges regarding the city's pension costs. But he argued the budget is balanced given the costs the city forecasts for next year.
"I'm not sure it's accurate to say this budget isn't balanced," Bartley said.
Millison acknowledged that the city's employee costs may be underestimated, but she said she is awaiting the outcome of an actuarial report detailing exactly how much.
She said it is possible the "pension stabilization fund" she previously proposed to cover higher future pension costs might need to be established in the future. The consequence of not setting that money aside in the budget, Wysocky argued, is that employees no longer see the need to continue giving concessions.
"The bargaining units see this and they see a surplus or they see a balanced budget. Why would they pay attention to something that's not there?" he said.
The city's nearly 1,200 employees, most of whom have given concessions in the form of unpaid furloughs and higher payments toward pensions and health care expenses, have not yet agreed to additional concessions next year, and it's unclear if they will.
If the one-time concessions are not renewed next year, the city's costs will go up $1.6 million.
Other key issues raised during the three-day budget hearing included the appropriate level of funding for police and fire, and the level of reserves the city should carry for emergencies.
Wysocky, Julie Combs and Robin Swinth all said the city needs to take a closer look at revamping MeasureO, the quarter-cent sales tax for public safety that, absent a special vote, requires the city to increase its spending annually by the consumer price index.
"We have a challenge where the basic assumption of Measure O is that that budget rises with CPI, and yet what we see is our general fund does not rise by CPI," Swinth said.
While she supported and voted for the public safety and gang prevention measure, Swinth said the result has been that "funding for the departments is disproportionate."