Welcome Guest! You have 4 free reads leftLogin/Register
Breaking News
You Are Here: Home » Visalia » City Prepares for balanced budget

City Prepares for balanced budget

City Prepares for balanced budget

By Reggie Ellis

@Reggie_SGN

visalia – The City of Visalia will have a balanced budget for the next two years, but it’s unlikely that will continue in the future without some help from local taxpayers.

Finance Director Renee Nagel presented the Visalia City Council with its first look at the proposed budget for 2016-17 and 2017-18 on June 6. Unlike most cities, Visalia is on a two-year budget cycle beginning and ending in even numbered years. She said she was happy to present a balanced budget that met the council’s goals of bringing back resources, increasing funds for capital improvement projects, make debt payments on the Visalia Emergency Communications Center and replenish emergency reserves.

“It was a difficult task but we do have a balanced budget with a small surplus, but this cannot be sustained as the population grows,” Nagel said.

While the Great Recession officially ended seven years ago, California cities are still struggling to balance their budgets due to the State shifting responsibilities for programs back to cities but without any funding to do so. For the next two years, this will be offset by the strong economic recovery since 2010. Property tax through the end of this fiscal year, which ends on June 30, is expected to reach a record high of $20.6 million, surpassing the previous mark of $20 million set in 2008-09. Property taxes are expected to continue to climb over the $21 million mark in each of the next two years. Nagel said sales tax revenues have steadily increased since 2010 and are expected to increase by another 3% next year and 1.5% in 2017-18. Those combined with the transient occupancy tax (better known as the hotel tax) and franchise tax fee, account for 89% of General Fund revenues.

Salaries and benefits are the largest expense, representing three-quarters of the General Fund. For 2016-17, salaries and benefits will increase by $2.8 million from 2015-16. The increase is due to a 2% cost of living adjustment negotiated by staff, a half percent increase to pay for additional employees for maintenance contracts, a 1.35% increase in PERS (the Public Employee Retirement System in California), a 3% increase in health insurance and an extra pay period that happens every 14 years.

Salaries and benefits are estimated to increase by another $500,000 in 2017-18 as health insurance and PERS continue to increase each year. However, this does not include any cost of living adjustment which will be negotiated with employees next year.

The City’s operating expenses continue to rise as well. Operating expenses for the General Fund – which include utility costs, contracts for park maintenance and day-to-day operations – increased by 4%, or about $600,000 and will go up another 3% in 2017-18.

Both Mayor Steve Nelson and Vice Mayor Warren Gubler wanted comparisons on how the City’s percentage of salary and benefits compares with previous years and other cities. Gubler asked staff to prepare a 10-year comparison of the percentage of the General Fund used on salary and benefits and what the industry standard is for sustainability. Nelson asked if other like-sized cities were higher or lower than Visalia’s 75% for salary and benefits.

In order to improve services for citizens and meet its goal of bringing back more resources, the two-year budget does include adding eight new positions, including a youth service officer for the schools, a recreation coordinator, two office assistants, a maintenance worker for transit, and two operators in solid waste and a supervisor at the waste water treatment plant.

Since 2000, the City has seen a 17% increase in staffing compared with a 27% increase in the City’s population.

The General Fund is also paying millions in debt on facility projects in the City of nearly $2.4 million in each of the next two years. That number includes debt payments on the Animal Control Facility, VECC, Convention Center refurbish in 2015 and the Convention Center renovation and City Hall East construction earlier this year.

Despite the debt, Nagel said the City should be able to end the next two years with a surplus of just under $63,000 in 2016-17 and a little more than $16,000 in 2017-18. That would bring reserves to $10.4 million by the end of 2017-18, the highest it has been since 2009-10 but well short of the $15.2 million needed to meet the City’s policy that reserves should equal 25% of operating expenditures.

“During the Great Recession, the General Fund used $12.3 million over five years to avoid excessive layoffs,” Nagel’s report read. “These reserves will be critically important when another economic recession occurs.”

In order to balance the budget, Nagel said staff had to limit the amount of General Fund revenues spent on capital improvement projects to $17 million over the next two years. Of the 57 capital projects proposed in the General Fund, only 25 were recommended for funding in the next to years.

Going forward, Nagel said rising costs in the Public Employee Retirement System (PERS), the next phases of the Affordable Care Act (ACA) and minimum wage increases are outpacing the growth in revenues. In 2013, the PERS Board approved increases in pension contributions for the next five years. By 2020, the City’s annual PERS cost will be at least an additional $3 million, which doesn’t include additional wage increases for employees. Health care premiums will increase by 3% next year and 4% the year after. The minimum wage increase will affect the Recreation Department and the Convention Center the most due to the large number of hourly employees. If prevailing wage rates are increased that could increase the City’s maintenance contracts for parks and recreation as well.

“The first 25 pages are a great synopsis of why we need to move forward on the sales tax measure,” said Councilmember Greg Collins.

The City is preparing to place a half-cent sales tax measure on the November ballot, after a brief discussion of a three-quarter cent sales tax. If approved by voters, the half cent sales tax would generate approximately $10.8 million a year for the City to spend on roads, public safety as well as parks and recreation, still short of the $14 million needed to bring the City up to full staffing levels. The sales tax increase would cost the consumer 50 cents per $100 spent. It would require a simple majority to pass on the November ballot. If approved, the half cent sales tax would be in addition to Measure T, the quarter cent sales tax approved by Visalia voters in 2004, bringing Visalia’s sales tax to 8.75%, which would equal the City of Dinuba, the highest in Tulare County.

The public will have its chance to comment on the budget during a public hearing at the next City Council meeting on June 20. Municipal budgets must be approved prior to July 1, the beginning of the new fiscal year. However, as a charter city, the Visalia City Council does have the option to make changes to the budget at any regularly scheduled meeting.

Retirement System (PERS), the next phases of the Affordable Care Act (ACA) and minimum wage increases are outpacing the growth in revenues. In 2013, the PERS Board approved increases in pension contributions for the next five years. By 2020, the City’s annual PERS cost will be at least an additional $3 million, which doesn’t include additional wage increases for employees. Health care premiums will increase by 3% next year and 4% the year after. The minimum wage increase will affect the Recreation Department and the Convention Center which have a large number of hourly employees. If prevailing wage rates are increased that could increase the City’s maintenance contracts as well.

“The first 25 pages are a great synopsis of why we need to move forward on the sales tax measure,” said Councilmember Greg Collins. The City is preparing to place a half-cent sales tax measure on the November ballot. If approved by voters, the half cent sales tax would generate approximately $10.8 million a year for the City, still short of the $14 million needed to bring the City up to full staffing levels.

The public will have its chance to comment on the budget during a public hearing at the next City Council meeting on June 20.

Clip to Evernote

About The Author

Number of Entries : 15971

Comments

comments

Powered by Facebook Comments

© 1901 - 2019 The Sun-Gazette Newspaper | 402 S F St | Exeter CA 93221 | Powered by Wordpress

Scroll to top