Members of the Ceres City Council on Monday approved a budget for the upcoming fiscal year that avoids firefighter layoffs through a myriad of frozen positions and a half-million-dollar deficit covered by use of reserves.
The city is also depending on using half of an anticipated $600,000 in fees from Kase Manufacturing, a medical marijuana facility that is expected to be up and running this fall. The city cleared the way for the plant to to be operational in September. The city anticipates a windfall of $600,000 in fees for the first year of Kase's operation. At a budget workshop held last month, three members pressed to include half of those anticipated revenues into the city's spending plan.
The budget plan - termed a reasonable response to current conditions by City Manager Toby Wells - leaves the city with an 18 percent reserve as outlined by the City Council as the city enters the new budget cycle on July 1.
Wells called the budget a "stop gap" spending plan as the city deals with a structural deficit of approximately $1.6 million. He said the deficit has been minimized by $1,085,669 through budget cuts - mostly positions which were abandoned and not filled.
The city expects to cover the $505,688 deficit with general fund reserves.
Ceres city officials expect to end the 2016-17 budget year with a fund balance of $4.1 million, which represent a reserve percentage of 22 percent. Digging into reserves to cover the deficit will bring the percentage down to 18 percent by this time next year.
In his staff report to the council, Wells said the Valley's economic future "will likely continue to face difficulties for at least the next several years."
The budget picture has also been impacted by increases in retirement costs, workers compensation insurance and health insurance premiums.
"Revenue is increasing a small amount each year but the increases need to come at an accelerated rate in order to eliminate the structural deficit that we continue to face or there must be changes made to the service levels provided," wrote Wells. "There are positive signs that the economy is improving, but clearly, the situation is fragile and the improvements have been slow to materialize. Economic development at our local level is a critical element to our financial future in order for revenue growth to exceed the projected expenditure growth. Our agreement with Kase Manufacturing will alleviate some pressure on the General Fund but is not a solution to our financial issues."
The budget adopted on Monday projects revenues into the General Fund at $19.3 million with expenditures at $19.81 million.
The budget includes the freezing of four positions: an administrative clerk, a custodian, a fire captain and one fire engineer.
It also eliminates a Public Safety Support Services supervisor and creates a Public Safety dispatch supervisor. It also re-establishes the Senior Planner job description.
Continue to be frozen from prior years are:
• A vacant Public Works Superintendent;
• One vacant Senior Parks Maintenance Worker;
• One vacant Parks Maintenance Worker I/II;
• One vacant Parks Maintenance Worker Aide;
• Six vacant police officer positions;
• One vacant Fire Battalion Chief position;
• One vacant Deputy Finance director;
• One Recreation Supervisor;
• Redevelopment and Economic Development Manager;
• One Police Sergeant (converted to a lieutenant position);
• One Hi-Tech Crime investigator;
• Non-critical positions as determined by the city manager.
The city is expected to lose the six firefighters whose salaries were funded by the two-year SAFER grant which runs out in March.
Wells said that the proposed budget has been "pared down to the point that line-items for important expenditures may not have sufficient funding to last through the entire fiscal year. Staff has calculated line items to the absolute minimums, and, in effect, any unforeseen equipment failures, damages, and major events disasters may lead to a midyear request for supplemental funding. Staff pledges to exercise all diligence in controlling costs within their control."
The Ceres Community Center continues to operate at deficit levels. Since opening the facility has drained the general fund by an accumulated $1.37 million.
"Steps must be taken to decide the level of subsidy that will be provided each year and how to repay the current negative fund balance," said Wells.
Police operations take up $12.05 million of the general fund and fire claims $6.98 million. Overall, public safety consumes 82 percent of the General Fund budget.
Seventy-three percent of the general fund is spent on employee salaries and benefits.
The council voted 4-1 - Linda Ryno casting the dissenting vote - to give Wells a five percent raise. Ryno opposed the increase saying all city employees should be given a raise. Her motion to allocate the $300,000 from Kase Manufacturing to employee raises died for lack of a second.
During a May budget workshop, the council decided the city should:
• Explore increases in the city business license and mill tax and user fees across the board;
• 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;
• 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.