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Lathrop braces for potential revenue hits
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While the full extent of the financial impact from the COVID-19 pandemic is not yet fully known, Lathrop is taking steps to weather the storm when it comes.

Earlier this month the Lathrop City Council voted to create a fiscal stabilization reserve in order to help provide a cushion when the inevitable finally happens as a way of making sure that essential city services continue uninterrupted while the tax base and the economy recover to previously seen levels.

With reductions in sales tax revenue already starting to become apparent, Lathrop city staffers proposed the application of $4.7 million in previous year’s funds to currently identified unfunded liabilities by:

*Transferring $400,000 to the Public Safety Reserves account to help offset against future increases in public safety costs.

*Transferring $2.2 million to the Street Repair Reserves to maintain deteriorating roadways.

*Transferring $600,000 to the Retirement Stabilization Reserves account to meet future unfunded pension liabilities.

*Transferring $1.5 million to establish a Fiscal Stabilization Reserve to accommodate unforeseen economic uncertainties associated with the virus and the unknown future it brings.

While Lathrop is currently on a positive economic trajectory and sales tax revenues have come in above the 2019/20 budget levels, there has been a noticeable decline in the receipts over the course of the last several months and the levels are around $850,000 lower than the actual revenue received during the 2018/19 fiscal year – prompting steps to shore up the city’s finances and preserve the millions in reserves that the city has built up as a result of smart fiscal planning.

And while they’re taking steps today, whether they will be enough – or perhaps overkill for the time being – will likely take months to find out.

According to the staff report prepared for the council, Governor Gavin Newsom in April approved a program that will allow small business to defer up to $50,000 of their state and local sales tax payments for up to 12 months which could have a double-impact for Lathrop – initially denying Lathrop the revenue it had planned for and potentially eliminating state funds that would come on the back end.

Lathrop’s Measure C sales tax increase that generated millions of dollars locally to pay for emergency responders and other vital city services also appears to have taken a hit since the shelter-in-place initially went into effect – drastically altering the daily life of most Americans and severely cutting down the amount of tax revenue generated from the sales of gasoline.

For the time being, however, these moves will not impact the employment status of city workers and will actually add positions.

As part of the same comprehensive package that included the creation of the fiscal stabilization reserve, they also added the equivalent of four full-time positions to help supplement the city’s operations – including a permit technician in the building division ($102,500 annually with salary and benefits), a senior maintenance worker ($102,200 annually), a permit and plan check supervisor ($151,000 annually), and the creation of new and reclassified jobs in the IT department ($160,800). The city also proposed a reclassification of an administrative assistant position ($4,100 annually) while at the same time removing six unfilled positions.

To contact reporter Jason Campbell email or call 209.249.3544.