Budget talks for next year start early at City Hall
City finances stand to dominate the Chico City Council’s agendas over the forthcoming months, as the panel tackles not only balancing next year’s budget but also repayment of the more than $15 million in so-called “enterprise fund” deficits the city has racked up over the past five years.
That was the takeaway from Administrative Services Director Chris Constantin’s budget update during the City Council’s regular meeting on Tuesday, Dec. 3. His presentation gave citizens a sneak peek into the city’s 2014-15 fiscal-year budget process, which at this time continues to be a moving target. He also updated the council on an auditing firm’s progress on its analysis of the city’s books.
Constantin, who was hired last March, replacing outgoing Finance Director Jennifer Hennessy, said the city would be working full steam on the upcoming fiscal-year budget beginning next month. The council will see a preliminary budget outlining projected revenues and expenses sometime in March, well in advance of the approval of the final budget in June. That didn’t happen last year, Constantin noted.
One of the sticking points in the budgetary process at this time, he continued, is that the city is in the midst of negotiations with employee bargaining units. “Until any conclusion and official action and ratification occurs, we can’t project any impacts of that [the bargaining process] associated with the budget,” he said. “We have to plan as if nothing has happened for the [2014-15] year.”
In the meantime, to determine what the city should reasonably allocate in the next cycle, the Finance Department will pore over each department’s expenditures for the prior year to see how they stacked up to the allocations.
During the sparsely attended meeting, the council members calendared a special meeting, a goal-setting workshop, for Jan. 6.
In the interim, at the council’s next meeting on Dec. 17, staff will present the panel with a deficit-reduction strategy that focuses on addressing that $15 million deficit through repayment of a little more than $1.5 million annually for the next 10 years.
“What that would mean would be the first item that’s funded in our budget will be funding $1.53 million in deficits, and that’ s a pretty huge chunk of resources for us when we’re so tight,” Constantin said.
He went on to explain that the alternative to that recommendation—only one component of a budget plan—would be the auditors obligating the city to immediately repay the debt via the general fund.
Constantin said that the depleted enterprise funds were previously established as such because a revenue source was there to cover the costs associated with those enterprises (e.g., private development). However, those revenue sources are “dried up,” as he put it. Those funds can remain in a deficit position with a portion of the general fund dedicated to repayment. The problem is that the city hasn’t consistently taken such action over the years, he said.
When not taking into account the necessary repayment of the depleted funds, the city’s general fund may appear relatively solvent. But that’s inaccurate, Constantin said.
“In fact, we don’t have a reserve. We don’t have positive cash positions. We are [in the] negative,” he said.
Speaking further on the audit, Constantin explained that the tentative date of a draft audit report—a document expected to have been released last month—has been pushed back until January as a result of staff having to devote so much of its time to negotiations with bargaining units. In short, the staff hasn’t had enough time to complete the work the auditing firm needs to complete its analysis.
A few other budget-related items came up during the meeting. Among them was a consideration to allow Constantin’s department to make some changes that would include a promotion through internal recruitment for the position of account technician and also the filling of a subsequently vacated clerk position.
Councilman Sean Morgan questioned the move—which includes a $6,000 pay raise for the promotion and a salary of about $38,000 annually for the clerk—given that the council has indicated that funding public safety is its greatest priority.
However, Constantin explained that the move is already budgeted in the current fiscal year. Additionally, the employee is already working in the capacity of an account technician, but doing so voluntarily. In other words, the promotion corresponds to the employee’s current job duties. Moreover, the administrative-services department has taken on a heavier workload, he said.
Morgan made a motion to approve only the promotion, but was not supported from the dais. In the end, the panel voted 5-1 (Councilwoman Mary Goloff was absent) to approve both departmental changes. For more on the meeting, see Downstroke, page 8.