City budget

Council ponders fiscal chasm

The members of the Chico City Council stared into the financial abyss Tuesday (June 5), and it wasn’t a pretty sight.

First they heard City Manager Greg Jones tell them, in his annual budget message, that the city was overspending its general fund by $6 million a year.

Next they listened as police Capt. Mike Maloney told them his department needed an additional $3.5 million to $7.1 million a year to bring police staffing in line with the average for West Coast cities of Chico’s size and keep people safe.

Welcome to the new era of limits.

Councilmembers looked grave as they listened to the litany of budgetary bad news. As Jones made clear, the city is facing a serious inability to provide municipal services. If things continue as they’re going, he said, it will be nearly $57 million in the hole in a decade (and that’s without the additional police, which would push the deficit to more than $100 million).

Balancing the budget “is only going to be attainable by some significant course correction,” he added.

Jones largely blamed the problem on declining sales-tax revenues and the expenses accompanying the annexation of most of the remaining unincorporated pockets within the city. But he also noted that 78.1 percent—nearly four-fifths—of the general fund went to salaries and benefits, and he acknowledged that city employees are very well-paid. “We’re a people business,” he said. “I think we ought to be proud of the fact that we compensate our people well.”

At the same time, Jones acknowledged, he has only half the money he needs to keep city streets and roads repaired adequately, is having to transfer money from other funds to beef up the general fund, is dipping into reserves, and is unable to invest in such infrastructure needs as new technology, tools and equipment. He also doesn’t have funds to staff a planned seventh fire station in north Chico.

The city has made a number of cost-saving moves in the past year, Jones added, but far from enough to balance the budget.

The general fund isn’t the only pot of money that’s coming up short. The city has more than 200 discrete funds, and others are hurting, too. For example, the so-called private-development fund, which collects fees from builders to pay administrative costs, has a $4.5 million deficit and is losing $1 million a year. Historically, money has been available from the general fund to cover the shortfall, but no longer. “We’ll need to increase fees” to make the fund solvent, Jones said.

Jones presented the council with a list of 54 “deficit reduction alternatives"—19 of them “revenue enhancements,” the rest “operating expenditure reductions.” The revenue boosters range from increasing the local sales tax by a quarter- or half-percent (the latter would generate $9.7 million annually) and hiking parking fines by $5 to leasing cell tower sites on city property and privatizing the airport. Possible cuts include changing employees’ retirement and health benefits, reducing City Hall operating hours and eliminating the city’s funding of the county library.

Jones warned that many of the possible cuts would involve renegotiating labor contracts, a difficult process.

In the meantime, the city has no idea how it’s going to finance a much-needed new police headquarters, and not building a seventh fire station creates another big problem: The Northwest Chico Specific Plan, which authorizes the development of thousands of houses on approximately 700 acres, relies on the station as a mitigation measure central to its environmental-impact report. Lacking it, the city would have to move two or three of its current six stations, Jones said.

The council unanimously referred the list of alternatives to its Finance Committee to study and prioritize.

In other action, the council unanimously approved $765,861 in funding for community and arts organizations as recommended by the Finance Committee and the Arts Commission. For a list of recipients, go to the city’s Web site ( and click on “June 2007 Budget Update.”