It is indeed independence day when it comes to Manteca municipal finances.
This marks the first Fourth of July in 12 years that Manteca will no longer have a structural deficit.
It means revenues are expected to meet or exceed necessary expenditures for day-to-day municipal operations when the current fiscal year ends on June 30, 2012.
The city in past years has covered the gap by using reserves, one-time monies which were primarily bonus bucks, and expenditure reductions to balance the budget.
Bonus bucks ranged from $7,000 to $12,000 per new home. Developers paid the bonus bucks to assure sewer allocation certainty. Bonus bucks were not restricted as to what the city could use it for as are most growth fees.
The structural deficit has been an issue for much of the past decade. However, as long as there was growth it didn’t receive serious attention. Sales tax, as an example, shot up 108 percent in the 10-year period ending in 2007 while property tax receipts rose 162 percent during the same time.
Three years ago when both revenue categories dropped to single-digit gains for the first time in a decade, city staff cobbled together a long-range plan to address the structural deficit. It didn’t mean that previous budgets were balanced - they were. It meant they were using money squirreled away over the years to keep things rolling.
Part of the problem was the lack of political will by elected leaders, employee groups, and even citizens who demanded more services over the past 12 years. As long as the economy was on a roll, one was not overly concerned.
Also four-year municipal employee contracts with annual 5 percent pay raises negotiated by former City Manager Bob Adams accelerated the problem just as revenues started dropping.
What got Manteca to react quicker than many other cities was a 15-member citizens budget advisory committee.
Employee group representatives sitting in on the meetings were stunned. There was no appetite whatsoever for new taxes even if it meant a reduction in municipal services.
“They (the committee) was saying their friends and families were taking 20 percent pay cut hits, furloughs, losing their jobs, and losing their houses and that they expected city employees to be treated no differently,” recalled City Manager Steve Pinkerton.
Making the message more poignant was the liberal sprinkling of Measure M boosters on the committee who had campaigned hard for the public safety sales tax.
“That really hit home when your staunchest supporters were saying no to taxes,” Pinkerton said.
The furloughs and pay reductions put in place two years ago for most bargaining groups was the first step. The final step is being taken this year.
Police, firefighters, and executive management groups have all reached an agreement with the city on how to eliminate their units’ share of the general fund structural deficit. The remaining groups are voting on their share. Depending upon how deep they are willing to cut compensation, additional employees may lose their jobs.
The general fund is the only city fund under severe stress. Just over 85 percent of the general fund goes to pay for employee compensation. The general fund covers public safety, parks, streets, and other general government day-to-day operations.
The final budget for the 2011-12 fiscal year that started July 1 will be before the City Council later this month for approval. It will not have a structural deficit.