Mayor’s State of the City address focuses on avoiding past financial mistakes
Local business leaders presented a rosy outlook for the city of Chico’s economic future at an annual business summit last Friday (Jan. 27), but Mayor Sean Morgan’s State of the City address was significantly less optimistic as he warned against repeating mistakes from the recent past.
In his speech, Morgan said the city is more solvent than it was during the depths of a financial crisis in 2013, but it’s still a long way from fiscal security.
“We could easily go right back to where we were four years ago,” he cautioned. “Although we’re better off, there is no significant surplus, there’s no pile of money in the middle of the table to be spent freely.”
The mayor’s State of the City speech came at the end of a business summit co-hosted by the city and the Chico Chamber of Commerce and held at the CARD Center. The summit also featured reports by Melanie Bassett, executive director of the Downtown Chico Business Association, and Mark Francis, president and CEO of Golden Valley Bank. The crowd of about 200 was largely composed of local business leaders, and Morgan’s address focused mostly on money matters.
According to data Morgan presented, city finances hit rock bottom at the end of the 2012-13 fiscal year, when the city’s general fund balance was $7.6 million in the red. A negative balance of $2.8 million was also reported in 2014. The general fund balances have been on the positive side of the ledger since, reaching a high of $6.5 million last year. This year’s projected balance is $4.6 million.
“If we want to be considered a safe, solid, financially secure city that’s ready for an economic downturn or natural catastrophe or any of those types of things, that number has to get to $15 million.” Morgan said. “We’re not all that close.”
Morgan also offered a rundown of the city’s $46.8 million in expenditures allotted for the current fiscal year, noting that 78 percent of spending is directed toward employee benefits and salaries. Police pay accounts for about 49 percent of that spending, and firefighter salaries for 24 percent.
Those percentages are in keeping with the City Council’s commitment to public safety as its No. 1 priority, which Morgan emphasized several times during his speech. However, he said the city’s still-tenuous fiscal footing means that bolstering one department comes at the cost of depriving others. He pointed to the city’s Public Works Department, which is staffed at the same levels it was in 1987. Morgan noted that department responded to about 4,000 calls for service from the public last year and, like other city departments, has developed a strategic staffing plan.
Morgan said the city needs to look at budget and staffing issues from a “holistic” perspective and prioritize its needs.
“Slow, steady, sustainable growth and investing in our most critical resources whenever possible is the course we need to maintain,” he said.
During Bassett’s presentation, she announced that the DCBA is involved in an effort with downtown property owners to start a Property Business Improvement District (PBID). A PBID, she explained, would open up resources for downtown based on a self-imposed and self-governed assessment focused on managing and improving the downtown business sector. Though it will be a separate entity, the DCBA would help coordinate PBID improvements.
Francis presented an “economic snapshot” of Chico’s current financial situation based on confidence surveys the bank conducted among local business owners in June and December 2016. Respondents showed increased levels of confidence in sales, profits and local and national business conditions for 2017, but were less optimistic about employment levels, with 62 percent saying they likely would stay the same.
“So what’s the difference?” Francis asked regarding the optimism evident in the survey results before switching to a slide showing that 74 percent of those polled believe Trump’s presidency will help the economy. Several in the audience laughed and a few cheered as Francis quipped, “Please don’t shoot me, I’m just the messenger.”