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Reserve change aims to make Manteca more responsive
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A change in municipal general fund reserve policies — fueled in part by increased property taxes captured from homes and property that once supported the now defunct redevelopment agency — will give the City Council more flexibility throughout the year to address community needs that may pop up.

It also will help the city deal more effectively with skyrocketing pension costs that pose a major threat to California cities in the coming years to be able to fund services and make contributions to the retirement system.

The City Council Tuesday is considering changes in the general fund reserve policy that would:

*Create a pension stability reserve at 5 percent of operating expenditures.

*Change the fiscal stability reserve for cash flow and contingencies to 30 percent as opposed to the current 25 percent.

*Cap the economic development reserve at $2.5 million with excess money coming from residual property tax from property in the RDA going into undesignated reserves.

*Reduce the current assignment for capital facilities from 4 percent of operating revenues to 3 percent with a cap of $2.5 million.

*Reduce the technology reserve from 5 percent of operating expenses to 3 percent with a maximum cap of $1.5 million.

The pension stabilization reserve is designed to soften the impact of significant year-over-year increase in employer contributions for the California Public Employees Retirement System (CalPERS) due to low investment returns or changes in actuarial assumptions. It would allow the city to take advantage of opportunities to reduce pension liability. The un-used portion of the budget for pension expense will be used as a one-time payment each year.

The combined general fund reserve accounts for the fiscal year that came to an end June 30 was $21,051,596 plus $468,590 in an unassigned reserve for a total of $21,520,186.

Under the proposed changes when the current fiscal year ends on June 30, 2019 there will be $20,237,472 in the general fund reserve accounts plus $1,257,330 in unassigned reserves for a total of $21,494,802.

The proposed reserve changes proposed by City Manager Tim Ogden and Finance Director Jeri Tejeda at the council’s direction addresses concerns expressed by elected officials that the city was holding on to too much money each year depriving the city of  the ability to be more responsive to citizens’ concerns and needs.

If implemented, the policy changes would pump up the unassigned reserve that the City Council could tap into for discretionary projects by capping the economic development reserve. In the past there have been undesignated reserves per se but that they were generally in the low six figures and were the first tapped when budget adjustments have to be made for spending concerns driven by needs identified by staff for day-to-day operations.

For at least the last 28 years, the City Council basically had a “once-a-year” window to add what could be described as community quality of life expenditures. That was at budget time. While they could adjust spending within the budget, adding any other initiatives such as fast tracking downtown alley work, funding a park project that neighborhood groups may push for or other one-time expenses to address relatively small scale community needs and wants essentially could only move forward during the formal budget process.

Ogden was able to propose the reserve policy change by shifting away from a position the council adopted three years ago on the advice of then City Manager Karen McLaughlin to funnel the residual property tax from the redevelopment agency property taxes into a reserve she recommended creating that was dubbed the “economic revitalization” reserve.

The money is the city’s share of property tax that would have gone to the RDA. Without the RDA that money would have continued to flow to the general fund between the mid-1980s when the agency was formed and until it was disbanded several years ago by the state.

McLaughlin viewed this as “new money” that could replace the economic stimulus function of the shuttered RDA after noting “we got along fine without the money” for years. It is money, if the city had access to it instead of it being diverted to the RDA that would have paid for day-to-day government services such as police, fire and streets. Some residents took a dim view of that stance arguing that Manteca wasn’t getting along fine as it could easily have covered the salaries of four to six additional police officers or funded street work.

When the economic revitalization fund was created three years ago, the annual RDA residual was $800,000 a year. It is now at $1.2 million a year and will continue to grow as property values increase on impacted properties that were once part of the RDA.

 The City Council meets Tuesday at 7 p.m. at the Civic Center, 1001 W. Center St.


To contact Dennis Wyatt, email