Six days before voters decide the fate of the City of Manteca’s one cent sales tax on the Nov. 3 ballot, Interim Finance Director Stephanie Beauchaine is warning a growing deficit triggered by economic fallout from the COVID-19 pandemic is likely to force elected city leaders to make cuts to general fund services that range from police and fire to parks and streets.
Beauchaine noted that a $2.2 million general fund deficit projected in March at the start of the pandemic and six months before she started her work at getting the finance department and city’s accounting back on track, is no longer valid.
The lingering pandemic has cratered sales tax, hotel room tax, and other major revenue sources to the point it is expected that the deficit will grow by another $4 million. While cautioning the figures are preliminary meaning they could be slightly lower or even higher, Beauchaine noted the city is looking at a deficit greater than $6.2 million this fiscal year.
That is higher than the hit the Manteca general fund took in the initial year of the Great Recession impacts hitting Manteca in 2009 that led to the layoff of 12 police officers and other municipal employees taking a 20 percent across the board pay cut.
Manteca just over a year ago restored police staffing to 72 — the number Manteca had prior to budget cuts just over a decade ago. There are 76 police officer positions funded in the current budget.
There are city departments that haven’t been restored to pre-Great Recession levels. That includes street maintenance. The Great Recession hit Manteca when it had 65,993 residents or 20,000 less than today.
The more dire municipal revenue projections is more in line with the state’s projection that they will take a $54 billion hit in revenue from the pandemic over two years. That is significantly more than the revenue loss California sustained at the state level during the Great Recession.
City sales tax revenue alone is now trending at 17 percent below last year’s level. That is due not only to many businesses such as restaurants and such being forced to operate at limited capacity due to COVID-19 but also businesses that haven’t reopened and might never do so as well as an accelerated shift to on-line shopping where Internet-based generated sales tax does not always get properly credited to the jurisdiction where the buyer resides.
The 17 percent drop in sales tax means if Measure Z passes it would only generate $9,960,000 instead of the $12 million projected when it was placed on the ballot earlier this year.
It also means the half cent Public Safety tax that funds 15 firefighters and 17 police officers will take a 17 percent hit.
While Beauchaine believes general fund reserves are adequate enough to cover deficits this year, the deficit is not only likely to continue but to grow in the following years like it did in the Great Recession until a recovery is underway.
That raises the strong possibility elected leaders would have to entertain budget cuts, if not this fiscal year, then in the fiscal year starting July 1, 2021.
The Public Safety Tax fund typically has enough of a reserve to cover all salaries for a year if funding suddenly dried up. A 17 percent hit is the equivalent of 5.44 police and/or firelighter positions. To keep those positions the city could be forced to turn to the general fund that is also under the same duress.
“Measure Z has shifted from being about bells and whistles to providing (for basic services),” Beauchaine said.
Under California law the next time the city can ask voters to consider a tax increase is not until the next general election year in 2022.
Measure Z requires a simple majority to pass.
To contact Dennis Wyatt, email email@example.com