Staff reports deficit, council votes to start process on how to spend Chevron settlement funds

The Richmond City Council voted Tuesday to move forward with a public process for spending the city's $550 million settlement with Chevron, after city officials disclosed that Richmond's day-to-day operations ran $9.8 million in the red this year.

The council also rejected a proposal to pause dozens of other projects to free up staff time.

Finance Director Emily Combs told the council that Richmond's core, day-to-day operations ran $9.8 million in the red this fiscal year.

The city is reporting a $40.2 million surplus, but that figure includes $50 million in one-time settlement money that went into the General Fund this year. A separate $3.44 million shortfall is being covered with interest earnings, not the settlement principal.

Combs said the city's financial forecasts have shown operating deficits for several years.

"Regardless of the scenario, for the most part, the city has consistently projected operating deficits in the future years, indicating a long-standing structural imbalance rather than just a single-year issue," Combs said.

Looking back at forecasts from 2024, 2025 and 2026, Combs said, "the structural gap has appeared in every forecast cycle... no matter how the scenarios were modeled."

Under the current pessimistic scenario, the yearly settlement balance could shrink from $48.5 million to $15.4 million by 2029-30.

Vice Mayor Doria Robinson questioned if it was good fiscal policy to balance a deficit with short-term revenue.

"It's never a good fiscal policy to balance a budget with any one-time resources," Combs said.

"So what's the way that you should balance a structural deficit?" Robinson asked.

"By way of pursuing additional revenues or cutting your expenditures," Combs said.

Voters considered a $120 million fire station bond in July. Polling showed 81 percent found it convincing that the city should use the Chevron settlement to pay for fire station upgrades instead of a bond, up from 71 percent in May.

Chevron settlement emerges as city’s ‘plan B’ for fire station upgrades

Richmond City Council voted Tuesday to place a $120 million fire station bond on the November ballot. City officials also said that if voters reject it, the city could fall back on Chevron settlement money to pay for the same upgrades. The admission came only after a councilmember asked directly.

Grandview IndependentSoren Hemmila

Public Works Director Daniel Chavarria told the council the city has about $1.5 billion in infrastructure needs, including fire stations, paving, and the stormwater and sanitary sewer systems.

"We don't even have 550 million dollars for infrastructure only," Chavarria said.

Robinson asked City Manager Shasa Curl why the council had been told there was surplus money to spend on parks and street safety projects in years that staff now says ran deficits.

"If we are supposedly in a deficit, how is there additional funds?" Robinson asked.

"It's a confluence of factors," Curl said. "It's not just one thing that led to where you are today. It's a culmination of decisions."

Curl said the council had approved built-environment improvements beyond what staff recommended and labor agreements larger than what staff had suggested.

"We suggested that the city council consider reducing priorities, and that was not heeded," Curl said.

Later in the meeting, Robinson said she wanted an outside review of the budget numbers.

"We really need another opinion on this matter," Robinson said.

"You'll have one on October 3," Curl replied.

Curl has said she plans to retire once the city finishes renovations at three parks, Boorman, Wendell, and Shields-Reid.

City Manager Curl announces retirement

Sasha Curl has announced she will retire after four years as City Manager and more than 20 years of work with the City of Richmond. The announcement came at the April 21 council meeting when Curl told the council she plans to leave upon the completion of renovation projects at

Grandview IndependentLinda Hemmila

"I don't think that we have all of the information we need," Robinson said.

"I think the council doesn't like the truth and the facts," Curl said. "Instead of accepting that we're leading with integrity, we are being chastised because of the decisions you've made, and that's not fair to staff."

Speakers from the Asian Pacific Environmental Network urged the council to move ahead with the settlement engagement process.

"Two years ago, we made polluters pay by winning a $550 million settlement, and multiple times the city council has committed to using that funding to improve the lives of our residents," said APEN organizer Stephanie Zhang. "Now we need to deliver on that promise."

The council rejected Mayor Eduardo Martinez's proposal to pause council-directed projects that had not yet started, 3-4.

It then approved a narrower proposal, 4-1-2, directing staff to prioritize rather than pause the roughly three dozen other projects. Staff is expected to return in November with a prioritized list.

The settlement engagement process will not start immediately. Curl said the city cannot finalize its contract with Dalberg Advisors, the consultant approved in April to run the process, because staff does not know how much settlement money will remain after labor negotiations with the police union and the two departments' management units.

"I don't feel comfortable saying start with unknown variables of this magnitude for something this important to the community," Curl said.