VACAVILLE — As the city begins to hammer together its projected $66 million budget for the 2014-15 fiscal year, one thing is obvious: Despite the temporary infusion of Measure M money, the city budget is projected to carry a deficit with a declining emergency reserve through 2017-18.
“Basically our revenues are still not keeping up with our expenditures,” City Manager Laura Kuhn said during Tuesday’s first budget study session for the 2014-15 budget.
Coupled with $3.8 million the city’s general fund has to give back to the redevelopment agency next year, and the eventual end of Measure M – a 0.25 percent sales tax increase passed by Vacaville voters in 2012 and scheduled to end in 2018 – the city needs keep watch into the 2018-19 budget, Kuhn said.
The structural deficit is projected to climb from a projected near $3.4 million in 2014-15 to about $5.7 million in 2017-18, according to a draft budget put out by the city. While expenditures also outpaced revenues last year and this year, the city received one-time funds, including redevelopment agency funds, and Measure M money that helped boost a cash flow into the general fund, increasing the emergency reserves, as well, for both years.
“Measure M is what is keeping us in the black, so to speak,” Kuhn said.
Measure M money is projected to be in the neighborhood of $3.8 million for both this year and 2014-15, but with the $3.8 million the city must pay back to the redevelopment agency, the reserve account plummets from $15.4 million this year to $11.3 million in 2014-15.
The continued structural deficit has Councilman Curtis Hunt concerned. While he said during a Wednesday interview that the city still has “to continue to do business,” it also can’t “lose focus of the structural deficit” and developing strategy is needed “to deal with it in the long run.”
He said the improving economy should relieve some of the structural deficit in combination with the budget’s conservative assumptions, but cautioned that there could be long-term consequences from a fiscal health point of view for running multiyear structural deficits – such as inadequate reserves and affecting future bond rates.
“I don’t think any one solution will be the answer,” he said Wednesday. (It’s) a combination of solutions.”
City departments also began their budget rundown before the council, with department heads giving an overview of each department, including budget projections and plans. Both police and fire leaders noted the biggest chunk of their budgets – both at 91 percent – goes to salaries and benefits.
Police Chief John Carli is working with a projected $28.6 million budget for 2014-15 with $23.7 million expected to go toward salaries and benefits. This is a nearly $2 million increase from last year, which Carli blames on an increase in health care and pension costs.
Fire Chief Frank Drayton projects a $19 million departmental budget, with $17 million going to salaries and benefits. It also is up about $1.5 million from last year’s adjusted budget.
Funding is also needed for a new fire station projected to open in September 2015 in the Southtown area. The Fire Department’s budget includes nine new firefighter/paramedics to staff the station.
Council members also heard budget presentations from the Public Works, Utilities, Human Resources, and Finance and Information Technology departments.
The budget process will continue at the June 10 council meeting.
Reach Susan Winlow at 427-6955 or [email protected] Follow her on Twitter at www.twitter.com/swinlowdr.