The city is spending more than it is bringing in, and even though that’s normal for this time of the year, officials need to make changes to keep spending under control and keep the budget on target.
According to the mid-year budget report presented to the City Council Tuesday, expenditures are at 50 percent of projections, and revenues are at 36 percent – about 14 percent less than anticipated.
This is typical for this point in the fiscal year, Finance Director Leyne Milstein told council members Tuesday – but adjustment is still necessary.
“Without these recommendations, we will not be able to balance our budget,” Milstein said.
It’s not all bad news, though.
The 2010-11 fiscal year ended with an unexpected $5.1 million surplus – largely due to savings from cutting back on expenses in a variety of city departments during the year, according to a city staff report.
That $5.1 million will be used to address a variety of budget needs including:
* $1.2 million to backfill General Fund revenue shortfalls;
* $1 million to the Police Department to cover a holiday pay budget shortfall
* $715,000 for unbudgeted utilities in the Department of Parks & Recreation
* $285,000 for payouts related to contracting out golf maintenance operations
* $750,000 for deferred maintenance projects at city-owned facilities
Another $3 million – left over from capital improvement projects that have been funded and completed ahead of schedule – will go into the General Fund Economic Uncertainty Reserve, bringing that “rainy day fund” balance to $20.7 million.
“Putting money into the reserve is wise, I think,” City Councilman Jay Schenirer said.
Staff also recommended adjustments – both up and down – to citywide revenues to keep the city budget balanced through the end of the fiscal year, including:
* $3.6 million reduction in property tax revenues, due to a greater-than-expected decline in property tax values
* $2.8 million increase in sales and use tax budget, due to a fourth consecutive quarter of sales tax growth
One adjustment to projected revenues comes from the closure of medical marijuana dispensaries in the city.
With eight of 33 dispensaries in the city now closed, business operating tax revenue from the dispensaries – initially estimated in the city budget as $1 million – will be reduced by $250,000 to $750,000.
The actual reduction amount will depend on how many more dispensaries close before the end of the fiscal year, June 30.
The City Council began the budget process for the 2012/13 fiscal year with a workshop Jan. 24. The city manager will present his proposed budget for the coming fiscal year on May 1.
The Sacramento Press discussed the first quarter budget report HERE.
Melissa Corker is a staff reporter for The Sacramento Press. Follow her on Twitter @MelissaCorker.
Editorial Note: A spelling correction was made to this story after it was published.