Since he was hired eight months ago to head the San Bernardino Parks, Recreation and Community Service Department, Kevin Hawkins has been intent on stretching an already taut budget.
At the same time, with a focus on beautification of commercial corridors and park maintenance, Hawkins has labored to establish his department's work as a crucial service, like public safety.
"There is a very real reason we should be considered a core expectation," Hawkins said. "We represent a reinvestment in the infrastructure of our community."
Hawkins hopes the sentiment takes root, because the coming years may be a major test for local governments.
Storm clouds have gathered on national and global economic horizons, and
Jesse Hernandez, a San Bernardino Parks, Recreation and Community Services Department employee, plants flowers in front of City Hall last week. About 26 employees maintain more than 550 acres of an ever-growing park system. The department s budget could face severe cuts as less tax revenue is projected because of the economic downturn. (Eric Reed/Staff Photographer)
local governments are bracing for lower revenues, persistent costs and tough decisions.
National forecasts darkened rapidly with the new year, moving the Federal Reserve to deeply cut interest rates twice in the past eight days and prodding Congress to unveil a major stimulus plan offering rebates to many U.S. families.
But at the municipal level - the one closest to the public - cautious outlooks and even dread of a looming fiscal crunch are the order of the day.
"Certainly what I see on the national horizon gives me cause for great concern," said San Bernardino City Administrator Fred Wilson, who oversees the city's $148 million budget. "In terms of what this means for our ability to manage our budget, the caution flags are in the wind."
Along with sales tax, property tax revenues are a pillar of local government. As properties that have changed hands are reassessed, plunging values could have a major impact on city budgets.
"This housing downturn could make the negative impact of a slowed economy stronger here than nationally," said Tom Pierce, a Cal State San Bernardino economics professor.
A different scenario
Chino City Manager Patrick Glover said it was premature to speculate on the severity of an economic downturn's impact on his city. But Glover, who has worked in local governments since 1981, said he is familiar with the effects of a downward economic swing.
"During downward cycles in the early 1980s and early 1990s, what you saw was predictable cutbacks on nonessential services," Glover said. "Vacant positions went unfilled, streets didn't get swept, parks got mowed less frequently."
But unlike past downturns, slowed revenues this time around could hit local governments harder due to accelerating public safety costs.
Cuts to these services are extremely unpopular, while costs steadily rise with retirement packages, competitive salary agreements, persistent crime and assertive unions.
"Public safety expenditures take up a larger portion of local budgets than in the past," Pierce said. "And much of those budgets are non-discretionary, so the unprotected types of spending, like parks and recreation, could face a serious burden."
That's the scenario in San Bernardino, where Wilson said public safety consumes 65percent of the $148million budget, a ratio likely to increase as the overall budget starves for revenues.
"Belt tightening is coming," Wilson said. "In the coming months I'll be sitting down with department heads and brainstorming about how to meet this challenge."
Troubling numbers
Wilson said a swift change in economic activity has cast serious doubts on tax-revenue projections made less than one year ago.
City officials last May hoped for a 6percent growth in sales tax revenue this fiscal year.
Now, they're just hoping to match last year's numbers.
"It's pretty clear to me that we won't hit those projections," Wilson said.
The story is similar elsewhere in the San Bernardino County. From Redlands to Chino, city managers are preparing budgets that deliver essential services amid sliding revenues, mainly from a projected slowdown in sales tax and property tax revenues.
Some cities may be in a better position than others. In Upland, years of fiscally conservative decisions by the City Council have bolstered the $41 million annual budget with a $20 million reserve fund, Assistant City Manager Rod Foster said.
In Ontario, Economic Development Director Mary Jane Olhasso said the city, with its core of older, stable housing stock and steady industrial and commercial growth, is well-suited to weather an economic drought.
"We are solid and stable," Olhasso said, adding that the city's 94million square feet of commercial space is less than 1percent unoccupied and that industrial growth has been strong.
Still, Olhasso conceded, the West End's largest municipal economy has already seen a harbinger of economic turbulence: Third-quarter 2007 sales tax revenue numbers show a decline from the same period in 2006.
"In my 10 years in Ontario we've never seen a decrease in sales tax over a similar period," Olhasso said.
Belt tightening
While drawing on reserves may be an option in some cities, virtually all will feel pressure to do some belt tightening in the coming years if sales and property taxes sag as much as expected.
In Rialto, City Manager Henry Garcia said overall growth in government services is all but off the table during the coming deliberations for a two-year budget.
"We are preparing for what we believe will be a flat economy," Garcia said.
In Redlands, City Manager N. Enrique Martinez said he too expects pressure on his city's $63million general fund budget.
"The ripples are far-reaching," Martinez said, citing the subprime lending fiasco as a major economic drag. "Local restaurants have a handful of people at the lunch hour. People aren't coming into our car dealerships and putting down $30,000 from their equity lines."
Along with sluggish consumption, Martinez said he expects continued inflation in the costs of materials essential to government services, including fuel, concrete and building materials.
"Priorities may need to be adjusted," Martinez said of the coming fiscal year.
The economics of having finite resources to satisfy varied and growing needs has leaders of smaller, less powerful departments girded for budget trims.
Pierce said that in times of economic scarcity, in which public-sector interests compete for a piece of a shrinking budget pie, the importance of political and legal power is heightened. Strong unions and mandated spending levels are key.
"Budgetary negotiations get more difficult, and those with more clout fare better than those with less," Pierce said. "Those whose departments have little protection against cuts should be concerned by what they're seeing."
Hawkins, the parks director in San Bernardino, is adamant that his $6million department budget has no fat to cut, having been emaciated by years of meager budget allotments.
The Parks, Recreation and Community Services Department budget was the same in absolute dollars in 1991 as it is today, city records show, unadjusted for inflation. Over that same period, both the Police and Fire departments have had their funding more than doubled.
"Any reasonable discussion would conclude that we are underfunded by $2million already," Hawkins said. "We need resources to beautify the city, so (that) we'll have inviting communities for growth once we get out of this (economic) tailspin."
