The city of Berkeley issued a hiring freeze Monday to reduce the negative impacts of projected revenue losses due to the coronavirus pandemic.
The city expects a 12% drop in total revenues, according to Stefan Elgstrand, spokesperson for Mayor Jesse Arreguín. Job offers and scheduled interviews made after Monday are suspended, unless the city manager grants an exception, according to a staff report from the city’s Budget and Finance Policy Committee.
The city is focused on continuing essential functions and preventing strain on limited resources, according to the staff report.
“The heart of our report was to make sure that there are wise fiscal decisions made about the overall budget,” said city auditor Jenny Wong.
The hiring freeze, initiated by the city manager, is intended to help reduce the impact of citywide losses on revenue. These include drops in sales tax, property tax, transient occupancy tax and short-term rentals, according to Elgstrand.
There will be less revenue for the next fiscal year budget and the city will need to make expenditure cuts, according to Wong. The Budget and Finance Policy Committee is looking to identify where to make these cuts, according to Wong.
“The City Council will have to consider what budgetary actions to take based on this information during discussions on the budget update, which will be finalized in June,” Elgstrand said in an email.
Work considered an “essential function” is excluded from the hiring freeze, according to the staff report. This includes jobs that are necessary in responding to the pandemic and protecting the general welfare and safety of Berkeley residents.
The city has $36 million available in a “rainy day fund,” according to Elgstrand. He added that although the funds exist, the city will still have to make difficult decisions regarding the services it is able to provide to the community.
UC Berkeley also issued a hiring freeze April 1 to address budget challenges caused by the pandemic and shelter-in-place orders, according to UC Berkeley economics professor Martha Olney. The campus is facing losses in revenue from housing and dining contract cancellations, as well as projected revenue losses due to uncertainty about enrollment in the fall, according to a message from Chancellor Carol Christ and Executive Vice Chancellor and Provost Paul Alivisatos.
Olney added that the campus’s hiring freeze is cyclical and that the current deficit will end once the economy returns to normalcy. This could, however, take about two years, according to Olney.
“There needs to be a focus on the needs of the community and prioritizing health, safety and values of the city,” Wong said.