The term "going to pot" normally has a negative connotation but in the city of Ceres' case, the introduction of a medicinal marijuana producer could spell big-time budget relief.
During a Monday evening budget workshop in which the Ceres City Council and city staff talked about ways to trim city expenses in an effort to reduce a $1.1 million budget deficit, councilmembers decided to count on half of the revenues expected when Kase Manufacturing opens up - supposedly by September. The city is in the process of changing its zoning law to allow the medical marijuana operation in an industrial zone in southwest Ceres. Under a developer agreement with the city, Mike Reynolds, proponent of the facility, has pledged to give the city $50,000 per month for the first year of operation, $75,000 per month for the second year and $100,000 per month for the third year. To put his money where his mouth is, Reynolds is putting down a $50,000 deposit with the city to accommodate his business proposal.
Members seemed split about counting on the revenues from the yet-to-be-seen operation into the 2017-18 fiscal budget. Councilmember Linda Ryno was adamant about not including $600,000 from Kase for the budget, saying, "That's part of our problem - we don't live within our means." However, Mayor Chris Vierra, and Councilmembers Ken Lane and Bret Durossette felt half of the money could be included. That adds $300,000 to the revenue stream to bring down the anticipated budget shortfall to $800,000.
The newfound revenue will not entirely fix Ceres' budgetary woes. The bulwark of expense cutting is expected to come in the form of fire services - either cutting personnel or contracting out the department to neighboring agencies like Stanislaus Consolidated Fire Department.
Much discussion centered on how to approach fire service reductions. Last month Ceres Fire Captain Mike Miller, president of the Ceres Professional Firefighters Association, said firefighters are interested in contracting with Stanislaus Consolidated Fire Department. Oakdale City and Oakdale Rural fire departments merged with Stanislaus Consolidated years ago to save money. But the council's majority on Monday expressed no interest in hiring a consultant to analyze a merger or other possible changes to service level. Mayor Vierra said he doesn't want to possibly spend $60,000 for a consultant unless it would develop specific instructions on how to proceed. He didn't think it would.
During the workshop, a consensus was reached to:
• Explore increases in the city business license and mill tax and user fees across the board. City Manager Toby Wells said a 10 percent increase in the business license fees could generate an additional $1000,000;
• Not fund the continuation of six temporary firefighter positions paid for by the federal SAFER grant, meaning they will be released;
• Pre-empt the city tree maintenance cycle to only fund emergency tree maintenance;
• Reduce code enforcement activities by $5,000;
• Not pursue an election to expand the Ceres Downtown Revitalization Area and not increase fees on businesses within it;
• Withdraw as a paying member of the Tuolumne River Regional Park joint powers authority to save $17,500 and possibly triggers expulsion as a participant;
• Stick to a minimum of an 18 percent reserve when compared to general fund expenses.
Escalating employee costs are wreaking havoc on the city's budget. Wells noted that public safety employee retirement costs are up by $314,000, worker's compensation costs up $168,000 and health insurance up by $285,000. In addition, salaries are up by $692,000.
The workshop broke off with Wells pledging to bring back a draft budget that keeps the city's minimum reserve of 18 percent.
He said he may have to call on a special meeting depending on the types of budget cuts he recommends.
The final budget is expected to be approved on June 12.