Just as it did at the national and state level, the COVID-19 pandemic has wreaked economic havoc on the fiscal conditions of Berkeley, Albany, and Emeryville. Beginning with a sharp decline in economic activity last March, the past year has brought surging unemployment, shuttered local businesses, and massive budget shortfalls to all three cities. These circumstances have had a disproportionate impact on underserved communities — and have forced local leaders to make difficult trade-offs around city services.
During the summer, the city of Berkeley struggled to close a nearly $40 million shortfall in its budget for the 2020-21 fiscal year, ultimately opting to reduce funding for the Berkeley Police Department. The city also asked its departments to put off non-urgent spending for future years, with the goal of avoiding mass-layoffs of city employees. While some departments were successful in identifying sufficient spending that could be deferred, others — including Berkeley’s fire department — were not.
Berkeley also saw a tripling of its unemployment rate, with thousands of workers losing their jobs or having their hours reduced. At the same time, individual and commercial tenants alike found themselves unable to meet rent payments. In response, the Berkeley City Council temporarily banned evictions, becoming one of the first cities in the state to do so.
The city of Berkeley also launched the Berkeley Relief Fund, which provided emergency grants to struggling tenants and small businesses impacted by the pandemic. Economic aid projects like the Relief Fund contributed to the city’s budget shortfalls, as emergency expenditures widened the gap between spending and lowered revenues.
While the pandemic has led to across-the-board declines in economic activity and city revenues, it has had varying effects on Berkeley, Albany, and Emeryville. While Berkeley experienced a budget shortfall, Emeryville — despite a $12 million fall in revenue — was able to avoid this challenge by drawing on reserves and one-time funds. While much of Berkeley’s revenue loss was the result of the general economic downturn, Emeryville’s loss was attributable to fewer hotel stays within the city. Emeryville’s budget relies heavily on transient occupancy taxes, or taxes on hotel room fees, which fell due to decreased travel and pandemic-related lockdowns.
According to Emeryville city councilmember Christian Patz, the city is attempting to direct resources towards its most vulnerable populations: housing and food-insecure individuals and families, as well as people of color.
“The impact of COVID-19 has been disproportionately hard on these communities,” Patz said. “We have increased our funding for in-need groups, such as the rent relief funds we allocated, and we will be allocating our Measure C funds for low-income housing programs. As for social services, we are doing all we can not to impact those budgets.”
Emeryville city councilmember John J. Bauters explained that the city has chosen to focus its attention on those directly affected by the pandemic, including vulnerable groups.
“The council took $400,000 from our disaster relief fund to provide emergency rental assistance to very low-income families during COVID-19, and we preserved housing for close to 100 at-risk families,” Bauters said. “We also put over $100,000 into a fund that the county matched, allowing us to help minority-owned businesses with costs. I am proud of the work we have done to prioritize protecting the vulnerable members of our community.”
According to former Albany Mayor Nick Pilch, the city of Albany has suffered less severe revenue declines than larger Bay Area cities like Berkeley. This is because its revenue base is less reliant on business activity and sales taxes (which were significantly reduced due to pandemic closures), and is instead more dependent upon property taxes — which remained stable during the pandemic. City spending also decreased over the past year, as recreational programs and city-run buildings were required to shut down. This, in turn, allowed Albany to save additional funds in order to cover decreased revenues.
“The pandemic has likely had the greatest effect on the least privileged among us,” Pilch said. “For this reason, we have prioritized social services and upped our efforts to house those experiencing homelessness.”
All League News