Poor San Jose. San Jose wants to be famous.
San Jose pines for the prestige they think should be associated with being the 10th largest city in the USA. San
Jose wants everybody to "know the way."
With Cisco and eBay as prime tenants, San Jose wants recognition as "The heart
of Silicon Valley." At the very least, San Jose wants sympathy for otherwise being the "bedroom community" for tech
firms in Mountain View, Sunnyvale, Cupertino, Palo Alto, Santa Clara, etc.
The real bottom line is San Jose wants to
attract more businesses. The California tax code recycles payroll and property taxes into the municipalities from which
they are collected. "Bedroom communities" like San Jose are stuck living on sales and residential real estate
tax but paying all the social services overhead avoided by cities whose workers commute in from San Jose.
To be fair,
San Jose's last three budget years are not pretty:
*- Palo Alto shows ~$500K surplus in 2004-05 since the UNDER spent their 2003-04 budget by ~$500K
Editor's
note: 55,598 Palo Alto residents led to ~$2,272 dollars in the budget per resident. San Jose's current 894,943 residents
lead to ~$810 budget/ resident. So, yes, San Jose does have a point. Nobody can be a hero in these circumstances.
San
Jose believes having more businesses located within the city limits would smooth out their revenue stream. Yet, San
Jose repeatedly shoots itself in the foot in their efforts to attract new businesses. A short list of San Jose recent
economic "developments" includes:
-Mayor Ron Gonzalez supports Governor Arnold Schwarzenegger despite the governor
rolling back the VLF reinstatement, costing the city ~$56M in the current budget year.
-Building a new $388M, and counting,
(#) city hall to house 1,800 employees even though the city was loaded with empty commercial real estate when the project
was approved-- much of which is still empty today, three years later!
-Repeated hearings and "studies" on requiring
a "living wage" on all city-approved, not to mention city-financed, construction projects.
-The city council again
refused to re-zone a large industrial site to residential, despite a decades-long cry for more housing. It's not like
Intel or eBay will ever use the site...
-Publicly hammering a contractor for refusing to submit to after-the-fact micromanagement
of where the workers they hired lived and how much they were paid. (The contractor said they would have submitted to
the scrutiny-- if only they had been asked prior to the press conferences denouncing them.)
-Instituting a new per-line
telephone tax, earmarking the expected $10M for "911" services. Ironically, Cisco has switched exclusively to
IP phones, completely avoiding phone lines (and now this new tax). Even more ironic is the city itself will soon follow suit.
-San
Jose made a big show of awarding $8M to Cisco in a recent IT acquisition for the new city hall. Unfortunately, it turns
out the city let Cisco write the specs. The scandal came to light only because Cisco's own lawyers "outed" the
parties involved.(*)
It should come as no surprise the local business community has their own acronym for locat\ion
/re-location planning: ABSJ ("Anywhere But San Jose")
However, since the mayor is expected to run for higher
office after his term expires. (He officially denies any such plans.) Maybe he can be forgiven for playing politics
with conflicting policy programs. Doing something, even if ineffective or counter-productive, gives the appearance of
action.
San Jose's 2004-05 budget brief (**), on the one hand, admits, ”Stagnant revenue performance,
coupled with the job losses and a continuing relatively high unemployment rate in Silicon Valley, provide little evidence
that the local economy is on the verge of a significant recovery.” (There are valid reasons why Silicon Valley
workers are currently the most pessimistic in the nation(##).)
Followed by "the Proposed Budget presumes that the city
will continue to face a sluggish economy through 2004-05 and the economically sensitive revenues have been programmed with
flat or only slight growth."
Right away, longtime readers will marvel at the admission of anything other than "optimism"
from a Silicon Valley business leader or politician. Did this person miss the memo?
San Jose's 2004-2005 Proposed
Operating Budget has a "$69.8 million funding gap in the City’s General Fund." San Jose’s "fix" is explained
in with:
General Fund Budget Balancing Plan SOURCE OF FUNDS (In $000s) 2004-2005 Future Deficit Reserve (One-Time)
10,000 Cardroom Revenue (One-Time)
6,250 Emergency Response Fee
10,000 Business Information Management System 1,450 Sale
of Surplus Property
1,000 Transfer from Other Funds 6,538 Miscellaneous
6,603 Total Revenue & Reserve Solutions
41,841
USE OF FUNDS Position Eliminations/Efficiencies
(15,880)* Non-Personal/Equipment Reductions
(5,295) Funding Shifts (3,192) Mayor,
City Council and Appointees (2,543) Use of Reserves
(Committed Adds) (1,753) Management Pay Increases/PDP
(1,822) New Facilities (Operations & Maintenance) 1,025 Miscellaneous
1,467 Total Expenditure Solutions
(27,993)
Total Balancing Solutions
69,834
*- $6.3M of this is identified as more “vacant position" cuts.
As I read it, $31M of $41M in new
funds are one-time solutions. At least $13M of $28M in spending reductions are likewise one-time events or just deferrals.
NO
growth in employment or sales tax revenue yet the city is papering over a $70M budget deficit with one-time fixes?
San
Jose does deserve sympathy for dealing with severely declining revenues over the last three years. On the other hand,
it's partly their own fault as they scare away the businesses who might have come in to stabilize their revenue stream.
Businesses know the bill for this un-solved deficit is likely to come due in the next couple years. They do not want
to be the ones to pay it. They're going ABSJ.
