Manteca’s days of kicking the can have reached the end of the road.

It’s a promise that the City Council made Wednesday.

In order to deliver on that vow, it is going to take rate hikes for sewer, water, and solid waste.

It also is going to require the city not just being as transparent as legally possible but to cease speaking in bureaucratese and assuming everyone knows how the sausage called local government is funded

And it will require frank talk about the “t” word — taxes.

The moment of solidarity among council members regarding painful decisions that have to be made to change the city’s course came during a budget workshop.

The city’s proposed $67.2 million spending plan for the fiscal year starting July 1 has a razor thin $42,000 left over after anticipated expenses are stacked up against projected expenses over the coming 12 months.

While there is real growth on the revenue side, much of the $6.6 million gain in tax receipts for the general fund that provides critical day-to-day services such as police and fire protection, street upkeep, park maintenance and such is the result of inflation increasing the price of goods which in turn increases tax receipts.

The expense side is being driven up by inflation as well as the goods and services the city uses are being ravaged by inflation.

The overall city budget once enterprise funds are included  such as sewer, water and solid waste as well as restricted accounts for things ranging from earmarked growth fees to state grants for road work is being pegged at $205.8 million for the 2022-2023 fiscal period.

The roots of the current budget were

inadvertently planted 3 years ago

The road to the pledge that the four council members attending — Jose Nuno was absent — made to embrace the spending plan and work toward long-term funding solutions started three years ago.

It was when Mayor Ben Cantu pushed for an overall overview audit of the city’s finances that went beyond whether the numbers added up on the balance sheet.

Cantu said he was driven by observations that had been nagging him for decades including more than 20 years as a city planner. The city, he said, just always seems to get by despite being consistently one of California’s fastest growing communities.

What unfolded next was a tectonic shift.

No one in the finance department could properly account that what they said at the time was $60 million. There was no evidence then — and there is none now — that money was pilfered or even grossly mismanaged.

But there were plenty of problems.

Funds were being assigned to the wrong accounts.

Projects were being double budgeted.

General fund departments were doing the work of enterprise accounts and not being reimbursed. That made less money available for day-to-day services such as police, fire, streets, and parks while keeping water, sewer, and solid waste rates artificially low.

Sewer and water rates haven’t been increased now for going on 14 years.

The city was borrowing from internal accounts to fund capital improvement needs without repaying them as is legally required.

The general ledger was a mess and not current.

Individual departments were keeping track of their expenses without the general ledger being property updated.

Annual audit reports weren’t being completed on time since the 2018-2019 fiscal year.

Growth fees weren’t all being updated meaning growth wasn’t covering its fair share of capital projects it was helping create a need for.

And while there was plenty of evidence that lack of political will on the part of elected leaders for decades as Cantu contends failed to keep revenue streams robust  enough to not only provide amenities people say they want but to effectively provide basic needs, it was clear the wheels came off in terms of “real” budget numbers after Susan Mallory retired as finance director.

How the city finances

became so scrambled

The post mortem on what happened isn’t complete. And while it is clear that Mallory’s successors may have been in over their heads there is plenty of blame to go around.

For years — through lean and flush times — city councils routinely rejected the finance department’s request for more positions to handle increased workload. And while that was no different than what other departments faced, doing so to the gatekeeper of the city finances ultimately led up to the $60 million question — what does the city really have to spend and how is that money restricted.

In the past several years the city has corrected that penny wise pound foolish decision as it involves the finance department by adding sufficient staffing.

At the same time, as Interim City Manager Toni Lundgren noted, the city is committing to continuing education of employees to keep staff atop of financial rules and changes imposed by the government and in other manners.

It didn’t help that the council effectively — even if  by accident — replaced the standard door on the city manager’s office with a revolving door in their search for a city manager to change the way the city was doing business. Lundgren is now the fifth person in three years to assume the role of city manager since the financial disarray came to light.

Lundgren, who rose through city hall ranks, has an interim in front of her title until December when the term of the current council expires.

The past two years the city had focused on straightening up the books. While the numbers for the most part are what Councilman Charlie Halford calls “real” there are still messes than have to be untangled.

Financial bookkeeping

issues still being worked out

And while the general fund numbers critical for day-to-day services are pretty much on the number there are still kinks being straightened out.

An example is the utility billing clerk positions in the finance department. Although their work is almost exclusively done on behalf of the sewer, water, and solid waste enterprise accounts they were being charged off to the general fund and not those accounts.

The issue of incorrect costs assignments cuts the other way as well. Finance Director Bret Harmon noted staff found that the golf fund was being charged $190,000 for the city’s fleet services on an annual basis yet only one vehicle that the division used was being serviced by the fleet service.

Little by little the general fund is closer to being in order.

There is also work left to be done on the capital improvement funds critical to needed city infrastructure projects.

Once all of that is finished, Halford noted the city will have “real numbers” that elected leaders need to make sound decisions.

That is an abbreviated overview of what led to Wednesday’s council remarks peppered heavily with euphuisms such as “the city has been digging itself a hole deeper and deeper “ and “robbing Peter to pay Paul.”

It is also what prompted Cantu to drop pushing as he has at the past three budget workshops for more spending for critical services such as additional police officers beyond what staff recommends.

“This budget is a write off for me,” Cantu said.

He noted the upcoming budget will — if progress continues to be made at untangling the bookkeeping mess — be the “bridge budget” that successfully leads to a transformation from how Manteca has done business for the last 30 years to one that builds services and amenities in the future.”

“We just don’t have the money,” observed Councilman Dave Breitenbucher. “. . . I’m good with this budget.”

Councilman Gary Singh — who came up on the losing end several years ago to make the painful decision to increase utility rates to make sure the city could continue to provide water and sewer service without emergency pipe failures and other issues — also embraced the proposed budget as the city finishes up getting its books in order.

“We have to start by knowing we have real numbers,” Singh said of initiatives over multiple years aimed at upgrading services and amenities.

Halford also stressed the need to keep things in perspective. He did so by bringing up “That 70s Show”, City of Manteca style.

He referenced a fiscal year in Manteca during the mid-1970s when the city — instead of having millions in reserve as they do  now — had less than $1,000. It forced the city not to open the then recently completed fire station on Louise Avenue as they lacked the funds to staff it. They also were forced to replace police patrol units when they could no longer be kept on the road with surplus CHP units from the state that had 92,000 plus miles on them when Manteca took delivery of them.

“It’s been worse,” Halford said.

Halford earlier referenced the accumulative effect of not addressing revenue issues by saying “I was always taught when you’re in a hole you should stop digging.”

And the council is posed to do just that when sometime in the next nine  months they will be asked to adjust sewer and water rates for the first time in 14 years.

Halford noted he asked previous council members why they didn’t question the lack of a need for rates. Halford said they did but were told by staff things were OK.

Halford said blame may indeed belong to staff that didn’t have a grasp of what was going on or could even have been intentionally misleading elected officials, but he still said council members should have continued pressing on an issue that clearly didn’t seem right given every other city around Manteca has raised rates a minimum of six times since 2008.

Singh noted with the proposed budget Manteca can “start building its future.”

And Singh along with Halford and Cantu agreed that means asking voters for some type of tax increase.

Halford pointed out the tight budget that is being advanced for possible adoption at the June 21 City Council meeting is primarily about retaining current service levels.

“It covers (the community’s) needs,” Halford said.

And if residents want stepped up service levels or additional amenities beyond what is being provided “they will have to vote to pay for them.”

To contact Dennis Wyatt, email dwyatt@mantecabulletin.con