If Manteca’s elected leaders are going to deliver on their promise to widen Main Street through downtown from Yosemite Avenue to Alameda Street to four lanes starting in early 2021, they are going to have to dip into general fund reserves.
That was arguably the most high profile tidbit to come out of Tuesday’s presentation and discussion of the city’s finances for the first quarter that ended Sept. 30 for the current fiscal year.
The presentation by Interim Finance Director Stephanie Beauchaine marked the first time a City Council — and by extension the public — have been provided a quarterly budget performance report in at least a quarter of a century.
While the nitty gritty information centered on how revenue and expenditures are trending after three months compared to the overall budget for the fiscal year ending June 30, part of the discussion touched on the disarray in finance department accounting procedures going back a number of years that were uncovered earlier this past summer.
Beauchaine gave the council a heads up that a number of large capital improvement projects they have authorized are likely to run short based on funds that were budgeted. That means the council would have to dip into general fund reserves that are currently pegged at around $17 million in order to complete them. She noted discrepancies were created due to how the city was budgeting for the projects — apparently using different systems that were partially utilized instead of a universal system and.
When a council member asked specifically about the Main Street project that originally was promised by a previous council to be delivered more than two years ago, City Manager Miranda Lutzow said bids exceeded the city’s estimates. Lutzow said staff would be returning to the council next month to discuss the project that involves removing the much maligned landscaping bulb outs that still remain in the 100 block of North Main Street.
A number of adjustments to capital improvement project funding are expected to be presented to the council at the mid-year budget review in early 2021 for a decision.
An example of accounting issues includes trying to determine the exact number of positions that have been authorized in budgets over the years as the data needed to account for them was not completely entered into the city’s financial software in all cases.
Accounting issues aside, Beauchaine said the staff “overall is comfortable with how the budget is performing pertaining to operating expenses.” She added the caveat is that the budget can’t be used as an effective strategic tool for management decisions that allow full council oversight until issues with the capital improvement projects and cost recovery allocations between various departments and funds are addressed.
As things stand now, general fund expenses are proportionately on target with 26 percent spent at the end of the first quarter.
Property tax revenue in the first quarter is always insignificant given the city doesn’t receive its first installment of property tax receipts until January. Those receipts are not only expected to be on target but based on state feedback reflecting growing assessed valuation fueled by growth, Manteca is on target to be ahead of projections for this current fiscal year.
Sales tax — one of the two hardest hit categories due to COVID-19 shutdowns — is down. Based on the first quarter receipts, the city anticipates sales tax revenue at midyear will be 18 percent below projections. Ultimately, Manteca had anticipated receiving $12 million in sales tax this fiscal year before the pandemic hit.
At the same time room tax is expected to be $1.8 million less than what it was projected to be at mid-year. That’s due to COVID-19 stunting travel and Great Wolf forced to delay its opening due to the pandemic.
The general fund budget in place anticipated $47.7 million in expense and $48.6 million in revenue. The $903,000 gap is budgeted to be bridged with general fund reserves.
General fund reserves have already been drawn down $1.4 million this year.
Beauchaine said the city has adequate general fund reserves to cover any shortfall in the general fund this fiscal year. The general fund pays for day-to-day operations such as police, fire, basic street maintenance, parks upkeep and general government functions.
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