The city of Ceres dodged a budget crisis during a special Wednesday evening meeting when the City Council approved a Continuing Resolution in the aftermath of a deadlock over a budget, which allows employee and bills to be paid.
On May 24 and on Monday, June 28 the four members of the council were deadlocked in 2-2 tie votes in approving a budget. With the new fiscal year arriving on July 1, City Manager Tom Westbrook asked the council for an emergency meeting on Wednesday to consider passing a Continuing Resolution (CR) to allow the city to pay its bills for the next two months.
The council has been meeting without a fifth member since January and its four members have been split on numerous votes, unable to accomplish much. The vacancy in the District 1 council seat will be filled by special election on Aug. 31 with the new member seated on Sept. 13. That will enable the council to refrain from remaining deadlocked in tie votes.
Westbrook originally asked the council for permission to spend $14.5 million to cover two months of city expenses including the Capital Improvement Projects program, which are part of the water and sewer enterprise funds. That request was amended to spend $17.826 million for 90 days minus the CIP.
The council ended up including the CIP and allowing two months of expenditures for a total of $14.5 million.
Westbrook expressed hopes that the council can get the budget approved as quickly as possible to include the CIP funds.
A Continuing Resolution allows the city to continue operating under the adopted budget for the prior year; it does not add any new spending or positions.
“I hope everybody understands that if we don’t approve some sort of budget, whether it’s two months or three months or whatever it is, after this week the city will have no authority to pay bills or pay employees at all,” cautioned Councilman Bret Silveira. “City business would have to be put on hold. I just want everybody to understand that.”
He wanted to see the CR cover a three-month period.
Vice Mayor Couper Condit asked if all of the city operations covered by the CR were “essential,” to which Westbrook replied “of course they are.”
The vice mayor continued that “it would not be right to not address the elephant in the room – that we need a fully funded budget.” He wanted city staff to come back in two or three months with a new budget that trims $1.6 million in expenditures to avoid dipping into reserves. Councilwoman Linda Ryno seconded.
Westbrook said the budget decision should dovetail with a talk about where to spend federal American Recovery Act (ARA) funds. Condit said he wanted the council to be presented a budget with the options for budget trimming and make a decision the same night, to which Westbrook queried with a nervous laugh, “We don’t want to meet when we get the ARA funds? Condit replied a discussion is warranted but wants to see a trimmed budget anyway with no dipping into reserves.
ARA funds may come after the Fourth of July holiday.
Mayor Javier Lopez expressed hopes the council would support the CR “to make sure employees are taken care of – they are vital to this city.”
Ryno expressed concern over the lack of communication between the council and City Attorney Tom Hallinan and wanted him to clarify a remark he made in May about the city not needing a budget to operate. Hallinan said that the city can operate without “a budget, per se, but you have to have some authority to make expenditures.” However, in May he did not include the mention of a need for a CR.
“I think about all the angst that our employees are going through, wondering if they’re going to get paid and I just think we didn’t have to be here,” said Ryno. “I think that we should have received that information Monday night.”
The proposed budget which the council could not agree upon in May draws down on reserves by approximately $1.69 million. That may sound like a big dip into the savings, but City Manager Tom Westbrook said the city added $1.58 million to the General Fund reserves related to salary savings due to freezing positions and not filling some when they became vacant. Under the budget proposal, the city is projected to have a General Fund reserve of about 19.7 percent, or $5.28 million by June 30, 2022. That figure meets the council’s established minimum General Fund reserve of 18 percent of expenditures.
Of the proposed $26.7 million General Fund, about 71 percent is spent on salaries.
In May Ryno and Condit voted against the proposed budget while Lopez and Silveira supported it. A 2-2 tie is the equivalent of a procedural denial.
Silveira didn’t see the draw down on reserves as being an issue since the city saved money in salaries and the leftovers went into savings.
Westbrook said trimming $1.6 million in General Fund expenditures likely will mean not filling previously frozen positions and freezing vacant positions, adding “I don’t know if those measures will even be enough to make up the $1.6 (million).”