Manteca’s adopted budget calls for the city to dip into reserves to close out the books on June 30 to bridge a $592,940 structured deficit.
The odds of that actually needing to happen are dimming by the day.
That’s because the two key general fund sources of revenue — property taxes and sales taxes —are running above budget projections made last June. Sales tax was projected in the city budget to increase 4 percent to bring in $7,435,000 this budget year while it is actually trending as a 9 percent increase. Property tax was projected to be up 4 percent to generate $10,350,000. It is now estimated to be up 14 percent for the fiscal year.
Much of the gain in property taxes is being reflected in assessments recapturing value reduction under Proposition 13. In other words, homes that lost as much as 40 percent in value and had taxes lowered accordingly can be reassessed to current market value jumps that substantially exceeds the 2 percent limit under Proposition 13 until such time the lost value is recouped.
At the same time some one-time expenses were avoided including upwards of $100,000 that could have been needed for a special election that was avoided when the City Council appointed Vince Hernandez to the council seat vacancy.
A mid-year budget review conducted last month for the City Council reflected an improving Manteca economy.
But while revenue collected for the 12-month period ending June 30 could meet or exceed expenditures made during the same time period, Finance Director Suzanne Mallory indicated the structured deficit still exists on the paper that matters — the adopted budget document. Once all expenditures and revenues are tallied months after the fiscal year has ended then the city will know for sure whether it collected more money that it spent during the 12 months.
Structured deficits do not mean the city doesn’t have a balanced budget. It refers to any shortfall that the city has meeting current fiscal year’s expenditures with the same current year’s revenues. As with all of Manteca’s structural deficits that have happened over the past decade, they have had money set aside to cover any shortfall.
And while things are looking up financially for the city, there are a number of pressing expenditures on the horizon.
• All the city employee groups are negotiating new contracts that start July 1.
• Public Employee Retirement System rates are expected to increase.
• Five police and fire positions covered by the Public Safety Endowment Fund will need to be shifted to the general fund as the endowment is being drained. Based on current revenue projections, Measure M at this time can’t support additional staffing.
• Identified needs to add staffing to the Manteca Police Department.
• Unfunded liability for retiree costs.
• No established policies for funding internal service funds on an annual basis for replacement of vehicles, general equipment, and information technology.
• Long-term building maintenance as well as heating and air conditioning issues.
• Long-term replacement of park irrigation wells.
• Needed storm drain maintenance.