City reacts to continuing budget woes
Moving money may be the best option, City Council agrees
The Chico City Council Tuesday night (Nov. 1) approved “supplemental budget appropriations” (a.k.a. shifting money around) to plug holes in last fiscal year’s ending balance. That shortage came about for a number of reasons, said Finance Director Jennifer Hennessy. The most glaring was the loss of about half a million dollars in vehicle license fees from the state. That situation is currently in litigation from a suit filed by the League of California Cities.
Then there is the continued decline in property-tax revenue because of dropping property values and a drop in utility-user-tax revenues. Hennessy said the city spent more than projected on fuel and electricity as well as more on city employee overtime than predicted. What this means is the city’s budget contingency plan approved in 2009 gets triggered. Addressing the last fiscal year after it ends in June is necessary, Hennessy told the council, because revenues such as sales tax don’t get tallied until mid-September.
Overriding the discussion was a novel solution, which was adopted later in the meeting—asking 24 city employees to take an early retirement and not promote or hire others to take their places, a step that would mean a yearly savings of $500,000. At this point, Hennessy said, only nine have shown interest in a plan that would grant them two years of credit to bulk up their pensions.
The idea was adopted at the end of the meeting 6-1, with Councilman Mark Sorensen casting the lone dissenting vote.
Earlier in the meeting Hennessy suggested other ways to plug the budget gap, including using reserve funds from “nonemergency” sources. The actual emergency fund stands at $5.2 million, she said. The general and park ending fund balance for the past fiscal year is $632,000 in the red. Projected revenue was short $387,000, while expenses ran over by $327,000. Projected sales-tax revenue, which makes up 34 percent of the general-fund income, came in less then 1 percent under projections. “Our largest revenue source, we almost hit that spot on,” said Hennessy. “However, we were experiencing further declines in property tax.”
This was due to continuing property devaluations by the county. There were also declines in property-transfer taxes generated when houses are sold as well as a fall off in business-license taxes.
On the other hand, parking-fine revenue was above projections because of changes in parking enforcement, which is the deployment of the green-shirted, beige-pants-wearing parking-meter watchers walking through the city on foot, as opposed to the old system of a police officer on a scooter.
Stepping up meter monitoring could bring the city $60,000 more annually, even with the hiring of more meter enforcers, the coucil learned. This would come from stepped-up coverage of meters beyond the downtown, in the streets near the campus.
The City Council also approved a proposal to transfer $798,800 from other sources; specifically $48,000 from the Private Activity Bond Administration fund, $250,000 from the General Liability Insurance Reserve Fund, and $500,000 from the gas-tax fund. Hennessy said transferring money from the gas-tax fund would not affect current capital projects.
City Manager Dave Burkland said the city can also rent out vacant office space in the old municipal building at Fourth and Main streets and space on the first floor of the three-story city building formerly occupied by county offices.
Over the past four years there have been reductions in salaries—the unions that represent city employees, with the exception of the police, all agreed to 5 percent salary reductions. And there are about 80 fewer city employees than there were just a few years ago. But because so much of the city’s budget depends on decisions made by a floundering state, the financial situation continues to look grim.