The freezing of five police department positions and a series of budget slicing across the board still won't be enough to avert a city of Ceres budget of red ink for the next fiscal year starting on July 1.
Members of the Ceres City Council got a two-hour look at the proposed 2016-17 fiscal year budget on Monday and were at odds on how to close the remaining $658,000 deficit. With only four members present - Councilman Bret Durossette was coaching a high school softball game - they were split down the middle over dipping further into reserves.
City Manager Toby Wells presented the budget plan he spent approximately 250 hours crafting since April and asked for permission to take city reserves down from 19 percent to 15 percent if the need arises. Not doing so, he warned, would likely mean layoffs since 87 percent of the budget is spent on personnel costs. With 83 percent of the General Fund spent on public safety, Wells said it's no secret where the cuts may lie. Mayor Chris Vierra and Councilman Ken Lane said they support dipping deeper into the city's rainy day fund while Councilmember Linda Ryno and Vice Mayor Mike Kline remained opposed to a greater draw down.
"If you're asking to go to 15 (percent), I can support that," said Mayor Vierra. "That doesn't necessarily mean that you're going there. It gives you the ability to go there. (Last year) we gave the ability to go to 18; you didn't go there. That's good.... Eventually we have to ween ourselves off the reserves."
Ryno took the opposite view.
"You said eventually we need to ween ourselves off of using reserves but for how many years have we been using our reserves," Ryno told the mayor. "If we do use them this year then next year we're faced with an even greater amount that we have to try and come up with ... we need to learn to live within our means and we're not doing that and we haven't been doing that for nine or 10 years. At some point we have to do it."
Ryno said the city needs to quit looking to greater sales tax revenues from projects like Ross Dress for Less, which is expected to open in July, or the Mitchell Ranch Shopping Center, which may not become a reality for another two years.
"If Ross does open, they do wonderful, Walmart comes in, they do wonderful, well then we have all this money but we don't have that money (now). I think that's our problem: we keep hoping we're going to get this extra money and we don't and we find ourselves where we're at."
Vice Mayor Kline pointed out that city reserves have consistently been declining since they were at 28 percent three years ago.
When the mayor reminded the council that the alternatives to not dipping into reserves would be laying off employees, Ryno said: "Something has to be done, you can't keep pushing it off every year."
The four were reluctantly in agreement to approve the freezing of four vacant detective positions and one traffic officer position. The action takes the sworn force from 51 to 46 to save $500,000. Wells said three of the four detective positions were designated for special assignments, such as the county drug enforcement agency and the Stanislaus County Auto Theft Task Force (StanCATT).
Wells projects ending FY 2015-16 with a reserve of $3.6 million. However, because the City Council last year decided to return to city employees the salary concessions which they forfeited to help the city balance past budgets in the economic downturn, the 2016-17 budget is taking a hit. The budget is also impacted by a $600,000 increase in employee retirement costs. Wells said that his first budget draft consisted of a $3.1 million budget deficit when he was looking at $18.6 million in revenue against $19.2 million in expenditures.
The city manager noted that he's not taking into account any recession which some economists say is coming. He appeared reluctant in having the council rely on what new sales tax might be generated by the Ross store. Wells guessed that the store could boost city sales tax revenues by $80,000 to $100,000 by capturing sales that are going to clothing retailers in Turlock and Modesto.
To avert another budget crisis next year, Wells said a five percent change is needed, or a $1 million change in either expenses or revenues "or some combination thereof." The situation will be worse for the 2017-18 fiscal year, Wells opined, because revenues are only expected to increase four percent and employee costs increasing six percent.
With the prospects of having a full council on Monday, June 13, Wells will present budget alternatives. Insiders feel that Durossette may support a draw-down on reserves to 15 percent, which would allow the city to escape employee layoffs this year. In the meantime, Wells indicated that he might be able to find an additional $100,000 to cut.
Wells is also proposing waiting later before drastic measures are taken. He proposes a "more thorough" mid-year budget review at the second meeting in January to plan a February review of service levels and give pre-budget direction "because obviously we cannot continue to do what we're doing this year and we've got to start making those changes."
He noted that the city doesn't know for sure where the city will end the 2015-16 year but said $100,000 is vital. "That's a fully burdened police officer. To me I would rather make that decision one day later than two days too early."
Lane remained skeptical about finding any more areas to cut.
"To take a line-item discussion on this," said Lane, "there's no line items that we can take enough out of the budget if we want to stay at 18 percent (reserves) or 20 percent or wherever we need to be. I know where that is and it's bodies."
Wells offered to try to "push harder on a few dials but I don't think we get to $400,000," said Wells.
The council went into closed session to discuss the possible actions required to execute layoffs.