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Bonus bucks: Most untouchable to cover deficit
Contracts restrict use for much of $18M in municipal coffers
Manteca is using $200,000 on bonus bucks collected for the purpose of recreational amenities to replace aging playground equipment throughout the city. - photo by Bulletin file photo
Bonus buck balances – fees that residential developers agreed to pay for growth-related fees for things such as main roads, sewer and water lines plus parks and government facilities - are enough to plug the City of Manteca’s projected deficit next fiscal year when combined with other measures being taken.
There’s just one problem.
The money can’t be used for purposes other than what the city contractual agreed to use them for when they inked deals with developers for sewer allocation certainty.
The Manteca City Council often gets hammered by perennial critics of their actions when they spend the bonus bucks while asking municipal workers to take pay cuts to balance the general fund budget. Legally, though, they can’t use the money for that purpose. Some of the items being paid for this fiscal year with bonus bucks normally would require general fund expenditures.
Those items are either development related – such as contracting for municipal planning workers instead of hiring them with general fund money – or are physical investments in facilities.
There were 13 categories of bonus bucks on June 30, 2008 with a combined fund balance of $18,014,881.63. That does not include $8 million paid by developers toward the public safety endowment fund. That money has been transferred to an account where the interest generated is used to fund either police of firefighters. There are currently two police positions funded with the interest – a patrol officer and a lieutenant.
The biggest bonus buck expenditure has been in keeping Manteca afloat with adequate reserves.
Since 2002, city leaders have used $12.2 million in the unrestricted bonus bucks that are development agreement fees to cover gaps in the general reserve.
It  started in 2002 as a $512,000 infusion to help ease the pain of dropping the $2.35 monthly household tax on garbage, water, and sewer service that generated $690,000 annually to help cover part of the tab of operating Manteca’ s municipal storm drain system.
Another $429,500 in bonus bucks was used to cover a revenue shortage in 2003. The city used $780,000 in bonus bucks in 2004 to assist with storm system expenses. Then in 2005 they used $2.4 million in development agreement fees for general fund operations and personnel. The city used $2.1 million in 2006 to also cover a general fund short fall.
This fiscal year, the City Council tapped $6 million in bonus bucks to balance the budget.
The budget, as developed, had a $7.3 million revenue shortfall against expenditures. The city made up the rest by leaving six positions unfilled to save $455,890 and then slashed department spending back by $800,000.
When the council adopted the budget in July, they called the $6 million infusion of bonus bucks a zero interest loan although it wasn’t clear how the council intended to repay the money down the road.
It is that $7.3 million that is referred to as the structured deficit. The city actually has money – thanks to the bonus bucks – to plug it this year. The structured deficit refers to usual revenue sources coming up short against expenses.
The $7.3 million shortfall for the upcoming fiscal year starting July 1 was assumed out of the gate on this year’s budget in planning for next year’s spending plan. Since then, property and sales tax revenue started dropping. That prompted the city in December to analyze trends and to announce they would face an $11.3 million deficit in the 2009-10 year unless steps were taken to reduce spending and possibly find a way to increase revenue.
So far, City Manager Steve Pinkerton believes strategies being pursued will cover at least half of the budget gap.