Union City Set to Adopt Two-Year Budget Amid Continued Recovery from Pandemic
Plus: We answer your FAQs about the City budget
by Lauren Sugayan, Assistant to the City Manager
The City Council is in the process of reviewing and considering a two-year budget for Fiscal Years 2021–2022 and 2022–2023, along with a five-year Capital Improvement Plan. The development of this budget marks a major milestone for the City as the organization has championed several key accomplishments over the course of the last two years, under a set of challenging circumstances.
City Manager Joan Malloy says, “it has been an extraordinary two years. After the Council adopted the previous two-year budget in June 2019, we were faced with a cyber attack that crippled City services; then had to manage the onset of Public Safety Power Shutoffs in our community; a herculean effort by the Union City Police Department helped bring justice to the families of two young boys who were murdered in our community in November 2019; and, then the pandemic happened. Despite having to address so many emergencies, we have been able to make significant progress on many of the City Council’s top priorities identified in our strategic plan.”
Accomplishments from the last two years include the passage of Measure WW — a critically needed revenue source for the City; a new five-year agreement with the Alameda County Fire Department for emergency response services; a successful community-driven effort to reimagine policing; and, several COVID-19 response and relief efforts that helped the most vulnerable residents and businesses.
Although the challenges of the last two years are not quite in the rear view mirror, City Manager Malloy recognizes that the City is still recovering from the impacts of the pandemic and cyber attack. However, she is ready to steer the organization ahead on accomplishing the City’s five-year strategic plan.
“We have significant initiatives underway that will help us to be more secure against outside attacks on our I.T. infrastructure, as well as improve the public’s interface with the City. The pandemic taught us that there needed to be additional ways for residents and businesses to engage with the City,” Malloy said.
Initiatives that the public can expect to see with the new two-year spending plan include the restoration of services to pre-pandemic levels, which includes a gradual recovery of recreation programs; continued COVID-19 support for residents and businesses in need; a digital transformation to improve public interfacing; processing of major development projects in the City’s Station District neighborhood and the establishment of a plan to reimagine policing.
Malloy adds that the restoration of services in the proposed two-year budget is only made possible due to funds from Measure AA, Measure WW and the American Rescue Plan Act. Measure AA and WW are voter-approved revenue sources that account for nearly 20% of the City’s General Fund. The American Rescue Plan Act, or ARPA, will account for just over $14 million in one-time funds aimed at helping cities and communities recover from their losses during the pandemic.
Now that the City Council has concluded a series of budget meetings and a public hearing, they are expected to adopt the budget on June 8.
Frequently Asked Questions About the City Budget
About the City Budget and Budget Process
The City Manager is required to develop and present a proposed operating budget every two-years per the City’s municipal code. The current two-year operating budget for Fiscal Years 2019–2020 and 2020–2021 was approved in June 2019. This past January, the City Council set a budget planning calendar to aid in the preparation of a new two-year budget for Fiscal Years 2021–2022 and 2022–2023. A Five-Year Capital Improvement Plan was also developed and presented in conjunction with the two-year operating budget. The City Council typically adopts the Capital Improvement Plan and the two-year Operating Budget in June.
What is an operating budget?
The City’s operating budget is based on projected revenues and fund balance resources (i.e. the amount the City has in its savings account) available to fund city operations. For the Fiscal Year 2021–2022 and 2022–2023 budget, total revenues are expected to be $264.1 million over the next two years, with total expenditures of $262.5 million.
The General Fund represents 58% of those total expenditures. The General Fund helps to fund essential city services such as police, fire, administration and planning, street and park maintenance and recreation.
What is a Capital Improvement Plan (CIP)?
A CIP is a five-year plan that prioritizes funding for projects that protect and enhance the City’s infrastructure. CIP projects may involve construction, acquisition, expansion, and rehabilitation or replacement of City facilities and infrastructure. CIP projects usually have higher costs and take a year or more to complete. These projects are important for improving the long-term health and development of a community. The CIP is primarily funded through property assessments; transportation funds; State, County and Federal tax revenues; grants; and, impact fees from new development. The proposed five-year CIP is anticipated to be fully funded when the City Council adopts it in June.
Has the pandemic impacted the City’s budget and ability to provide services?
City finance experts expect that the General Fund will continue to be impacted negatively through the next two-year budget by the pandemic due to a loss in sales tax, hotel tax, business license tax, parking revenues and revenue brought in through City recreation programs. Fiscal recovery from the pandemic is anticipated in 2024. Until then, the City is reliant on voter-approved revenue and federal relief funds to help fill a $6 million budget gap.
How much did the City receive in COVID relief aid and what can it be used for?
The American Rescue Plan Act (ARPA) was approved by the United States Congress and signed into law by the President on March 11, 2021. It provides economic relief to individuals, businesses and state, county and city governments. Funds allocated to cities from ARPA are required to support the City’s response to the pandemic; address negative fiscal impacts; provide premium pay to eligible workers; address government revenue losses; and/or, invest in public infrastructure. Union City is expected to receive slightly above $14 million in two separate stages over the next two-year budget cycle. The City Council is expected to direct those funds at its final budget meeting on June 8.
How does the City get its revenue?
The City gets most of its revenue from property taxes; however, with this revenue source alone is not able to fund city services. Nearly 20% of Union City’s General Fund revenue that supports essential services like 911 emergency response, paramedic services, fire protection, emergency planning, street and pothole repair and services for youth, families and seniors comes from two local tax measures — Measure AA and WW — approved by Union City voters. More information about Measure AA and WW can be found at https://www.unioncity.org/574/Voter-Approved-Funding.
