Previewing the 2023-2024 City Budget Process
The City Council is about to begin the process of developing and adopting the City of Berkeley’s Biennial Budget for Fiscal Years (FY) 2023-2024 (July 1, 2022 - June 30, 2024). This newsletter serves as a guide to explain the budget, next steps in this process, and how you can participate before the final vote on June 28th.
What is the Budget?
Under State law, each city must pass a municipal budget by June 30th to cover the next fiscal year, which starts on July 1st and ends the following year on June 30th. Typically, a two-year budget is passed, as will be the case during this process. But due to the economic uncertainties brought on by the pandemic, the last two budgets only covered a one-year cycle.
The purpose of the City of Berkeley’s budget is to serve as a “blueprint” for providing City services and as a working financial plan for the fiscal year. It also represents the official organization plan by which City policies, priorities, and programs are implemented. The budget provides the means to communicate to the residents, businesses, and employees how the City’s financial resources are used to provide services to the community.
There are several categories that make up the structure of the budget, as described below.
General Fund: This is a flexible, discretionary fund that pays for a wide array of city services. This accounts for over a third of the City budget, which represents the largest slice of the budgetary pie. Half of the General Fund is used for public safety (police and fire). Two thirds of the General Fund is used for personnel costs (i.e. employee salaries) and the other third for non-personnel costs.
Enterprise Funds: These are fees paid for specific city services and are restricted for those specific purposes. Examples of this include the Permit Service Center, Zero Waste Fund, Sanitary Sewer Fund, and the Marina Fund.
Special Revenue Funds: These are revenue sources legally restricted to a specific purpose, service or program and include tax-based revenues. Examples include Parks, Libraries, and Business Improvement Districts.
The budget includes other types of funds/revenues/expenditures, including but not limited to bonds, debt service, grants, and internal service funds.
What Happened Last Year?
The last budget, adopted in June 2021 to cover Fiscal Year (FY) 2022, had to tackle the ongoing economic impacts caused by the COVID-19 pandemic. Despite facing a $20 million deficit, we were able to approve a balanced budget without any layoffs or sacrificing basic city services. The same was achieved during FY 2021, when a $40 million deficit was overcome during the peak of the economic impacts of the pandemic. As the Omicron surge ends and California shifts from a pandemic to an endemic, we expect the economy to eventually recover to pre-pandemic levels.
The FY 22 budget, amounted to nearly $600 million, of which approximately $220 million came from the General Fund. Focuses of the FY 22 budget included:
COVID-19 response & recovery: Continue efforts to vaccinate our population and contain COVID cases, in addition to addressing the economic impacts of the pandemic through rental, arts and small business assistance.
Fiscal Health: Replenish our General Fund Reserve which was used to balance last year’s $40 Million dollar deficit, and put aside money to fund our Section 115 Pension Trust.
Public Safety: Fund fire prevention work such as vegetation management, clearing paths, Safe Passages and an emergency warning system. Fund expanded bike patrols in high crime areas and expanded hours for mental health crisis response. Support Violence Prevention efforts and leverage new state Violence Intervention Prevention (VIP) funding. Continue the public safety reimagining process and fund the creation of a Specialized Care Unit pilot. Increase funding for traffic calming and fund Vision Zero projects throughout Berkeley to improve pedestrian/bike safety.
Homelessness Response: Continue existing emergency shelter and social services. Launch the outdoor shelter at 742 Grayson Street, provide safe parking for vehicles, fund one or more Homekey projects, expand sanitation and public health, support trash pick up around encampments, and fund rental subsidies to get people off the street. With gratitude to the voters, these programs have been funded through Measure P
Infrastructure: Invest in fixing our roads, and other public buildings and facilities including at our Waterfront, thanks to Measures M and T1, our local dollars can be leveraged with future funding through the American Jobs Plan.
What is the Timeline for the FY 2023-24 Budget?
The current budget process kicked off at the end of January with the Budget & Finance Committee. In February, internal staff began developing plans for the budget. The City Manager published the FY 22 mid-year report, which was discussed at the Budget & Finance Committee in late February and will be discussed at the full City Council on March 22nd. On March 10, the Budget & Finance Committee will discuss the Capital Improvement Program, Measure P, and State and Federal funding opportunities.
Throughout April, each department goes over their budget proposals, before a first draft of the budget is introduced from the City Manager's Office in May. The Budget & Finance Committee will receive department presentations in late April. In mid-April, the Committee will receive an overview of the preliminary budget, in addition to recommendations for the Capital Improvement Program.
The first public hearing on the biennial budget will take place at the May 10th Council meeting. Over the next two months, both the full Council and the Budget & Finance Committee will host multiple meetings to discuss the many aspects of the budget. A draft final budget will be published in early June, and after a marathon of meetings, the Council will adopt the budget on June 28th.
In total, there will be at least 19 meetings which will take place between now and June 28th in which the public will be able to weigh in. You can also submit comments anytime to the City Council by emailing council@cityofberkeley.info. We value your input as we embark on this important process and are committed to receiving your public comment in order to develop a budget that reflects our needs and values.