Economic woes are translating to budget problems for Ceres city coffers and the officials are forecasting only worsening problems in the next five years.
Council members were apprised of a looming budget crisis at a Jan. 26 study session and a general fund that now has a deficit of $559,664. The city is now scrambling to find some ways to cut spending and will take up budgetary solutions on Feb. 9.
"We're looking to stop the bleeding," said Ceres Mayor Anthony Cannella. "We're being hit by something out of our control."
The task isn't an easy one given the fact that the city only is able to make cuts to the $20 million general fund, of which roughly 80 percent is spent on public safety. Most of the cuts will be in labor since approximately 87 percent of the general fund is spent on labor and benefits.
"There are other areas that are funded through the general fund (that can be cut)," said Cannella. "As far as public safety is concerned, there's roughly $2 million in non-sworn personnel."
City Manager Brad Kilger was directed by the council to put together a staff reduction list.
Cannella said: "I think it's fair to say that public safety is going to see some effect of this massive problem that is related to the economy. We're going to do our best to make it as minimal as possible when it comes to sworn police and fire."
Revenues to City Hall are dropping due to several factors. Property taxes are dropping because of the mortgage crisis and sales taxes are dropping with decreased spending due to a worsening economy. Building permit fee revenue is down because home construction has halted.
The city's finance director, Sarah Ragsdale, said if the city doesn't decrease spending, deficits of $2.1 million may be expected in the next budget year and $4.2 million by the 2010-11 fiscal year.
Cannella said the city has the task of trimming spending as painlessly as possible. Immediate steps may include:
• Going back to employee bargaining groups to end cost of living adjustments in the future in lieu of sparing job cuts;
• Placing a hiring freeze in all area except critical police and fire position;
• Asking employees for budget-cutting measure ideas, with the dual purpose of signaling to them that the city is in a budget squeeze;
• Forbidding department heads from making purchases greater than $500, and running all spending requests through Kilger and Ragsdale;
• Freezing all training and travel except in the case of mandatory police and fire training;
• Reducing the number of credit cards in the hands of city employees;
• Determining if any non-personnel expenses can be cut.
In the next one to two months the city expects to see which jobs would "have the least impact on existing services" and look at positions that rely heavily on the general fund. One area that will be scrutinized is the city recreation program, which partly funds itself through user fees.
A staff idea to propose raising the Ceres utility users tax from 3 percent to 6 percent was declared "D.O.A." (dead on arrival) by Cannella after the meeting.
"We're not going to do that," said Cannella. "We just came to the voters for Measure H. The school district came to the voters for Measure U. We just had to increase our fees for sewer and water. We're not going back to the voters."
The mayor does not rule out another attempt to increase the tax charged for motel use in Ceres. Voters rejected a Transient and Occupancy Tax (TOT) increase when Tim Kerr was city manager.
"I'm not opposed to bringing that one up," said Cannella, noting taht the TOT is generally paid by only visitors staying in Ceres. Raising the TOT from 5 percent to 7.5 percent would only generate an estimated $37,500 annually - hardly enough to make a drastic impact.
Cannella said the council needs to approach its budget shortfalls the way most household do during money crunch time. "It may be that we just ... take care of basics. Everything else will have to wait and we're prepared to do that."
The council does not appear to be willing to renege on its policy to maintain a 35 percent reserve level to balance the budget. The budgetary cushion is used for emergencies and short-term budget shortfalls.
"Once we lose those reserves, they're gone," said Cannella.
The mayor said "we need to be just like a family that takes a massive cut in salary from their work, they better not borrow from their savings account, they'd better re-adjust their lifestyle. And we have to do that in the city of Ceres."
Other cities in California are facing more dire situations, some declaring bankruptcy. Last May the city of Vallejo filed bankruptcy.
The county is facing a $17 million debit in its general fund.
Council members were apprised of a looming budget crisis at a Jan. 26 study session and a general fund that now has a deficit of $559,664. The city is now scrambling to find some ways to cut spending and will take up budgetary solutions on Feb. 9.
"We're looking to stop the bleeding," said Ceres Mayor Anthony Cannella. "We're being hit by something out of our control."
The task isn't an easy one given the fact that the city only is able to make cuts to the $20 million general fund, of which roughly 80 percent is spent on public safety. Most of the cuts will be in labor since approximately 87 percent of the general fund is spent on labor and benefits.
"There are other areas that are funded through the general fund (that can be cut)," said Cannella. "As far as public safety is concerned, there's roughly $2 million in non-sworn personnel."
City Manager Brad Kilger was directed by the council to put together a staff reduction list.
Cannella said: "I think it's fair to say that public safety is going to see some effect of this massive problem that is related to the economy. We're going to do our best to make it as minimal as possible when it comes to sworn police and fire."
Revenues to City Hall are dropping due to several factors. Property taxes are dropping because of the mortgage crisis and sales taxes are dropping with decreased spending due to a worsening economy. Building permit fee revenue is down because home construction has halted.
The city's finance director, Sarah Ragsdale, said if the city doesn't decrease spending, deficits of $2.1 million may be expected in the next budget year and $4.2 million by the 2010-11 fiscal year.
Cannella said the city has the task of trimming spending as painlessly as possible. Immediate steps may include:
• Going back to employee bargaining groups to end cost of living adjustments in the future in lieu of sparing job cuts;
• Placing a hiring freeze in all area except critical police and fire position;
• Asking employees for budget-cutting measure ideas, with the dual purpose of signaling to them that the city is in a budget squeeze;
• Forbidding department heads from making purchases greater than $500, and running all spending requests through Kilger and Ragsdale;
• Freezing all training and travel except in the case of mandatory police and fire training;
• Reducing the number of credit cards in the hands of city employees;
• Determining if any non-personnel expenses can be cut.
In the next one to two months the city expects to see which jobs would "have the least impact on existing services" and look at positions that rely heavily on the general fund. One area that will be scrutinized is the city recreation program, which partly funds itself through user fees.
A staff idea to propose raising the Ceres utility users tax from 3 percent to 6 percent was declared "D.O.A." (dead on arrival) by Cannella after the meeting.
"We're not going to do that," said Cannella. "We just came to the voters for Measure H. The school district came to the voters for Measure U. We just had to increase our fees for sewer and water. We're not going back to the voters."
The mayor does not rule out another attempt to increase the tax charged for motel use in Ceres. Voters rejected a Transient and Occupancy Tax (TOT) increase when Tim Kerr was city manager.
"I'm not opposed to bringing that one up," said Cannella, noting taht the TOT is generally paid by only visitors staying in Ceres. Raising the TOT from 5 percent to 7.5 percent would only generate an estimated $37,500 annually - hardly enough to make a drastic impact.
Cannella said the council needs to approach its budget shortfalls the way most household do during money crunch time. "It may be that we just ... take care of basics. Everything else will have to wait and we're prepared to do that."
The council does not appear to be willing to renege on its policy to maintain a 35 percent reserve level to balance the budget. The budgetary cushion is used for emergencies and short-term budget shortfalls.
"Once we lose those reserves, they're gone," said Cannella.
The mayor said "we need to be just like a family that takes a massive cut in salary from their work, they better not borrow from their savings account, they'd better re-adjust their lifestyle. And we have to do that in the city of Ceres."
Other cities in California are facing more dire situations, some declaring bankruptcy. Last May the city of Vallejo filed bankruptcy.
The county is facing a $17 million debit in its general fund.
