Rec. and Park eyes Open Space Funds to fill deficit

By Carol Dimmick

Top officials at the SF Recreation and Park Department have decided to close a gaping hole in their budget for the upcoming fiscal year by raising program fees and dipping into funds that could have been used to acquire open space properties for the City.

"This budget situation is changing faster than anyone can keep track of. The good news is that there will be no service cuts. The bad news is that to avoid this we will have to use funding sources available to open space," said Elizabeth Goldstein, general manager of the SF Recreation and Park Department.

Goldstein's remarks came at a May 7 meeting of the Park, Recreation and Open Space Advisory Committee (PROSAC) where she told board members that she is taking a gamble by putting off staff reductions in favor of hiking program fees and using $900,000 from the Open Space Fund to help close the budget gap.

"We are banking on an improvement for next year. The big risk is if the economy doesn't recover, we may be postponing the inevitable," she said.

But the situation continues to look grim, with Gov. Gray Davis's announcement in mid-May that California's 58 counties could expect an additional $1 billion loss in state revenue for the upcoming fiscal year. City officials are still analyzing how this latest bit of bad news will affect the city's spiraling budget deficit.

The governor's announcement comes on top of a $175 million budget deficit the City was already facing for the 2002-2003 fiscal year, due to an economic slowdown and the terrorist attacks Sept. 11.

To offset the $175 million shortfall, SF Mayor Willie Brown asked all city department heads months ago to cut their budgets by 10 percent by the June 3 budget submission deadline. This translates into a $4.3 million loss in revenue for the Rec. and Park Department.

In addition, the mayor asked the Rec. and Park Department to reduce its reliance on city dollars for the remainder of the current fiscal year by $3.5 million.

The bad news hit the department just as it was recovering from years of budget cuts and low employee morale and while it is struggling to implement a $400 million capital improvement plan.

To make good on her pledge to hold the line on services, Goldstein announced that fees for day camps will be increased to help offset the budget shortfall. Fees for one-day-a-week camps will jump from $35 to $85. The department hopes to bring in an additional $200,000 with the increase.

Goldstein also announced that by reducing the operating costs at the Union Square parking garage and using downtown park funds, the department should realize additional savings of $1.5 million.

Use of Open Space Funds Sets "Risky" Precedent

The biggest surprise in the plan to plug the budget gap was Goldstein's decision to use almost $1 million in unallocated surplus property taxes from the Open Space Fund to help meet the mayor's budget mandate. Considered a sacred cow by department watchdogs, Goldstein acknowledged she is setting a precedent by using the funds to balance the budget.

According to figures supplied by department officials, the Open Space Fund has a balance this fiscal year of $4.1 million. That money includes $2.4 million in the bank, an additional $1.1 million anticipated by July 1 due to financial growth and $600,000 in additional property taxes, according to the city's financial estimates.

Goldstein told PROSAC board members at the May meeting that she made the decision to hold off on staff reductions after listening to concerns raised by residents in a series of neighborhood budget meetings. She said it was a tough decision to make.

"Is it better to close facilities or mow the lawns less, or is it better to make this compromise? In the end I decided that I wanted to keep providing service. That's what we are here for," she said.

According to Mary King Gorwky, director of finance for the department, $1 million in Open Space Funds will be spent to pay for various expenses, including telephone and garbage bills and automobile maintenance. In addition, salaries and benefits for seven and one-half full-time employees will be paid with the fund.

While Goldstein is not prohibited from using the funds to cover operating expenses, she told board members there is a risk that once she commits the funds it will be difficult to convince city officials to absorb those costs in future budgets.

"We will have to make a strong case for these funds to the Board of Supervisors in the future," Goldstein warned.

PROSAC Board Members Support Use of Funds To Close Budget Gap

The majority of board members at the May 7 meeting voiced agreement with Goldstein's decision to use Open Space Funds to avoid service cuts.

A few members, including Isabel Wade, president of PROSAC, said Goldstein was setting a precedent, by using the funds, that might be hard to resist in the future.

"Will there be a temptation to use more Open Space Funds in the future?" Wade asked.

"Of course, that is the concern I share ... but these are monies which had been saved for a rainy day," Goldstein responded.

Another board member asked if the department intended to repay the $1 million and was told by Goldstein that there was an intent to repay it, but that there is no mandate.

Goldstein also confirmed the fund would lose anticipated interest payments due to the lack of funds in the Open Space Fund account.