The Manteca City Council is about to go from being fiscally conservative to being fiscally responsible. There is a big difference
Between 2002 and 2011 Manteca was not run well financially. The city ran nine straight years of structural deficits. By that they spent more money on general fund services — police, fire, parks, streets, and general government — than they collected money in a fiscal year. How the city stayed afloat was simple. They not only cannibalized reserves set aside for rainy days but also other reserves that were set aside for other endeavors including bonus bucks.
Bonus bucks is shorthand for fees developers paid the city to guarantee sewer allocation certainty.
Staff points out correctly that the bonus bucks were paid with no strings attached meaning they could be used for city endeavors at the council’s discretion. What they forget is how the bonus bucks were sold to existing residents. As the growth surge started elected leaders repeatedly told residents amenities the city wouldn’t otherwise be able to afford would happen thanks to the bonus bucks.
And to a degree, they did. The bonus bucks paid for traffic signals at Tidewater Bikeway street crossings, 60 percent of the Union Road fire station, soccer field lights at Woodward Park, the skate park, soccer lights at Northgate Park, aerial fireworks displays and more. However, $14 million did not go for “extras.”
The $14 million in bonus bucks was used along with the sale of property and payroll tax benefit reserves to cover $17.3 million in day-to-day spending beyond the city’s means over the course of nine years.
This was not the result of the Great Recession. It was the failure to either increase fees, restrain wage increases, or reduce staff to bring expenses in line with general fund revenue. Growth was helping mask the city’s inability to live within its means.
In the late 1990s, the council dropped a $2.35 a month utility tax out of concern that how it was adopted in the late 1980s may not have passed muster with challenges being made retroactive to a successful ballot initiative that gained approval several years after the fee was put in place.
A typical household paid $28.20 a year that went to run city services. The last year the tax was in place, it generated nearly $2 million.
When the tax was dropped, the council at the time lacked the political courage and the foresight to ask for a replacement tax that would pass muster 100 percent with the voted approved guidelines for putting user fees in place.
Over nine years, the city burned through $17.3 million in reserves. Had a replacement utility tax been approved it would have generated $18 million during that time period and that’s without adding additional homes and businesses.
A $2.35 tax — if it were in place today — would generate at least $4.2 million a year for the general fund. You could spend a $1 million of that a year and restore the streets division staffing and then some to the level it was at in 2008. You could hire four more police officers and four more firefighters and still have $1.2 million a year to fund smaller quality of life projects. All of that for less than $30 a year per household or 8 cents a day.
The reason why Manteca acted quicker than everyone else to the impacts of the Great Recession is because they were tripped up more by the city’s bad fiscal decisions. Ben Cantu, a long-time community activist that has run unsuccessfully five times for council or mayor, nailed it.
Since 2011 the city eliminated all structural deficits. Credit goes to past and current councils working with staff. The city also restored and expanded reserves.
They were being fiscally conservative the right way by living within year-to-year revenue while looking for ways to make the city more efficient. The problem now is the city is not lean and mean as much as they are slipping onto the anorexic zone.
Meanwhile dozens of major projects have been identified to deal with growth. The city has yet to make sure all fees that can legally be collected on growth are as high as they can be although they appear to be getting closer to that goal.
Those reserves are parked where the law requires them to be — in low risk investments that also happen to have low interest rates.
The city’s policy of not going forward with a project until all growth fees need to pay for it have been collected is proving to be costly. Construction cost increases are significantly outpacing interest the money collected is earning.
Given that Manteca managed to build 300 housing units a year — more than every other jurisdiction in San Joaquin and Stanislaus counties combined during the depth of the Great Recession — it is safe to project that any coming economic dip will reflect that as well. The reason is two-fold: Manteca has the housing projects lined up and greater Bay Area housing market is tight.
The council on Thursday decided it was time to be financially responsible and possibly tap the reserves for loans to get critical projects built that are costing more with each passing year due to inflation. Then as fees come in from growth, those loans would be repaid. That is much more responsible than simply being fiscally conservative.
Perhaps the next thing they might want to consider is asking residents to restore the utility tax.
Eight cents a day per household can make big differences in Manteca’s quality of life.