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Current council credits predecessors for positioning city to weather pandemic
cash reserves

The current City Council Tuesday gave a shout out to their predecessors for making it possible for Manteca to weather the current economic downturn triggered by the COVID-19 pandemic without draconian cutbacks in services or staff pay.

The city entered the pandemic in March with reserves equal to 70 percent of the $47 million general fund that covers the cost of day-to-day municipal services such as police, fire, parks and recreation, street maintenance crews, and general government.

The general fund reserves include $13 million for fiscal stability, $2.1 million for pension stabilization, $3 million for economic development, $1 million for public facilities oversizing, $1.3 million for capital facilities, $1.3 million for technology, and $8.9 million for unassigned reserves.

As things stand the city will only have to use $2.2 million of its fiscal stability reserves to balance next year’s budget. That is after accounting for an expenditure of up to $1 million approved by the council to encourage early municipal worker retirement that would reduce expenses going forward.  The provisional budget proposed for the fiscal year starting July 1 is expected to require $50 million in spending.

While all of the reserve funds by council motion could be raided to cover budget gaps, the $13 million fiscal stability reserve is specifically designed to cover revenue shortfalls such as the drop off in sales tax and hotel room tax receipts the stay at home orders triggered by the COVID-19 pandemic created.

The reserves are so robust the council is opting to take it down to 25 percent in the future to free up close to $2 million for other purposes. The typical city strives to maintain a 20 percent fiscal stability reserve. A financial advisor recommended only taking it down to 25 percent given there are still unknowns regarding the economic impacts of the pandemic.

Mayor Ben Cantu, who has advocated a smaller reserve to avoid “warehousing” money that is in excess of most conservative budgeting philosophies employed in other cities that could be used for other pressing municipal needs, agreed only trimming the fiscal stability reserve to 25 percent due to the ongoing pandemic made  sense.

Several council members noted the more robust than typical reserves was the result of an ongoing effort of previous councils that wanted to avoid the hits Manteca took in 2009. The housing mortgage crisis that triggered the Great Recession had most employees taking a 20 percent reduction in compensation while the bargaining unit for police opted not to cut their pay resulting in 12 police officer layoffs. The city also burned through more than $8 million in unrestricted “bonus bucks” collected from sewer certainty for new homes to balance multiple years of the Great Recession slashing annual city revenue. While the council was free to spend that money as they saw for on city needs, the original impetus for the bonus bucks was to create a pool of money to allow growth to pay for new civic amenities. Just over $11 million — or just under a third of the bonus bucks collected to that point — had been used by councils in the Great Recession and even in robust years before that to cover gaps between annual revenues and expenditures.

Previous councils made it a point to pump up the fiscal stability reserve from 20 percent of the general fund to 30 percent as the city was working to restore pre-Great Recession staffing and spending as the economy recovered.

The current council embraced a number of City Manager Miranda Lutzow’s strategies to reduce ongoing expenses in the fiscal year starting July.

The strategies include leaving 12 fulltime equivalent positons vacant, deferring general fund capital improvement projects, switching to a trial year of 4-day/10-hour workdays, offering flexible employee work scheduling, only spending for essential operations, and a previous action of laying off 100 part-time non-benefited staff that  took place in mid-March.

Those are in addition to the incentives being offered for early retirement to help reduce annual payroll costs. More than 80 cents of every general fund dollar spent goes toward worker salary and benefits. By employees opting for early retirement the city can hire replacement workers at lower levels on the pay scale.


To contact Dennis Wyatt, email