The city of Ceres will usher in the new budget year on July 1 with a deficit made up by dipping into reserves. But there will be no layoffs for now, City Manager Toby Wells informed the Ceres City Council during Monday's Study Session.
At the direction of the council, Wells crafted a spending plan that leaves in place an 18 percent reserve. Wells believed that to retain an 18 percent reserve would have meant layoffs for FY 2015-16 but the current budget that ends on June 30 may end up with more unspent funds.
To help pare down the deficit, Wells asked Police Chief Brent Smith if the planned hiring of a third lieutenant could be delayed until January. "He agreed to make that work," said Wells.
The budget includes an alternative fire staffing plan that extends until Sept. 30. The plan was put into place to retain firefighters which were initially funded by a federal grant whose two years' worth of funding ran out. The staffing plan calls for the brown out of the Ceres Fire Station on Service Road as well as reduced overtime costs to fund the salaries of the firefighters. It also uses some funds from Measure H, the half-cent sales tax measure. By the end of the fiscal year, Measure H is projected to be at $200,000.
Only two of the six firefighters funded by the SAFER grant remain on the job, with three firefighter positions unfilled due to attrition.
The city is applying for another federal grant to help pay for firefighters, but Wells said "we're not overly optimistic where we're at right now."
A total of 27 firefighters were in place before the SAFER grant was delivered. There are 29 now.
Even if the city is awarded a new grant, Councilman Ken Lane said he expects the city's costs to rise since that would mean an end to the alternate staffing plan and opening up stations full-time again.
Wells said revenues for the upcoming fiscal year will be approximately the same level in 2007-08 when the recession hit the country. The total city budget is at $59.6 million. However, the General Fund, which is where all discretionary spending takes place, consists of $18.2 million in revenues and $19.5 million in expenditures for a $1.3 million deficit covered by cash reserves. The city manager said the deficit may not be as deep pending the close of the current budget year.
Most of the deficit traces back to the council's decision to restore the salary cuts accepted by city employees. That decision cost $824,593. Other employee cost increases were due to retirement costs, worker's compensation insurance and public liability insurances.
Approximately 80 percent of the General Fund is allocated to police and fire services. The remaining breakdown is: 7 percent for administration; 6 percent for parks; 3 percent for community development (planning); 2 percent for recreation; and 2 percent for public works and engineering.
The council heard Wells address a prior pledge to get the city budget to a balanced state by the third year of his administration as city manager. He said he's projecting revenues for the 2016-17 fiscal year to be four percent higher and $500,000 in cuts in the form of layoffs or reduced services. The budget would be balanced for FY 2017-18.
Wells said the city needs to develop a five-year plan to deal with the red ink which the Community Center is awash in. The center has drained the city by $845,000 since it was opened.