By Steven Tavares.
Hayward is forecasting a significant bump in revenue in a mid-year budget adjustment report to be presented to the City Council this Tuesday. On the heels of increased real estate activity in Hayward, the city’s finance director expects $4.8 million in additional revenue this fiscal year. The report, however, attempts to temper enthusiasm, noting its economic resurgence may be an anomaly.
In March, the City Council unilaterally imposed a five percent wage cut on nearly 300 city employees, claiming its financial future is uncertain without the wage cuts. The employees have been without a contract for nearly a year.
“The economic news indicates a slow national economic recovery, and the City of Hayward is beginning to see glimmers of economic improvement. Sales tax revenues are improving and the real estate market is once again seeing increased activity, with increases in valuations from recent past years,” said the report compiled by Hayward Finance Director Tracy Vesely and only offered for public review a day before Tuesday night’s meeting.
In addition, Vesely says the 11 percent increase in the Real Property Transfer Tax revenue “is a reflection of increased real estate sales activity and housing prices in the Hayward market.” However, the report speculates whether the additional revenue from the sale of homes in Hayward will continue. The report notes revenues from the tax have been “highly volatile” in years past.
For instance, property transfer taxes dropped from a high in 2006 of $10 million to $3.8 million four years later, said the report. However, the significant drop in revenue occurred during the height of the Great Recession and also affected other communities, as well.
Mid-year adjustments to expenditures have also risen to $5.7 million, or 4.5 percent, said the finance report. The adjustments include an additional $1 million in payments owed to the city’s medical retirement employee benefits fund. Previously, Hayward had not budgeted its minimum annual payment to the fund.
Hayward expects to see over $1.1 million in cost savings from labor contracts this year, or, what it labelled “concessions.” However, the recent contract imposition occurred too late in the budget year to attain full savings, said the report. It now only expects savings of $750,000 this fiscal year. In addition, a $3.46 million deficit is projected by the finance department next fiscal year beginning in July.