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Business Closures Mean $1.6 Million Loss For City

City staff anticipate that next fiscal year's operational budget will total around $31.9 million.

While a voter-approved utility users tax has brought in more revenue than anticipated, city officials are anticipating a shortfall of $1.6 million for the next fiscal year caused by businesses leaving town.

City Manager John Becker announced Thursday that the most recent and most detrimental loss for Newark is the planned departure of the Staples Fulfillment Warehouse located at 6601 Overlake Place.

“They do not employ a lot of people, but that closure will create a huge loss for the city,” Becker said. “We’re still getting a handle on what the complete impact will be, but it’s not going to be good for us.”

Becker announced Staples’ future closure at a special budget workshop held Thursday night. He told City Council that the news was “completely unexpected” and was brought forth to city staff on Jan. 16.

“It was strictly a business decision on their part, and, unfortunately, we are on the short end,” Becker said.

The shutdown of the warehouse, along with the soon departure of Target and the last year, total a $1.6 milion loss for Newark.

City officials said because of these business losses, they anticipate that Newark’s operational budget will be $31.9 million in 2012-13, compared with the forecasted operational budget of $33.5 million for 2011-12.

The current budget for 2011-12 is estimated at $33.2 million.

Still, officials told councilmembers that they are optimistic, partly due to the fact that Measure U  – a 3.5 percent utility users tax that has restored numerous city services – has generated more funds than anticipated.

Officials said Measure U is expected to bring in approximately $3 million for fiscal year 2011-12, which is $700,000 more than expected.

But because of expected budget shortfalls, city staff may be asking councilmembers to consider not allocating a specific total toward its Fiscal Uncertainty Fund in future fiscal years, according to Susie Woodstock, administrative services director.

In May, City Council approved budget amendments that apportioned $250,000 toward the Fiscal Uncertainty Fund annually for the five-year duration of Measure U, in order to build it back up to $1.25 million. Since 2008, the city used $5 million from the Fiscal Uncertainty Fund. 

Instead, city staff is proposing that at the end of each fiscal year, any extra revenue be transferred to the Fiscal Uncertainty Fund, and Becker said that is a positive for the city.

“The budget for the next two-year period looks positive. We’ll be able to build up our reserves,” Becker said. “We’re anticipating surpluses. … It’s really Measure U that’s really helping us.”

No action was made during the workshop and Becker said a document that will outline a complete five-year forecast will be presented to the council in April and that another budget work session is planned for May.

Albert Rubio February 26, 2012 at 04:00 AM
I agree with you Jerry. The part that bothers me is that no one who argues with me will bother to read a single book to improve their understanding or challenge their own views by reading online. 1. They either are too smug/comfortable in their notions to bother 2.. Or they mistrust evidence to the contrary because it contradicts their socialistic beliefs. I see it in people who are very partisan, It's like a defensive religious position. i would love to see a basic economics discussion or see/give such a workshop in Newark. I'm convinced that if 10% of the voters read 'Economics In One Lesson' by Hazlitt, it would be a game changer in any city.
HashCentral February 27, 2012 at 08:58 PM
I wonder about Newarks association with CalPERS. The 3% at 50 can lead to future issues with CalPERS being over inflated. I'm not saying benefits aren't in order but some officers can retire under this program at at age 50 and easily make $70,000-$100,000 per year for the rest of their lives. Over time this can/will affect city resources especially when the economy wavers as it has over the past 5 years. I'm just saying its a point for discussion.
Albert Rubio February 28, 2012 at 01:11 AM
Benefits are likely NOT in order. I'm sure the problem pervades even the local level. The issue is today's issue, there is no more tomorrow about it. This is part of the current US economic crisis. Take a look at Greece, Spain, Italy, Portugal etc. as well. ‎"On average, the federal government spends 48% more on benefits for its employees than private employers do." http://caffertyfile.blogs.cnn.com/2012/01/31/do-federal-workers-deserve-better-benefits-and-higher-salaries-than-private-sector-employees/ "Do federal workers deserve better benefits and higher salaries than private sector employees?"
Nadja Adolf March 11, 2012 at 08:57 AM
As long as Newark focuses on high-density (read lower income) housing, has rotten schools, and has a utility tax that makes the city an expensive bet for business, we can forget having anything other than Dollar Stores and second hand shops. Retail goes to where people have income to spend. Service workers don't have that income. Low income people by definition don't have that income. Quality retail knows that people don't have money in Newark - and our reputation is such that people from outside don't wish to come here. Our city is oblivious to the impact that the homeless beggars defacating alongside Hwy 84 has on out of town visitors. Or the beggars lurking around Safeway. Or the transients loitering around the NewPark Mall and cruising the parking lots. They think that building tenements on the swamp is going to be a new Santana Row when it will really be a new Cabrini Green. Look it up.

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