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2021 Year End Budget Report

Fiscal Year 2021 ended on Speter 30, 2021. The city ended the period with a surplus of 4.3 million dollars in revenue and another 2.5 million saved on expenditures.

Illustrated by Melody Zhang


By Daniel Gong
 

Revenues in fiscal year 2021 totaled $238.2 million, $4.3 million more than the $233.9 million that was predicted in May 2021. Of this $4.3 million surplus, almost $3 million came from a surplus of sales tax revenue. Furthermore, Fremont saved $2.5 million in the expected spending in the 2021 fiscal year. Of the $2.5 million, $1 million came from savings in police expenditure, and $900,000 came from savings in fire station expenditure. The increased income and expenditure savings resulted in an ending unreserved balance of $5.8 million dollars, which is essentially extra budget for the city to spend as it sees fit.


Of the $5.8 million dollars, Fremont plans to spend $600,000 for public radio encryption (this is to protect crucial public safety information from being leaked via radio transmissions). $4.5 million on the Budget Uncertainty Reserve, and $700,000 on the Capital Improvement Fund.


The Budget Uncertainty Reserve, as its name suggests, is money the city is reserving in preparation for any circumstance of financial uncertainty. For example, the city depleted a large part of the fund during the 2020 COVID-19 pandemic, and at the start of 2021, the fund decreased from $8.3 million to $5.5 million. However, with the planned $4.5 million investment in the fund, the city is planning to push the fund over the $8.3 million pre-pandemic level and even up to $10 million. As for the Capital Improvement Fund, it is reserved to support infrastructure projects that are currently reliant on the Capital Improvements Program.


Finally, in the budget report, the city addresses the encumbrance projects that carry into 2022. Encumbrance projects, projects that the city is committed to but has not paid for yet, add up to an expense of $22.5 million, which must be paid for in 2022. In the financial report, the city discusses increasing revenues through grants and donations that will support these projects. For instance, the Federal Emergency Rental Assistance Program will grant over $7 million in revenue. Other sources will provide an additional $1.5 million in funding for these projects.

 
Increase in Sales Tax:

Sales taxes rose from 9.25% to 10.25%, which makes Fremont tied for second place in terms of highest sales tax in the United States. This tax raise can be attributed to two tax hikes that were passed in 2020: Measure C, which raised sales tax by 0.5% for 20 years to raise additional funding for the Children’s Health and Child Care for Alameda Fund, and Measure W, a 0.5% sales tax increase for 10 years to combat homelessness. Measure W, which was passed after the pandemic, passed with a margin of only 0.09%. On the other hand, Measure C, which passed March 4, 2020, had a much larger passing margin, as this was before the pandemic worsened financial issues. These two measures both took effect in July 2021, resulting in a large boost in sales tax revenue.


It is important to note that sales tax is considered regressive taxation in that it disproportionately affects low-income households.

 
Police Expenditure:

In 2021, Fremont decided to remove overtime pay for the police, as well as remove many part time jobs that were funded by the police budget. Since around 6% of the police budget was dedicated to overtime pay, saving 6% of the roughly $20 million police budget would add up to around $1 million. However, in the 2022 budget planning report, Fremont has reported that it wishes to reinstate the overtime budget as well as increase part-time police station jobs.




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