Those were the words of Mayor Greg Ponciano during a special budget meeting of the Colusa City Council last Tuesday.
While the city has, in Ponciano’s opinion, already cut staffing and services to the bone, more cuts may be necessary to help close a $434,000 budget deficit projected for the 2018-19 Fiscal Year, which begins on July 1.
“Hopefully, we are going to remedy the income side of the equation,” Ponciano said. “If anyone has any suggestions on how we can address the expenditure side, I’m open to it.”
Rather than approve the proposed budget as submitted by the city’s finance department last week and make up for the budget deficit by dipping into the city’s general fund reserves, the city council voted unanimously to form an ad hoc committee, which will be tasked with considering the city’s options when it comes to making up for the projected shortfall. Councilmen Dave Markss and Dave Womble were appointed to serve on the committee, which will report back to the balance of the council in July.
The proposed budget before the council last week estimated that the city’s general fund expenditures would be about 12 percent higher than its revenues. While the city’s general fund revenues are expected to remain roughly the same as projected during January’s Mid-year Budget Update for Fiscal Year 2017-18, General Fund expenditures are now projected to be $370,084 higher than previously estimated.
“You have to live within your means,” said Councilman Dave Markss, adding that while he realized the budget was a fluid document and that it would be adjusted during next year’s Mid-year Budget Update, he would prefer not to enter the upcoming fiscal year with expenditures projected at 12 percent higher than revenues. “I’d like some input from the department heads on if they had to cut 12 percent from their budgets, what would they do? (We can) go from there,” Markss said. “I know it’s tough, you guys, but at the same time, when you’re half a million (dollars) out, you’ve got to look at everything. I think our budgets are structurally deficient. We don’t have the revenue stream to keep going, or the reserves to keep going… Our reserves are dropping.”
The proposed budget indicated that, should the city dip into General Fund Reserves to balance the budget, the reserves were anticipated to dwindle to about $1.76 million. Current policy requires 50 percent of expenditures remain in General Fund Reserves, and the city’s anticipated expenditures for Fiscal Year 2018-19 were about $3.6 million.
Ponciano said that asking department heads to slash 12 percent of their budgets could mean cutting city staff, and Markss responded that he understood that. Ponciano ultimately agreed that because the disparity between general fund revenues and expenditures was relatively large, the council needed to do its due diligence and weigh its options.
Councilman Tom Reische said that the city had been “out of bounds” with its budget before, but had always found a way to balance the budget as it evolved throughout the year.
“I would ask that to keep that in the back of our minds,” Reische said. “Because we have to put this on paper this way.”
City Manager Jesse Cain said that in recent years, the city had used one-time revenues to help balance the budget, but cautioned that the city “was running out of those types of one-time funds.”
According to the staff report attached to the proposed budget, the most noteworthy items contributing to the overall budget deficit included the City’s General Fund California Public Employee Retirement System (CalPERS) Unfunded Accrued Liability (up by $73,000); Other Post Employment Benefits costs (up by $39,000), and CalPERS employer retirement rates (up by $23,000). The City’s liability and workers compensation premiums also increased, up by $64,000. The elimination of cash in lieu of health benefits, coupled with a potential 6 percent health premium increase, added another $64,000 to the city’s general fund expenditures. City Manager Jesse Cain said that increasing CalPERS costs are the city’s biggest concern moving forward.
Regular salary steps and additional job positions will add an estimated $107,000 to the city’s general fund expenditures. The city also saw increases to expenditures from increasing gas and PG&E costs, as well as equipment maintenance repair costs.
Other items worth noting:
Cannabis Revenue Fund: The city has set aside a special fund, called the Cannabis Revenue Fund, to track all revenue transactions related to cannabis development agreements for the various projects in place in Colusa. As of January, the city had received $2,543 via those development agreements. For Fiscal Year 2018-19, the city anticipated that it would receive $12,000 in revenue.
Pools/Trees/Parks Fund: The city cut nearly $14,000 from its expenditures in this fund, due to lowering the level of emergency tree service in the city.
State Park Management Fund: Revenues and expenditures are both expected to drop in this fund due to the State Park closure during the construction of the city’s boat ramp project. While revenues are anticipated to outstrip expenditures by about $12,000, it is anticipated that the State Park Management Fund will have a deficit fund balance of about $35,000 at the end of the 2018-19 fiscal year, which will eventually need to be reconciled with the city’s general fund.
Salary appropriations are anticipated to increase by about $118,000 from Fiscal Year 2018-19 to 2019-20.
Unfunded Liabilities for CalPERS and Other Post Employee Benefits is about $8 million.n