Last week, Mayor Reed held his State of the City Address. And I think the mayor was forthright by clearing stating that the City of San Jose has a large deficit, and that cuts to services and layoffs are before us. In fact, I believe that the current $60-65 million budget deficit will worsen and grow to $70-75 million.

Just look at what is happening. Consumer spending is down, which affects sales tax revenues. Fewer properties are selling, which affects the conveyance tax. And property values are plummeting, which will affect property tax revenues for the next two or three years.

The deficit is larger then the entire Parks, Recreation and Neighborhood Services budget and more then twice the library budget.

Last week, I attended the library commission where the impact of the budget deficit was discussed.  All departments except public safety are being asked to find 22 percent of their budgets to cut. For the library, this means $5.3 million out of an approximate $28 million budget.

One idea that was raised at the meeting and quickly approved by the library commission is to double the fine for late books and videos. The fines would go from 25 cents a day to 50 cents a day and the maximum fine would increase to $20. This could raise $800,000. (Assuming library patrons do not change their behavior and still return their books late. Inevitably, if a fee or fine is increased it will change behavior and thus less fines may occur.)

Nonetheless, even with this fee increase, it still leaves the Library Director $4.5 million to cut.

Last year, the library spent around $3.5 million on books, magazines, and videos (of which $500,000 is spent on non-English items). The materials budget fluctuates each year based on revenue that is dependent on you and I buying and selling homes and a parcel tax on homeowners.

If the City no longer bought books, we would still be$1 million short.  And this option would not even close the gap, since the money for books is somewhat restricted and cannot be spent on personnel or other things besides materials.

The other option on the table is to reduce hours—actually, reduce days—for the neighborhood branch libraries.  The thought is to have those libraries open only three days a week, with the various branch libraries rotating days. For example, the Almaden library would be open Monday, Tuesday and Wednesday and closed the rest of the week. Then the Cambrian Library would be open Thursday, Friday and Saturday.

Today our neighborhood branch libraries are open 5.5 days a week. Incidentally, they have seen increasing book circulation, and more residents using the computer services as unemployment rises.

Please note that the three city-owned golf courses have not cut their hours, and are open all week in case you want to take your kids there to do their homework or read their library books.

This is just one example of how you may be affected starting in July when the council adopts a budget in June.

Last week, I attended in the Santa Clara County Cities Association. This association has a representative from every city in Santa Clara County. In my view, a good portion of the time is spent uniting all the cities to advocate state and federal policy- makers on policies or bills that help Santa Clara county cities.  At this meeting, the Recycling and Waste Reduction Commission (RWRC) of Santa Clara County presented the concept of banning plastic bags. The idea is to come up with a policy that could be adopted uniformly through the entire county. But each city would have to adopt and implement the policy. The hope is that each city would adopt it as is or with limited changes, so that the entire county would be on the same page by April 22nd of this year (Earth Day).

The representative from Monte Sereno said that city’s council is in favor of it, but later confessed that they actually don’t have commercial stores that would be effected…funny.

So, the problem as you many know, is that plastic bags litter the environment, clog drains, take centuries to decompose and for the most part cannot be recycled. Also, these single-use bags, plastic or paper, require higher consumption of natural resources, generate greenhouse gases, and use petroleum which we as a country typically import from countries that we don’t always trust.

After stakeholder input was completed, the RWRC came up with the idea that both paper and plastic bags would no longer be free. That by charging for single-use bags we would modify the behavior of consumers to instead use a reusable bag. The thought is that under this new policy, if you were to go to a grocery store or retail store and did not have your reusable hemp bag, then you would pay 25 cents for a plastic or paper bag. If you were doing a big shopping spree at the grocery store and needed 12 bags you would only have to pay for the first eight for a maximum charge of $2 per visit. The 25 cents would be split between the store and the government. The store would get five cents and the county or the city would get 20 cents. The 20 cents would go toward enforcement of the new policy. It is not clear whether the county would enforce the implementation or the city. Who do you think would be more or less effective to oversee this new policy, if adopted—cities or the county?  (Personally, I picture Boss Hogg of the show Dukes of Hazzard doing the enforcement).

The 25 cents would essentially be a fee passed on to the consumer which could only be spent on enforcement of the policy since it is a fee and not a general-purpose tax. The average consumer uses 300 bags a year which would be $75. Would $75 change your behavior? Would you carry a large over sized IKEA like bag with you to Valley Fair or Oakridge?

Exemptions would be on produce/fish/poultry/beef or take-out food. Also, people on welfare would be exempt from paying.
I don’t remember ever getting a bag at Costco; they usually just stack everything in the cart or some random odd-shaped cardboard box and then I shove the items all over the car and do 20 trips back and forth between my car and my kitchen.

From my perspective, there is value in a plastic bag after you purchase something. I just used plastic bags to put away all my Christmas lights. I also use them to pick up dog poo. Actually, I keep a couple bags in my car so when I see an irresponsible dog owner who lets their dog poop on someones yard without cleaning it up I pull up and ask them if they need a bag for the gift they just left the resident. So far they all say yes.

My Dad, who grew up during the depression, loves plastic bags to organize all his clutter that he keeps because he does not like to throw things away (you know the type). I can imagine my Dad in the future at the Safeway parking lot selling his extra plastic bags out of his trunk for 10 cents each.

Charging for bags will not end litter. The only way to solve litter is by having Singapore-style laws where the penalties are high enough to discourage deviant behavior even when no one is looking. In the end, if I find value in the plastic bag then I am OK with paying for it. What about you? We are still in the outreach phase so what do you think?

2008 was certainly a roller-coaster ride. From the rise and fall of oil to the housing market collapse and finally the recession. 2009 will be a challenging year for each and every one one of us.

The City of San Jose will have a newer City Council. What I mean by newer is that six out of 11 members will have two years experience or less on the council, including Pete Constant, Sam Liccardo, Kansen Chu, Ash Kalra, Rose Herrera and myself.  Councilmembers Herrera and Kalra are the newest members, replacing eight-year veterans Dave Cortese and Forest Williams.

The 2009 San Jose city council will be unique in that four of the 11 members will be under 40. I am not a historian of the San Jose City Council but four under 40 certainly seems to be historic for our council. The under-40 club includes Councilmembers Kalra, Liccardo, Madison Nguyen and myself.

In addition, the council has wide racial diversity, with Chinese, Greek, Indian, Italian, Latina and Vietnamese, among others, represented. Also: Of the 10 council members, the make up is half female and half male.

Some insiders try to size up the council based on their endorsements during their political campaigns, or on whether some council members are labor or chamber players, or on the political left or on the political right. In the end, the 2009 council will need to solve big problems, and in my view will need to pull together solutions for residents of San Jose, and not interest groups.

The council has a full plate in 2009 and the years thereafter. As we work to balance the current $65 million shortfall in the budget. ($65 million is the same amount the City spent on the Hayes Mansion about 10 years ago without voter approval,) We will be working through the ongoing structural deficit, implementing the Green Vision, and making wise land use decisions.

I am looking forward to being part of this new council. Although the future is a bit bleak; I have high hopes that San Jose has good representation in it’s elected officials and will do great work.

The first challenge in front of us is the budget. I hope you plan on attending Mayor Reed’s Neighborhood Priority Setting meeting on Jan. 24, from 9am-noon at City Hall (free parking). It is important that you provide your feedback on how you would like to see the City spend the money it does have, and perhaps on how the City can deliver services differently.

Hope your Christmas and Hanukkah holidays were enjoyable. City Hall is closed from Dec. 24 through Jan. 5 for the annual furlough. Like many people, I am spending time with family and reconnecting with friends. I have known many of my friends since San Jose grammar school in the 1970s and ’80s, so that puts us in the 35-45 age range. Most of my friends are married with children and both parents or partners work. Our discussions usually include catching up and memories of the past. This year, however, our conversations were mostly about the economy.

Many of my friends felt pretty bleak about 2009. Some were hoping that they could fast forward to Christmas 2009 just to get away from the recession. They were pessimistic since they knew that sales results for this quarter were poor and forecasts for next year are down. Also, their own companies (like their customers) are putting off spending. Nearly everyone I’ve spoken to over the holidays have told me their companies did an RIF (reduction in force). Also, they felt more layoffs were coming.

One friend told me that his employer went from 400 employees to 220 over the span of 2008, and come January 2009, they are going to do a 50 percent layoff. The company did not want to lay people off just before the holiday, so they chose to wait till the first week of January. The reason? No orders from customers. And these same customers were poised to do layoffs as well. My friends chatted about not wanting to get laid off since the prospects for a new job are not bright.

One employer went to a four-day week so the company could save money (survive) but keep their talent. When this topic came up, nearly everyone said that they would rather have the four-day-a-week job, making less money, then have to roll the dice on a new job. They also felt that three-day weekends would be relaxing. However, they would need to hold back on discretionary spending to cover their basic expenses. A few thought it better to have 80-85 percent of your salary and an extra day to start interviewing.

Many European companies are switching to a four-day work week. The goal is that companies will be able to reduce their costs (payroll and carbon footprint) and provide an additional rest day. Economic conditions in Europe, exemplified by weak market demands and high levels of productivity, have made this idea more popular. Companies have been able to minimize the number of layoffs with the shortened workweek. However, this involves more working hours per day, but most in Silicon Valley would admit that they already work more then eight hours in a day.  Rumor has it that Cisco, National Semiconductor and Oracle are looking at four-day work weeks.

If your employer asked you in January to switch to four-day work week with a pay cut, would you say yes or hit the road? If you said no: Would you go out and find another job in your industry or career change? If you said yes: Would you enjoy that extra day of free time or be too stressed on making your basic payments? Should government hold back payroll spending during recessions to avoid layoffs and switch to a four-day work week, like the city of Atlanta?

Tomato Thyme is a popular restaurant in my district that operates out of a typical suburban shopping center—with parking in the front and the buildings in the back. Tenants in this shopping center include Safeway, Rite Aid, Bally’s Fitness, Bank, Dry Cleaner and even a Moose Lodge.

Consumers patronize shopping centers like this, but may never ponder who actually owns the land. In some cases the land is owned by one person, and in other cases there are many owners. In this shopping center, there are six different property owners. They each own their specific building and specific parking spaces. The six owners have had a shared parking agreement in place for years that has allowed customers to park wherever they wanted and visit whichever store they choose without being towed.  This parking agreement is expiring in a few months, and renewing it is up to the private property owners.

Tomato Thyme wanted to build a patio in the back of their building with 50 additional seats. So the restaurant hired two lobbyists to assist them in having the City Council change the zoning of the shopping center so that the individual property owners would no longer have a certain number of spaces allotted to their business—thus eliminating the need for an updated parking agreement.

Might seem innocent at first, but when you look deeper, it is really asking the city to use its power of eminent domain to take control of private property. Reminds me of the Tropicana Shopping Center where the city used eminent domain to take land, and in turn was sued. The city lost the court case and paid out millions to the property owners.

I did not want our city to be sued again, as I would rather spend money on public safety and libraries.

The campaign of “Vote Yes on the Patio” was really a smokescreen for a bigger acquisition. The owners of the Tomato Thyme had an option to buy their neighbor, the Moose Lodge. The value of the Moose Lodge, with unlimited parking spaces, (provided the lobbyists could rezone the shopping center) was substantial since the Moose Lodge owned only a handful of parking spaces.

I did not bring up the Moose Lodge on the night of the council vote, because I felt that my memo—supporting a patio—was the goal. Many people whom I have spoken with are happy that the patio was approved, but had no idea about the Moose Lodge and the private property issue the lobbyists were working on.

I gave the Council an example that evening: Lets say you own a house and do not park in your own driveway, since you only have one car. Your next-door neighbor has several cars and asks if he can park in your driveway for free whenever he wants. You say, “no it is my driveway, and I may have future plans for it.” So your neighbor, unhappy with your answer, goes and hires a lobbyist to change the zoning of your house so he can now park in your driveway for free whenever he wants. Sound fair? Well that was the proposal by the restaurant.

When a restaurant wants to add more seats they need to designate where customers will park. So beyond the building of the patio, the city needed to approve where all the new cars would park for the additional 50 patio seats. The onion unraveled as we found Tomato Thyme did not have enough parking for its existing dining room. They own 20 parking spaces which allowed for 50 seats, not their current 119 seats in the dining room.

What a messy situation!

I am supportive of outside dining and like to help small business grow in a way that does not monetarily damage others. Therefore, my memo changed the parking ratio for restaurants in that shopping center to fix Tomato Thyme’s out-of-compliance parking issue. If we did not do this, they would have to reduce the current seating by 69 seats.

The Council also approved the patio with a setback for the neighborhood residents. However, a shared parking agreement for the additional parking spaces, on site or off site, must be in place. Seems fair to have an agreement to use someone’s property.

So things are not always what they appear, even on smaller items on the council agenda.

Should local government respect private property rights, or make exceptions?

Last week, I attended the Valley Transportation Authority (VTA) Policy Advisory Committee at the VTA headquarters on North First Street.  This advisory committee is not the official VTA governing board you hear about, but a committee “underneath” the governing board which has a representative from each city in Santa Clara county.

At this meeting, Joseph T. Smith, the Chief Financial Officer (CFO) of VTA, spoke to the committee about the VTA budget.  As we knew, and he explained further, VTA derives much of its revenue from a sales tax. And because the recession has knocked consumer and corporate spending to the ground, less sales tax revenues are being generated for government bodies like VTA. He is forecasting decreased sales tax revenues in 2009—down 3 percent.

Smith predicted that sales taxes will increase by 5 percent in 2010.  I think the 2010 predictions may be a bit rosy so I will set a date in my BlackBerry two years out to see if he is correct on that forecast. Coincidentally I set another date in my BlackBerry for VTA’s GoLive date on their $3 million plus SAP ERP software upgrade. VTA already spent $30 million on this software, before even starting the current software upgrade.  I believe these type of multi-million dollar technology decisions are problematic, because I believe we should do a better job of managing budgets, and doing a better job of cost avoidance when it comes to technology.

The CFO continued on that 80 percent of the VTA budget is personnel costs. To do that, some people said that perhaps we should take money from the reserve fund. However we, are not sure how much worse the economy may become, so taking funds from reserves may be unwise.

VTA would like to keep its current personnel to maintain services instead of looking at ways to provide services differently. That means we are not going to cut costs, but just spend money.  As a result, Smith told the committee, the plan is to take money from capital funds to fund daily operations.  Capital funds pay for capital projects like the light rail extension to Eastridge or the electrification of Caltrain among many others.  To me, taking money away from the capital projects seems shortsighted.

I am not sure how you feel, but I am leery or taking money from capital funds to pay for operations. What are your thoughts?