Expenses are about $23.7 million and total revenues are expected to be close to $24.5 million, said Finance Director Leticia Salcido in her presentation to the City Council.
As a result of the recession, from 2008 to 2010 the city lost $4.1 million in revenues, Salcido said, who then noted in 2007 the city’s revenues were about $27 million.
Join the discussion and add your comments to this story! Scroll down or click here and tell us what you think.
Most of the loss of revenue is due to a decline in building permits and sales tax, according to Salcido. As a result the city invoked cost-cutting measures by freezing salaries, cutting money for supplies and postponing projects, she said.
In 2011, revenues increased, Salcido said, mainly because of sales tax and building-related fees. “That is good news,” she said, but it still to be determined if this is a trend or a one-time event.
Still, the city is operating below normal levels of revenue, which are considered to be the same as 2007 revenues.
“It should be noted for 2011 that expenditures were below budget,” she said, but this came mainly because of vacant positions.
Moreover a fund balance of $6.3 million was carried from the past fiscal year, Salcido said, which is an increase of about $785,000 from the 2009-2010 fiscal year. These funds are set aside mainly for economic unknowns and replacement of major equipment.
“Revenues went up as we thought,” said City Manager Ruben Duran, but the problem is that retirement costs may skyrocket in the future.
Expenditures for retirements will increase approximately $2.4 million in the next five years, according to Salcido.
And then there’s the impact of the disappearance of the redevelopment agency, which funded programs for economic development and the removal of blight through bonds.
“For us it’s $1.3 million,” Duran said, adding the good news is this figure is a small portion of the budget.
As far as this fiscal year, expenditures by Dec. 31 have reached 46 percent, or almost $11 million, according to the report.
Meanwhile, 31 percent of revenues have gone into the general fund, the report reads, which is down from 38 percent during the same time last year.
This is expected as most revenue from sales tax and property tax is received by the city in the second half of the fiscal year.
The council members seemed mostly calm during Salcido’s presentation. But their facial expressions did harden as the presentation went further into the challenges coming in the next five years.
In the worst-case scenario, operating costs will increase by $2.6 million every year from 2012 to 2017, Salcido explained to the council. This comes as result of five major projects: Fire Station 3, the skate park, the aquatic center, the sports pavilion and the library’s rent-lease, which increases every year.
With the rise of pensions, the operation of projects and other costs increases are added, and by 2017 expenditures are projected to be $36 million.
But $4 million is a one-time payment for the construction of a library, Salcido said.
In contrast, the city’s revenues are expected to increase $250,000 over the same time to a total of $25.8 million by 2017, according to Salcido.
This gap between expenditures and revenues will have to be closed in order to have a balanced budget, Salcido said.
But as far as this fiscal year, there is a light at the end of the tunnel, said Salcido, as about $101,000 in positive numbers is expected even if the RDA was to be funded for half a year.
Staff Writer Alejandro Davila can be reached at email@example.com or 760-337-3445.