Exeter bares unexpected costs this fiscal year but has unexpected revenues as well, City looking to increase revenue for future years
By Paul Myers @PaulM_SGN
EXETER – Exeter’s midyear budget review had as many ups as downs, coming out almost even.
Over three-quarters into the fiscal year and Exeter is realizing almost $260,000 of unexpected costs. According to finance director Chris Tavarez they came in the form of approved salary increases after the 2018-2019 fiscal year budget was adopted and increased cost to fire service. An Exeter staff report notes that fire services provided by the County ran over by $140,000, due to fire station repairs and increase in call volume. A 1% salary increase and regular benefit specialty pays that were not budgeted for was $100,000. Professional services, code enforcement and election district transition costs made up the other $20,000.
Fortunately, the City has also taken in unexpected additional general fund revenue. The majority of which was in property taxes.
Increases in property taxes and sales taxes have yielded $160,000 in unexpected revenue according to an Exeter staff report. The additional revenue bumps up Exeter’s originally passed general fund budget of $4.182 million to $4.3.
According to Tavarez’s presentation, property taxes made up 24% of the budget while sales tax made up 22%. In between was motor vehicle property tax that made up 23% of the general fund’s revenue this year.
The remaining 31% was a mixture of utility user taxes, transfers from other funds, franchise taxes, transient and occupancy tax and various other taxes. For this year, the City remedied the $260,000 projected shortfall but appropriating $140,000 of additional funds into the general fund from unexpected revenues, funding a police officer with existing grant funds to offset $100,000 and then investigating further revenue enhancements and expenditure savings to retrieve the remaining $20,000.
“We believe with these three actions we can fill in that gap and maintain a balanced budget,” Tavarez said.
While some unexpected revenues in the general fund will help this year, future budgets do not look so friendly.
In a presentation to the Exeter City Council on Tuesday, March 26, Tavarez noted that revenues are less and less likely to keep up with growing costs. Without additional cost saving for next year’s 2019-2020 budget, Exeter will face a $79,548 deficit. The gap will grow even wider to $145,968 in the 2020-2021 budget, then $192,324 in the 2021-2022 budget and then $240,041 in the 2022-2023 budget.
However, Exeter plans to take on some major financial issues throughout this year and next. Former interim city manager Eric Frost and Tavarez put together a two-year budget to keep an eye on the city’s spending through this fiscal year and into the next. Thus far things are trending in a positive direction, but city manager Adam Ennis is preparing to take on looming deficits.
“As you know there were a lot of cuts to get here but it’s time to start looking at how we are funding things. We are looking at utility funds now, we are going through those in detail to understand our numbers and keep those systems marching forward,” Ennis said.
Exeter has already made a major change to their refuse fund. With plummeting Chinese import markets for recyclables Mid Valley Disposal could no longer offset the cost of recyclable collection. The move solely affected commercial refuse customers as their trash collection rate increased, while at the same time having to pay a brand new rate for recyclables and organic material.
Midway through March, the City received their first draft of their master water plan that will detail the type of work Exeter has left to do on its water system. The plan will address the weakest portions of the City’s water system and is presupposed to make recommendations for increased water storage. Heatwaves in previous years have left the City reeling for water at peak hours of water consumption in the morning and evenings.
Ennis added that the City will start a discussion over a sales tax this summer. Cities all around Exeter have raised their sales tax rate to 8.75%, a full percent above the minimum 7.75%. Visalia’s sales tax has managed to keep their general fund afloat at 8.50%. In the coming month, Exeter will be discussing whether they need a full percent or less in the coming months, and likely put the measure on the November 2020 ballot.