A $71 million spending plan for the city's Budget Year 2016-17 was approved by the Ceres City Council on Monday evening but the vote wasn't unanimous.
Since most of the budget is comprised of enterprise funds - such as sewer and water funds - the council's attention is usually focused on the General Fund, which contains the only money which the council can spend as it chooses. The vast majority of the General Fund pays for the costs of police and fire services.
City Manager Toby Wells said the city has ended the 2015-16 budget $250,000 better than predicted in June and $80,000 less in expenditures. That allows the city to:
• Start the 2016-17 budget with a beginning balance of $4.6 million;
• Project General Fund revenues at $18.3 million;
• Anticipate General Fund expenditures of $18.9 million;
• End the year on June 30, 2017 with $3.9 million, or 21 percent.
Wells said he will finalize the budget in September with updated information and present a "plan of attack for our structural deficit" in October. The council has made it clear they want Wells to develop a plan so that the city quits slowly whittling down on reserves. Without any adjustments in spending or revenue, the city is headed to a 4 percent reserve by 2020, which Wells said is "clearly unacceptable so we've got to make those course corrections."
The council approved the budget in a 3-1 vote. Vice Mayor Mike Kline was absent.
The budget was balanced by the projected use of $537,042, which left Councilwoman Linda Ryno unsettled.
Ryno suggested that the budget truly doesn't have an 18 percent reserve because of the deficit spending in the Community Center enterprise account. She said the 18 percent reserve doesn't take into consideration the $1.178 million negative cash balance of the Community Center forecast for the end of the 2016-17 budget cycle. Wells said the Community Center is an enterprise account but a "sub fund" of the general fund.
"When I look at this sheet that shows the 18 percent reserve, in actuality that isn't true because you're not taking into consideration the negative cash balance of $1.178," said Ryno. She wrung an admission from Wells that "that is an obligation that we do have as an enterprise fund that has an obligation that has to be addressed."
Ryno said while she thought it was "great that you were able to make the changes that you've made," she said Wells still presented a budget using more general fund reserves.
Mayor Chris Vierra reminded Ryno that this fall Wells will be delving into ways to remedy the budget deficit. Many public safety employees fear layoffs are coming.
"Yes, it's a deficiency but it's one that I think we're working on a solution for, cobbled with the increase in revenue so I'm okay with it," said Mayor Vierra.
"Do you remember having a discussion about having a balanced budget this year?" Ryno asked the mayor, adding she wanted a budget that didn't dip deeper into reserves.
Reasons for the city's higher expenditures stem from higher retirement costs as well as the return of employee salary concessions. Councilman Bret Durossette noted that the city's costs have increased, such as $500,000 for the retirement paid into StanCERA (Stanislaus County Employee Retirement Association). "Obviously we have to get a grasp on that," he said.
To deliver a budget that doesn't cause reserves to deplete below the 18 percent level set by the council, the city froze four vacant police officer positions. The city also continues to freeze a number of vacant positions, including a Public Works superintendent, two parks maintenance workers, a parks maintenance worker aide, two vacant police officers, a fire Battalion Chief, deputy Finance Director, a recreation supervisor, the Redevelopment and Economic Development manager, a police sergeant (that was converted to a lieutenant position) and a high-tech crimes investigator.
The budget supports 191 full-time employees.
Earlier in the meeting the council appointed Leonard Shepherd, Diego Fernandez, and Rafael Valencia to the Measure H Oversight Committee. Melvin "Gene" Yeakley was also interviewed by passed over.
Outgoing committee member John Silveria made it known that he is not happy that the council is freezing police officers and talking about additional public safety layoffs. He suggested an idea of doing away with the half-cent sales tax passed in Measure H and assess homeowners a "fee or tax" for public safety. "If people don't like it, they can live someplace else," said Silveria. "I think there's a lot of people that I've talked to that would be okay with that. But I think it's not okay to continue to cut police and fire."
However, both Mayor Vierra and Shepherd balked at his suggestion.
"Maybe we should ask the citizens to pay more but I can tell you right now that's not going to happen," said the mayor. "Most people don't want to tax themselves anymore."
Shepherd compared the chances of a new public safety tax with that of a "snowball in hell."
Vierra said he remains hopeful that the Mitchell Ranch Shopping Center is constructed soon with new stores and restaurants helping to stem the bleeding of sales tax dollars off to other communities.
"That's a number that will help," said Vierra.
Randy Cerny, a member of the Measure H Oversight Committee who has stepped off, said the council has to dip into reserves.
"We're in tough times right now and folks need to remember that public safety is your primary responsibility," said Cerny. "You have a reserve fund; you're going to have to dip into it."
As he departed the committee he implored the council to restore the Street Crimes Unit.
"Measure H was built on that. The people of this community needed a proactive unit to go out and fight drugs and gangs in this city and by taking it away you really took away the whole vote of the community to support Measure H."
Wells and the council acknowledge they have a difficult task in October. If no adjustments are made to spending or revenue, the city is staring at the use of $863,783 in reserves in the next budget year, ending 2017-18 with a 13 percent "rainy day" fund. The year 2018-19 would have to use an additional $845,469 in reserves, drawing the fund down to eight percent. Projections for the 2019-20 fiscal year show an additional $825,568, leaving reserves at four percent.