On March 12, I hosted the second annual budget meeting in my district. My goal was to inform the community about the budget process, the size of our budget, where the revenues come from and different options on trying to deal with the current deficit.

The major message from the residents that attended the meeting was that the city needs to change employee policies and compensation (including sick leave payouts and pensions) before cutting services. Residents brought newspaper and magazine articles about how other cities are facing major financial issues, including bankruptcy, due to pension obligations.  Many people brought up analogies to Vallejo, which filed for bankruptcy.

The residents continuously asked when the City of San Jose was going to make these changes; city employee compensation, sick leave payout and pension adjustments.  Several people in the audience work at Hewlett Packard which implemented wage cuts for every employee in the company. Others had hours reduced at their employers, resulting in a cut in compensation, or were laid off. Other views expressed were switching to 401K’s from pensions. And 100 percent said new city employees should be given lower benefits than current empleyees, since we cannot afford them.

Recently, I read how union employees at the San Francisco Chronicle took pay cuts, fewer vacation hours and eliminated seniority just to keep the paper alive.  They did this so that more people could keep their jobs and therefore keep the Chronicle operating.  I hope these examples set the tone for San Jose’s management and unions.  The message that we are all in this together folks, lets see what we all can do for the sake of keeping our city healthy during this prolonged recession.

I prepared a presentation about the City budget for the meeting.

Some of the major facts:

• In the last seven years there has been a 58 percent rise in total compensation.
• In the last seven years the average salary went from $73K to $117K.
• In the last seven years our contribution towards pensions has more than doubled.
• We have a $1.4 BILLION dollar unfunded medical liability.
• To fix the budget deficit via economic development we would need to build 15 Valley Fair’s or 24 Oakridge malls. (That would require 750-1,200 acres of land, they would all have to be equally successful and residents would have to accept more traffic and parking in their neighborhood.)

At the end I made my own suggestions of how to balance the budget:

• Wage freeze for the next three years.
• Freeze Step and Merit increases.
• 5 percent pay reduction for all 2,663 employees that make over $100K.
• 2 percent pay reduction for all employees making under $100K (includes council and staff).
• Make changes to sick leave and vacation payout.
• Raise fees on card rooms but allow them nine extra tables which will bring the city $5.5M every year on top of the existing $13M. (Bob Brownstein, a union leader and Pat Dando, the President of the Chamber agree on this.)
• In future years we maintain wage freezes.
• Sell the Hayes Mansion to cut the $4M we lose every year.
• Retain industrial land for job growth and slow down housing growth.

However we cannot provide core city services without more revenue:

• Therefore I proposed that we raise utility tax 1 percent on electricity, gas and water only. This would bring $11.43M a year that would go to police only.
• Spend 70 percent of new revenue on new officers and the balance on non-sworn police employees and technology so more police officers can be out on the street versus behind a desk.
• Also I believe we should do a $100M bond to pay for street repairs only, since we have a deferred backlog on maintenance of $457M, and the longer we wait it will cost us even more to fix streets since we will go from repaving to rebuilding.

The journey is far from over on the budget so stay tuned.

On Saturday morning, I went on my 5th Homeless Encampment “sweep” with the San Jose Police Department’s Metro Unit.  The Metro Unit is in charge of monitoring creeks for encampments.  These clean-ups have taken me to Districts 3,4,6 and 7, alongside the Coyote, Guadalupe and Los Gatos Creeks. When you climb down into the creeks you forget you’re in San Jose, as all you can see is nature.

We have hundreds of people in San Jose who live in the creek areas in temporary shelters. Some structures remind me of developing world shanty towns while other camps have a complete living room set up, with power operated from car batteries.  Some encampments are small and are set up underneath street overpasses, while other encampments are massive with many people.

In speaking with several of the people that have chosen to live in the creeks, I have these observations.
• The overwhelming majority are male with few females.
• They are mostly Caucasian and some Latino.
• The overwhelming majority have a substance abuse issue of alcohol and/or speed (crank/meth). They typically do not want to go to the shelters since the shelters have curfews and do not allow drug use or people to enter who are high.
• When asked where they were from, none of them said San Jose or Santa Clara County. They were all from other states like Washington, Colorado, Illinois, Nebraska… I thought to myself, is there any correlation between these people migrating to California due to warmer climate, or is this just coincidence?
• I encountered one schizophrenic gentleman who stopped taking his medication and substituted drugs instead.

In addition to the homeless encampments, the Metro Unit provides response to graffiti, back-up homicide investigation, surveillance, and narcotics enforcement. The Metro Unit manages the clean ups alongside the San Jose Valley Water District, and the labor is provided by 30-40 men that have weekend work issued by the court for things like DUI’s. They are directed down to the campsites to clear out all items. (They must be careful where they step because there are no toilets in the encampments, which means fecal matter abounds.) The weekend court-appointees then carry all the trash, mattresses, shopping carts etc… to the trash compactor on the garbage truck. It is not uncommon to fill as many as five trucks in one day.

Prior to the clean up date, SJPD has already visited the campsites and posted signs telling when they will be coming and giving fair warning to the creek residents to take their belongings somewhere else that day. They could be arrested for trespassing, since much of this area is private property owned by the water district.

The people that vacate the creeks on Saturday will return either the same night or within a few days since they know the drill; SJPD will not be back ‘til the next cycle which may be a few months. Last year, during the City of San Jose’s budget, Mayor Reed increased the funding by $76,000 for four additional creek cleanups.  The cost pays for the 8-10 officers assigned for the cleanup day, the dumping fees, and one or two people from the City of San Jose’s Environmental Services Department.

It is a sobering sight to see how some people live, and that a simple hot shower is not in the cards.

Some people believe that those who choose to live outside should be able to live in the creeks indefinitely. However, that could be problematic, with campfires that go out of control, water contamination, stolen goods and general lawlessness like a Mad Max movie.  Power struggles occur in the creek encampments which results in fist fights between individuals.

Certainly, this is a societal issue that takes a larger government then San Jose to solve since cities do not have borders.

On another note, this Thursday I will be hosting a meeting to discuss the City of San Jose budget deficit at the Willows Community Center, 2175 Lincoln Ave, at 7pm. You are welcome to attend.

In 1976, San Jose city leaders emerged from a retreat at the Asilomar Conference Center and declared that their number-one priority was to fix the jobs and housing imbalance in San Jose.  Since then San Jose has provided the most affordable housing in the state of California, and tens of thousands of market-rate dwellings; however, San Jose has not shared in the job growth. So while other cities have a “jobs surplus,” San Jose still has a “jobs deficit.”

San Jose has grown faster then planned.  For example, in 1970, our population was 459,000, growing to 629,000 in 1980 and then 894,000 in 1990, with up to almost a million in 2009.

The Association of Bay Area Governments (ABAG) numbers would have San Jose grow by another 471,000 residents by the year 2040. I serve on the General Plan 2040 Task Force, which has met once a month for more than a year, and will conclude in June 2011. The Task Force is charged with deciding how San Jose will grow by 2040.

This jobs-housing imbalance is one of the reasons San Jose has difficulties in paying for neighborhood services. The tax base for housing is lower in comparison to commercial and industrial uses. Commercial and industrial land produces more revenue and demands fewer city services. Housing produces less revenue and demands more city services, like libraries, parks, code enforcement and the list goes on.

There are vocal paid housing activists that believe San Jose has not done enough for housing. These folks would like to see every parcel paved over and housing put in its place. They don’t seem to care if land is zoned for commercial and retail uses; in their point of view, San Jose should just change the zoning and allow more housing instead of industry.

I do not believe San Jose should be the housing hub for the state of California.  I support putting housing where the land is zoned for housing, however, I do not support allowing ABAG to have free reign over San Jose. We could build housing on every last parcel, but our housing would still be more expensive then other parts of the country because of our great climate. Start-up companies continue to grow in more expensive housing areas like San Francisco, Menlo Park, Palo Alto, Redwood City and Mountain View. So to say high housing costs deter new business is an odd statement. San Jose is the patron saint of building both affordable and market rate housing in the state of California.

The 2040 Task Force will be moving forward soon with an Environmental Impact Report (EIR), which will take about one year to complete, regarding different scenarios. The scenarios range from 179,000 new housing units to 105,000. As for jobs it ranges from 181,000 to 479,000 which is a BIG “what if” scenario.

You see, the city of San Jose does not make jobs; jobs are created by the private sector.  What San Jose can do is provide great services that make San Jose attractive to start and grow a business.  Personally, I advocate leaving more land for job expansion and less for housing.

“If” we get more jobs then expected (this hasn’t happened in the history of San Jose, but there is a first for everything) we can quickly rezone land to accommodate more housing.  However, you cannot rezone housing back to industrial unless you’re in China.

My ultimate preference is a staged “gate” approach, where we approve an overall total of housing but it is dependent on job growth. So, for example, for every 10,000 units of housing that is entitled, we then wait for 15,000 jobs. Then, and only then, do we move forward with more housing. Otherwise, San Jose will be destined to follow its historical past of providing all the housing and none of the jobs, and get little revenue to pay for city services.

Prior to 2040, we will be able to leverage new areas for housing with high- speed rail so San Jose can be a job center. From Fresno to Downtown San Jose will be one hour with high speed rail.

If you would like to do some reading then take a peek at the General Plan website. The next General Plan Task Force meeting is Monday March 9th at 6:30pm at City Hall.

Last week, I attended a brainstorming session at City Hall.  The purpose of the gathering was for ideas to help Downtown during the recession. The group included the Downtown Association, land owners, developers, business owners, arts advocates and others. Individuals presented their ideas to the group.  One example was sponsoring an overnight camp-out in Downtown parks by the Boy Scouts and Girl Scouts. Another was closing SOFA to cars every Friday allowing for a pedestrian-oriented evening. Other ideas included a 24-hour theater festival, music festivals, murals and free parking. And another was that the city could give away free Downtown land for an architectural design contest.

I thought to myself, “What could we do during a long-term recession that costs the city zero dollars and would actually bring more revenue to the city?” My idea: allow card rooms to locate in Downtown again. Downtown originally had a card club that moved to the suburbs.

No new card clubs are allowed to open in California. San Jose has two card clubs grandfathered by state law that are allowed to stay open indefinitely. The two card clubs bring approximately $13 million in tax revenue to San Jose every year. That money pays for a lot of serviecs; for example, half of our citywide library budget, or 21 miles of road paving, or 3,200 wheelchair ramps on street corners (we have over 60,000 street corners). In addition to generating nearly $13 million for the city, the card clubs also must pay for the cost of police to regulate them, which is about $2 million annually.

Currently, our two legal card clubs are not allowed to move; therefore, they are forced to stay in the same location and pay a higher rent every year since the landlord knows they are not allowed to move.

At the session, I suggested we allow one of the card clubs to move downtown adjacent to our convention center. As I mentioned above, card clubs are a profitable legal business that bring money to the City. In fact, I believe that there would be a big incentive to move Downtown that could help pay for the upcoming convention center expansion. Perhaps if San Jose would seriously consider this idea, we could put a card club at the base of a new hotel Downtown on top of an expanded convention center where the $5 million “tent” is located on Market and Viola.

When conventioneers come to Downtown they roam around after the convention events and maybe have dinner, maybe see a movie and then go to bed. I believe we should allow the option of playing poker for those conventioneers that choose to do so. Card games have grown more popular with celebrity poker on television.  I believe that a card club Downtown adjacent to the Convention Center would bring increased revenues since I believe they would have increased customers. The city would have new net revenues that could be used to lower our deficit.

There are some who find gambling immoral. However, not everyone finds gambling immoral; therefore, its important that we keep in mind that gambling is legal, is a pastime that both women and men can equally participate in, and gambling gives the city a significant amount of revenue each year. We already have a well policed Downtown and the card club could and would contribute to Downtown policing since it pays $2 million for police today.

Some may worry that there will be some Atlantic City down-on-their-luck folks roaming Downtown. If that did occur, is that any worse then today’s situation of homeless individuals and drug dealers from the East Bay that are Downtown today? Is it any worse then the two people who I came upon Friday night on South 2nd Street that had been stabbed multiple times in the SOFA district? Gambling will continue regardless of strong opinions, just like the legal consumption of alcohol. One only needs a web browser to play internet poker, or one can drive to one of California’s 60 Indian casino’s, Lake Tahoe, Reno, Las Vegas or simply go to friends’ homes and play cards.

I was asked, why not allow a card club in Willow Glen?  My answer was “because Willow Glen does not have a convention center and seven hotels.” The publicly funded Downtown is for everyone.

Why not allow a popular legal business to move next to the convention center and allow out-of-town visitors to spend their money in San Jose? We collect money from visitors all the time with the Transit Occupancy Tax (Hotel Tax), Airport Fees, Rental Car fees,etc….For local customers who choose to gamble, they would bring more revenue to the City by utilizing the parking garages.

What are your thoughts about moving the legal card clubs back to the Downtown where they originated?

Last week at the Rules committee, there was a standing- room-only crowd to support our request to use $1.9 million to fund the citywide school crossing guard program on a temporary basis (three fiscal years) out of the $9 million the City receives from the tobacco settlement monies.

The reasoning for this request is that the 60-year-old crossing guard program should not be eliminated, as has been suggested, to balance the budget.

This issue brought out five school superintendents, two principals, three elected board trustees, crossing guards, police personnel, and numerous parents from neighborhoods such as Almaden Valley, Cambrian and Santa Teresa.

These supporters spoke in favor of our request, and the need to make hard choices, for nearly a hour. The Franklin-McKinley Superintendent shared that crossing guards were more then people trained to assist pedestrians crossing busy streets; he stated that crossing guards are watchful eyes for the children when it comes to outside influences. He continued by explaining that he is on the Mayor’s Gang Task Force, and that crossing guards look out for children as they walk to school to make sure they are not approached by gang members.  Definitely a good point that pertains to our entire city, but especially the greater Downtown neighborhoods and the East Side. There will be more to come on this issue so stay tuned.

On another note, the council accepted the mid-year budget cuts last Tuesday. We were short $9 million—which is the same amount as the HNVF/tobacco money. Items that will directly affect service to taxpayers that took the axe included proposals to eliminate all money from the traffic-calming budget, to start turning off street lights in non residential areas, to reduce grants to fix homeowners sidewalks, and to eliminate the street maintenance and repair reserve fund.

Jennifer Maguire, the City’s budget director, shared that the city is forecasting that we will be short an additional $6 million on revenues, which could push our budget deficit as high as $71 million by June. The big number comes out in March when we get an update on our sales tax revenue.

The same meeting also discussed the results from the citywide survey which was conducted by a consultant that included 500 San Jose residents. Half of those surveyed were “likely voters” and the other half were picked from a random computer-generated list.  I asked that we try to expand the survey to 1,000 residents to make it a bit broader, since the cost of expanding the survey is incremental.  Also, when we are asking questions about the city I think we should only ask likely voters since they actually took the time to vote.

At least two-thirds of residents found the following potential reductions in city spending “somewhat” or “completely” acceptable to cut:
• Reducing the size of pay increases for city employees (79 percent)
• Reducing funds for recruiting, training and recognizing city employees (73 percent)
• Reducing branch library hours by one day per week (70 percent)
• Closing some city pools and aquatics centers (67 percent)
• Reducing maintenance of city buildings (67 percent)
• Reducing the size of benefit packages provided by city employees (66 percent)

On raising revenue:
• 78 percent supported selling old City Hall
• 76 percent supported selling advertising on city owned property
• 73 percent supported selling city owned golf courses
• 60 percent supported selling the Hayes Mansion.

Do these results match your opinions?

Coming before the Rules Committee on Wednesday, Feb. 11 at 2 PM in Room 118 is a memo regarding the 64 year-old crossing guard program. In a nutshell, the memo asks that the City of San Jose use $1.9 million from the $9 million tobacco settlement monies (which the City receives every fiscal year from the tobacco industry and will receive for the next 25 years) to fund the crossing guard program on a temporary basis (for three fiscal years) to ensure that the program stays intact despite our massive $65 million deficit. After three years, our economy ideally should improve and the funding for the crossing guard program can be re-evaluated.

The City began receiving the tobacco settlement monies in 2000; before Sept. 11, 2001, and before the recent collapse of the economy. Instead of using these additional funds for core city services, as all other municipalities did, the City set up the Healthy Neighborhood Venture Fund (HNVF).

It’s not uncommon for government to start new projects, or create new government jobs with “extra money” that it has. However, my bet is that if people got to vote whether government was to save money or start “new projects” with “extra money” that the people would vote to save money.

There are three groups that are currently funded “off the top” from the HNVF fund. We spend more than $900,000 on staff to manage the HNVF (please note that this amount equates to between six and seven full-time police officers, or almost enough to open all neighborhood libraries on Sunday), $2 million on children’s health insurance, and about $2 million on homework centers. After these groups are funded, there is about $4 million left for the HNVF competitive process.

It’s important to note that besides these three groups, there is no other entity or group that is guaranteed funding from the HNVF.  Groups need to reapply for HNVF funding every year. Therefore, using $1.9 million for crossing guards does not displace any group nor does using some of the HNVF monies eliminate anyone’s job. In fact, if the City of San Jose used $1.9 for crossing guards out of the $4 million, the HNVF would still have more than $2 million left for its competitive process.

Also important to note: The City of San Jose gives approximately $30 million to non-profits every fiscal year, as reported by the city auditor in December 2008.  I believe the City is doing a very good job of funding non-profits.
Members of some non-profit groups have said that the crossing guard program should be paid for by Parent Teacher Associations, or that the schools should fund the crossing guard program. I think these statements are out of touch. The crossing guard program has been under the City of San Jose Police Department since 1945; the HNVF, since 2000. Crossing guards keep our children safe on city streets. In fact when the residents of San Jose were polled in a citywide survey and asked if they wanted the crossing guard program cut, 65 perent said “totally unacceptable.” When the same residents were asked if they supported reducing the amount of money the city gives to non-profits; 62 percent said totally acceptable.

These are harsh economic times where we have to make hard choices, as you and your family do. Therefore, I support tapping the HNVF fund for $1.9 (on a temporary basis) to fund our 64-year-old crossing guard program which leaves over $2 million for HNVF. This proposal does not fire anyone and keeps part-time crossing guards employed and our kids safe on busy streets.