City Budgets Straining Under Economic Pressure

Mateen Kaul — Wed, 19 Nov 2008 00:59:04 +0000

By Mateen Kaul –

NEWARK – In a public forum Monday night, the city managers of Fremont, Newark and Union City detailed the stresses on their budgets because of falling tax revenues and the state budget crisis.

(Right to Left) Larry Cheeves, city manager of Union City, John Becker, city manager of Newark, Fred Diaz, city manager of Fremont, and Dominic Dutra, moderator, at a public forum in Newark on Nov. 17. Photo by Mateen Kaul

The city managers opened the forum with brief presentations showing how they were struggling to balance their budgets. All three have implemented belt-tightening measures and hiring freezes to try and trim expenses.

Fred Diaz, Fremont city manager, said the economic situation was so dire, it could be considered a “catastrophic emergency,” adding that the city of Fremont could conceivably dip into its $22 million fund reserved for disasters if the situation worsened. “What’s the use of all that money lying around if the salaries of fire and police officers are not getting paid?” he said.

The managers said the three cities’ main sources of revenue are property taxes and sales taxes.

Newark City Manager John Becker said the cities hire outside consultants to track sales tax from quarter to quarter, and it goes up and down with the economy. Property tax is usually slower to react, and has not gone down yet in the Tri-Cities area, the city managers said.

Diaz said the affects of the economic slowdown on buying habits would become clear in February, when sales figures for the Christmas season come in. The real affect of the mortgage crisis would not be seen in property tax until next October, he said. “I’m not optimistic,” he said, about the likely affect on city budgets.

Larry Cheeves, the city manager of Union City, said it was harder for a city government to cut expenses during times of economic hardship, compared to a private company. During a downturn, demand for a company’s product falls and so it could cut jobs and expenses, but demand for city services grows, he said.

The cities mainly spend money on fire and police services. Fremont spends 71% of its operating budget on fire and police, and Newark spends 61%. Figures from Union City were unavailable at the meeting.

Dominic Dutra, a former Fremont Council member and moderator for the evening, asked the panel what they thought of the 3 percent at 50 benefit, which allows officers to retire at the age of 50 with a pension equivalent to three times their number of years in the job. An officer with 30 years of service would thus be able to retire with a pension equal to 90 percent of his or her salary.

Becker said it was a big problem, but it’s one the cities could do little about since it was now standard in California. Not giving the benefit would put them at a competitive disadvantage when hiring police and fire officers.

However, the city managers said Fremont, Newark and Union City were not in the same danger as some other cities in Northern California, like Vallejo, which spent 80 percent of its budget on fire and police salaries. That city filed for bankruptcy protection in May in the face of falling property tax revenue and rising employee costs.

The state budget crisis has also affected the cities. Fremont, for example, lost $2.3 million in redevelopment funds due to state budget cuts, and Union City lost $1.6 million.

Dutra said the state budget had a structural deficit of $12 billion this year and it was expected to grow to $28 billion next year. The city managers felt there any solution to the deficit would require raised taxes and reduced spending.

In sour economy, local immigrants sending fewer remittances to relatives back home

tylersipe — Sun, 19 Oct 2008 23:31:58 +0000

Story and photos by Tyler Sipe

The tradition of sending funds back home, called remittances, is a longstanding tradition among immigrants living abroad in the U.S. – including in Fremont.

However, faced with a domestic and global economic downturn, foreign-born immigrants have been forced to tighten their wallets and decrease the amount of money they send back to friends and family in their native countries.

Fremont resident Carmen Garcia, 49, departs Ramirez Market in Fremont's Centerville District. Garcia said because of the economy, she sends her son, who lives in Mexico, about $200 less a month.

Fremont resident Carmen Garcia, 49, works full-time as a house cleaner. Up until recently, she depended on supplemental income earned at a second job at a local banquet hall where she assisted with wedding celebrations and parties.

Garcia said last year she sent about $500 a month to her son Ramon Garcia, 25, who lives in Tepic, Mexico. Now, she sends about $300 a month, which Ramon uses for rent, food and school.

“There’s been little business, little work for me,” Garcia said. “So less and less money for my son.”

The economic crisis in the U.S. has hit Mexico particularly hard, a country where remittances drive consumer spending and make up the second-largest source of foreign income, after oil exports, according to the Bank of Mexico. In 2007 alone, expatriates sent more than $24 billion back home to friends and family in Mexico.

On Oct. 1, the Bank of Mexico said remittances dropped to their lowest level in 13 years, falling from 1.76 billion in January 2007 to $1.65 billion in January of this year, as cited by the Dallas Morning News.

A few days after that report was released, Leslie Corona thumbed through the pages of a Latina Magazine at Ramirez Market in Fremont’s Centerville District, where she is manager.

Corona said foot traffic at the four-year-old store, which sells Mexican specialty products, have slowed considerably. The store also provides remittance services; Corona said money transfers have declined about 35 percent from this time last year.

“It hurts us a lot,” Corona said. “Everywhere it’s bad, everybody’s suffering.”

Corona said anecdotally, many Ramirez Market customers have lost their jobs in the service industry like car washes, landscaping, construction and painting. She said others have lost their homes in the subprime mortgage crisis. And even a few, with no prospects of work, have returned to Mexico.

However, not all countries are seeing decreases in the flow of remittances.

In Pakistan, remittances grew by more than $117 million between 2007 and 2008, according to the State Bank of Pakistan and reported in the Pakistan newspaper The Nation.

Expatriates living in the U.S. accounted for about $151.45 million of the total remittances in July and August this year, according to the State Bank of Pakistan.

However, there is no new data taking into account the recent global implosion of the financial sector, which has affected the amount of money Fremont restaurant owner and Pakistani native C.H. Saleem sends back to his siblings living in Lahore.

“I have to support my family here and support family back in Pakistan,” said Saleem, who co-owns the Indian and Pakistani cuisine Bismillah Restaurant in the Centerville Business District. “They’re (relatives in Pakistan) not getting enough stuff, enough food.”

Saleem said business at the restaurant has dropped 40 percent since the same time last year; he’s had to cut two lunchtime employees.

As a result, Saleem has reduced how much money he sends to family back home in Pakistan from about $500 a month to about $200 a month.

Philippine National Bank Customer Relations Assistant Mitchie DeCastro speaks to a customer about the exchange rate between the U.S. and the Philippines at the PNB branch in Union City. PNB has seen a 20 percent decrease in business since 2006 because of the sour economy.

“It’s been a struggle lately, and the pressures on me are high,” said Saleem, gazing at his empty restaurant at lunchtime.

“In the Philippines, it’s really bad,” said Mitchie DeCastro, a customer relations assistant at the Philippine National Bank in Fremont. She was busy assisting a small line of customers waiting to transfer funds to relatives in the Philippines.

DeCastro estimates the PNB Union City branch office has seen a 20 percent decrease in remittance transfers since 2006.

“A lot of people rely on money from their relatives, and it will probably get worse for them.”

Despite the two-year slowdown of customers at the Union City PNB, remittances overall to the Philippines increased by more than 14 percent in the first five months of 2008, compared to the same time in 2007, according to the Embassy of the Republic of the Philippines.

However, the Philippine Overseas Employment Administration contributes the remittance increase to a 39.5 percent rise in the number of Filipinos employed globally.

Outside of the PNB, Danny Galang, 59, said he hasn’t decreased the amount of money he sends to friends and family in the Philippines, which he estimates to be around $8,000 annually.

“I want to send less, but I can’t,” said Galang, who works for the city of Hayward. “We’re kind of obligated to help out relatives and friends.

“My priorities are reset. There is less money coming in from work so I don’t go to the movies now, but I still send (money) to the Philippines.”

The 510 Report » Union City

City Budgets Straining Under Economic Pressure

In sour economy, local immigrants sending fewer remittances to relatives back home