The Williams City Council unanimously approved the city’s operating budget for the 2018 and 2019 Fiscal Years at their meeting on Sept. 20, along with a Capital Improvement Program, which the council directed city staff to prepare at their June 2017 meeting.
According to the staff report prepared by Finance Director Rex Greenbuam, the majority of the city’s funds are comprised of the General Fund, the Water and Sewer Funds, street allocations, Measure G (the city’s 0.5 percent sales tax), and law enforcement. The bulk of the city’s fiscal resources are spent on water and sewer utility operations, street and building operations, police services, fire services, and administration.
Because the city relies so heavily on gasoline taxes, which are extremely volatile, Greenbaum said, the city’s budget is somewhat volatile as well.
According to Greenbaum’s report, the city is anticipating a general fund shortfall of $122,000 in 2018. He cited increasing personnel expenditures including pension and healthcare obligations, coupled with slow revenue growth, as the primary contributing factors. The city’s 2018 budget includes expenses related to the approved negotiated contracts with both the Miscellaneous Employees Association and the Peace Officers’ association. It also reflects increases to pension expenditures from the California Public Employee Retirement System (CALPERS) for the required repayment of unfunded liability, a 7.1 percent increase for citywide liability premiums, a 5 percent increase to Fire District expenditures, as well as overall increasing costs including utility and general cost of living increases.
The projected $122,000 shortfall is actually less than those originally projected for the two-year budget for Fiscal Years 2016 and 2017, which were $194,000 and $234,000, respectively. Because a number of staff positions were left vacant in those years, the city was able to have a balanced budget and did not have to dip into general fund reserves. The city will save about $107,000 by freezing one police officer position in 2018. Some of the projected shortfall for Fiscal Year 2018 is projected to be made up in Fiscal Year 2019, when the city anticipates General Fund revenues will outstrip expenditures by more than $42,000, with revenues projected at about $3.7 million – over $500,000 more than the number originally projected for Fiscal Year 2017.
Councilmember Charles Bergson said that the jump was a big one, and asked Greenbaum whether the $500,000 increase was overly optimistic.
“I actually think we’re being fairly conservative, given what we’ve got with the new business and new development we have planned,” Greenbaum said.
Greenbaum continued, “We’ve done our research, we have our… consultants that help us with our projections… and we feel pretty comfortable with those figures. Throughout my career, I’ve always been pretty conservative in budgeting.”
General fund revenues are projected to come in at 5.7 percent higher, or $180,000 more, than was originally budgeted for Fiscal Year 2017. General Fund revenue sources include revenues from property taxes, sales and use, local sales taxes, licenses, and fees, among others. Greenbaum said that the increase in revenues for 2017 can be attributed mostly to higher than expected building revenues and transient occupancy taxes. In Fiscal Year 2018, the City is projecting that revenues will increase by 2.8 percent over the revenues projected for 2017, with an even larger increase projected for Fiscal Year 2019, when the city expects to see increased sales tax revenues from expected growth within the city.
Troughton urges continued prudence with budget
Pointing to the city’s decision to “loan” itself $900,000 for street repair projects in town, councilmember John Troughton, Jr. said that the budget would need to remain flat for the next few years in order to enable the city to pay off its debt to itself.
“I want to remind the council that that’s based on a payback, and what we need to do to meet that is keep this budget flat for the next three years,” Troughton said. “Consequently, I applaud (Rex) for keeping this pretty flat… The only way we’re going to pay this back is as development grows, and that increases our revenues, is to use that increased revenue over the existing budget numbers, at least under 1 percent, as a payback for reserves that we borrowed our own money from – no interest, by the way.”
Capital Improvement Plan
Attached to the city’s budget was its Capital Improvement Plan, a list that details the status of projects since Fiscal Year 2011, and new projects that have been added to the list. It also includes the road repair projects that were included on the City’s Regional Transportation Improvement Project (RTIP) list. As it was approved by the City Council, the projects on the RTIP list will be submitted to the California Transportation Committee for the city to be eligible for state transportation funding made available by Senate Bill 1. A total of four projects were included on the RTIP list, including pavement repairs and overlays for southbound Husted Road (South) from Interstate 5 to Abel Road (estimated to cost $820,000), Seventh Street/Frontage Road from Theater Road to Husted Road ($1.174 million), Husted Road (North) from E St. to Highway 20 ($698,000), and E Street from Husted Road to Sixth Street ($757,000).