Where’d that hole come from?
When City Manager Greg Jones delivered his fiscal forecast to the Chico City Council at its budget session in June, the bottom line was no surprise. The deficit he projected had been the subject of discussion for months.
Repeat after me: Fifty-six million dollars.
That figure has since doubled, if you add in the additional staff the Chico Police Department requested in its 10-year plan. But whether you go with $56 million, $110 million or $125 million, it’s a pretty big blindside.
So, when did Chico become a money pit?
Twenty years ago, maybe 30—that’s how long Tom Lando, Jones’ predecessor, estimates the city has had budget issues. Officials have found ways to offset the shortfalls, Jones said, which masked some of the problem—and the current deficit figure is so daunting because this is the first time the city has taken so many years into account.
“I think Greg’s coming into office wasn’t much different than mine,” Lando said. “We both were shocked. I came into office in 1992, when we used to do a five-year financial plan; the five-year financial plan showed a $25 million deficit.
“I made the mistake in the budget message of saying the city was in ‘a precarious financial position.’ I heard that quote for the next three or four years. It became an election issue, and I frankly regretted saying it, although I’m not sure that it wasn’t true…
“Past councils and Fred Davis [Lando’s predecessor] had continued to address that issue. So I don’t think the situation is new, but I appreciate somebody’s willingness to take a fresh look at it and say the city should take a long-term view of how the city should be.”
The fact that the city has stared down deficits averaging $5 million a year the past 15 years would seem to suggest a systemic flaw. Not so, the city managers say.
Lando: “The council’s desire and to some extent job is to do good, and for each of them that means something different"—more police, better roads, economic development. “Whenever the city started to show a positive balance, we’d add staff, we’d add programs. And when things started to slow down, and a lot of these costs are recurring costs, it’s hard to put the brakes on.”
Jones: “My main concerns were revenues and expenses not tracking, and our dependence on transfers from other funds…. The fact of the matter is we can transfer all of the gas-tax money to the general fund and be fine legally, but we’ll not be maintaining our streets because we won’t have any money for asphalt.”
This was not a swipe at Lando—"I would probably have to do the same thing in a reactionary environment,” Jones said, meaning a municipality that budgeted just a year or two ahead. “If you have a year when the state says it’s going to keep $1.5 million, you have to cover that. It was how budgeting was done here. But going forward, I’d be criticized for a reactionary solution long-term.”
Thus came 10-year planning, a policy approved by the council last spring. As for the big red numeral it produced, that $56 million…
“It’s certainly dramatic—it’s a big number,” Jones acknowledged. “It wasn’t done for dramatic purposes. It is what it is"—a projection based on middle-of-the-road assumptions, with upward and downward trends factored in.
“But looking long term wakes people up,” he continued, “because you see the cumulative effect. Like at home: I know I’ll have a kid in college and I’ll need to buy a new home in five years, so I’d better start planning today. Government is not good at that.”
He’s hoping Chico’s government grows good at that. The city’s Finance Committee—Councilmembers Scott Gruendl, Mary Flynn and Larry Wahl—are evaluating the projections and potential solutions put forth by Jones and his staff. The meetings are public, though they so far have been held on Wednesday mornings. The city intends to schedule an evening session to attract more citizen engagement.
“It’s important stuff,” Jones said. “People are passionate about the general plan and land use for the community. What about this issue? It’s about police service, fire service, everything we do. There’s a big disconnect there.”