Manteca’s general fund operating reserves for the next eight months has been slashed to a razor-thin $91,637 in order to balance the $32.8 million spending plan.
The City Council Tuesday adopted the budget for the year that started July 1, 2009 after staff started working 15 months ago to bridge the gap that was projected at $14 million for the current fiscal year.
“I’d like to thank our city staff for really stepping up to the plate,” said Councilman John Harris of the sacrifices in compensation and the rethinking of jobs that municipal employees made to have a minimal impact on city services, save the jobs of fellow city workers, and to balance the budget.
Harris expressed fear that things could get worse even though staff is cautiously optimistic in forecasts that the revenue picture will remain flat or decline slightly in the coming 12 to 18 months.
The councilman noted that he expects property tax to drop a little bit and for taxable sales to start coming back.
“My fear is whatever gains we make on the local level the state is going to come in and rob us,” Harris said. “There is more sacrifice for all of us in this community on all levels up ahead. It is going to be a rough ride.”
Manteca expects to collect $26,966,000 in general fund revenues this year against $32,796,989 in expenses after employee bargaining groups made compensation concessions plus a slew of other cuts were made ranging from freezing positions to reorganizing jobs to reduce manpower needs.
That left a $5,830,189 deficit that still had to be covered. The city applied almost all of its operating reserve carry over - $3,721,826 – to this year’s deficit. They also took interest of $1,200,000 and revenue of $1,000,000 collected as a general tax since June 20, 1994 on new single family homes with the expressed purpose of helping oversize infrastructure such as sewer and water lines. Since the tax was never structured per se for that purpose, legal counsel said it was OK to use it to balance the general fund.
That leaves an operating reserve of $91,637. That compares to the operating reserve in the previous municipal budget of $3,794,419.
It is the lowest operating reserve since the early 1980s when Manteca teetered on the edge of bankruptcy and had just $1,000 set aside for unexpected operating expenses in the general fund. It was when Manteca was forced to buy used CHP cars with 90,000 miles on them for patrol units as well as leave the then just finished Louise Avenue fire station vacant as they couldn’t afford to staff the engine company.
Finance Director Suzanne Mallory concurred noting there is a strong possibility since the state has already developed a $1.1 billion deficit just 11 weeks after adopting their budget. That deficit is now expected to grow to $7.4 billion by June 30, 2009.
Manteca does have a $1,918,000 reserve designated for emergencies and capital outlay.
The current council – and their predecessors – has faithfully kept that amount set aside for that purpose through the years in the event of major problems hitting the city. It was accessed during the flooding in 1996 when Manteca incurred hundreds of thousands of dollars in expenses that the state eventually reimbursed helping protect property and lives in rural South Manteca when levees on both the San Joaquin and Stanislaus rivers failed.
It is also used should unexpected capital expenses be needed such as police vehicles being totaled, equipment failure, and such.
Without such a reserve, the city – which can’t legally operate in the red – would be forced to delay replacing critical equipment or further reduce expenses which translates into laying off workers since over 80 percent of all general fund costs are employee compensation related.
The overall city budget excluding the redevelopment agency is $107,563,391 for the current fiscal year. That includes restricted fees collected on growth for infrastructure to the various enterprise accounts such as sewer and water, plus restricted funds such as the Measure M public safety sales tax, transit money, and grants. None of that money can be used legally to balance the general fund.
The projected cash balance on June 30, 2010 is expected to be $88,203,638 most of which is money collected through fees to build infrastructure.
The redevelopment agency – even with the state taking $6,657,835 – will have a projected cash fund balance on June 30, 2010 of $66,959,378.
Among the ways Manteca has responded to the drop in revenue are as follows:
•Thirteen employees took advantage of a program that gave them two extra years of retirement credit if they opted to retire by May 22, 2009. Also, 42 vacant positions were left unfilled and will remain frozen through at least June 30, 2010. The combined general fund savings of those two moves is $2.6 million.
•All employees were put on a furlough program of unpaid days off that saved the general fund $537,000.
•The parks division took over city landscape maintenance districts. The equivalents of four full-time positions were transferred out of the general fund to save $275,000.
•Negotiations with bargaining groups resulted in $1.8 million in savings for the current fiscal year’s general fund and $3.3 million in savings for the 2010-11 fiscal year.
•Streamlining functions within departments and shifting outside work to in-house when it could reduce costs generated $400,000 in savings.
•Expenses for supplies, travel and training were kept at 2007-08 levels.
•Cost recovery charges are being established for community development and building safety expenditures that can legally be charged to developers and others who submit plans or request building permits. A development services fund has been set up that takes all of the expenses that are incurred and tracks them against revenue. A $1.7 million loan from the redevelopment agency has been requested to allow the costs to be shifted out of the general fund.
The City Council Tuesday adopted the budget for the year that started July 1, 2009 after staff started working 15 months ago to bridge the gap that was projected at $14 million for the current fiscal year.
“I’d like to thank our city staff for really stepping up to the plate,” said Councilman John Harris of the sacrifices in compensation and the rethinking of jobs that municipal employees made to have a minimal impact on city services, save the jobs of fellow city workers, and to balance the budget.
Harris expressed fear that things could get worse even though staff is cautiously optimistic in forecasts that the revenue picture will remain flat or decline slightly in the coming 12 to 18 months.
The councilman noted that he expects property tax to drop a little bit and for taxable sales to start coming back.
“My fear is whatever gains we make on the local level the state is going to come in and rob us,” Harris said. “There is more sacrifice for all of us in this community on all levels up ahead. It is going to be a rough ride.”
Manteca expects to collect $26,966,000 in general fund revenues this year against $32,796,989 in expenses after employee bargaining groups made compensation concessions plus a slew of other cuts were made ranging from freezing positions to reorganizing jobs to reduce manpower needs.
That left a $5,830,189 deficit that still had to be covered. The city applied almost all of its operating reserve carry over - $3,721,826 – to this year’s deficit. They also took interest of $1,200,000 and revenue of $1,000,000 collected as a general tax since June 20, 1994 on new single family homes with the expressed purpose of helping oversize infrastructure such as sewer and water lines. Since the tax was never structured per se for that purpose, legal counsel said it was OK to use it to balance the general fund.
That leaves an operating reserve of $91,637. That compares to the operating reserve in the previous municipal budget of $3,794,419.
It is the lowest operating reserve since the early 1980s when Manteca teetered on the edge of bankruptcy and had just $1,000 set aside for unexpected operating expenses in the general fund. It was when Manteca was forced to buy used CHP cars with 90,000 miles on them for patrol units as well as leave the then just finished Louise Avenue fire station vacant as they couldn’t afford to staff the engine company.
State may still take even more money from city
Councilman Steve DeBrum pointed out that the state could still come back this fiscal year and take more money from cities through reneging on law enforcement grants to instituting charges for processing evidence at state crime labs.Finance Director Suzanne Mallory concurred noting there is a strong possibility since the state has already developed a $1.1 billion deficit just 11 weeks after adopting their budget. That deficit is now expected to grow to $7.4 billion by June 30, 2009.
Manteca does have a $1,918,000 reserve designated for emergencies and capital outlay.
The current council – and their predecessors – has faithfully kept that amount set aside for that purpose through the years in the event of major problems hitting the city. It was accessed during the flooding in 1996 when Manteca incurred hundreds of thousands of dollars in expenses that the state eventually reimbursed helping protect property and lives in rural South Manteca when levees on both the San Joaquin and Stanislaus rivers failed.
It is also used should unexpected capital expenses be needed such as police vehicles being totaled, equipment failure, and such.
Without such a reserve, the city – which can’t legally operate in the red – would be forced to delay replacing critical equipment or further reduce expenses which translates into laying off workers since over 80 percent of all general fund costs are employee compensation related.
The overall city budget excluding the redevelopment agency is $107,563,391 for the current fiscal year. That includes restricted fees collected on growth for infrastructure to the various enterprise accounts such as sewer and water, plus restricted funds such as the Measure M public safety sales tax, transit money, and grants. None of that money can be used legally to balance the general fund.
The projected cash balance on June 30, 2010 is expected to be $88,203,638 most of which is money collected through fees to build infrastructure.
The redevelopment agency – even with the state taking $6,657,835 – will have a projected cash fund balance on June 30, 2010 of $66,959,378.
Steps taken to reduce costs
The weakened general fund status reflectsboth the housing crisis and the general economic slowdown. Unemployment in Manteca is at a post-Great Depression high of 13.5 percent. It is about double what it was during the last economic slowdown in the early 1990s that was worsened by the Loma Prieta Earthquake and the loss of civilian military jobs and aerospace employment.Among the ways Manteca has responded to the drop in revenue are as follows:
•Thirteen employees took advantage of a program that gave them two extra years of retirement credit if they opted to retire by May 22, 2009. Also, 42 vacant positions were left unfilled and will remain frozen through at least June 30, 2010. The combined general fund savings of those two moves is $2.6 million.
•All employees were put on a furlough program of unpaid days off that saved the general fund $537,000.
•The parks division took over city landscape maintenance districts. The equivalents of four full-time positions were transferred out of the general fund to save $275,000.
•Negotiations with bargaining groups resulted in $1.8 million in savings for the current fiscal year’s general fund and $3.3 million in savings for the 2010-11 fiscal year.
•Streamlining functions within departments and shifting outside work to in-house when it could reduce costs generated $400,000 in savings.
•Expenses for supplies, travel and training were kept at 2007-08 levels.
•Cost recovery charges are being established for community development and building safety expenditures that can legally be charged to developers and others who submit plans or request building permits. A development services fund has been set up that takes all of the expenses that are incurred and tracks them against revenue. A $1.7 million loan from the redevelopment agency has been requested to allow the costs to be shifted out of the general fund.
