Updated June 9, 10:01 a.m.–
Sentinel staff report– The Citrus Heights City Council on Thursday is set to consider adoption of an amended budget, in light of projected shortfalls amid the coronavirus pandemic.
For the current fiscal year, which concludes at the end of this month, the city is already facing a $947,000 shortfall in sales tax revenue — a significant drop from the roughly $12 million annually received by the city in sales tax revenue.
According to a staff report from Assistant City Manager Ronda Rivera, the shortfall is made up for in part by increases in building permit and “miscellaneous one-time revenues.” She said the city’s general fund budget expenditures are also coming in at $1 million under budget for the current fiscal year, $32 million instead of $33 million.
The savings are “due mainly to anticipated salary savings from 23 current position vacancies,” 16 of which are positions in the police department, Rivera’s report says.
“By temporarily not filling these key positions, the City will be able to offset the significant reduction in revenue this fiscal year and possibly reduce the amount of line of credit financing funds needed to balance the budget,” the report says.
Despite savings from vacancies, the city is still left with a projected net $1 million shortfall this year, as the adopted budget had already factored in a pre-pandemic $1.4 million shortfall for the year, when the council adopted the budget last June. That shortfall was to be largely made up for by tapping into the city’s $12 million line of credit, which remains the current staff recommendation for the council.
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What about next year’s budget?
The City of Citrus Heights adopted a two-year budget for the first time last year, so considerations will also be made Thursday night to make mid-cycle adjustments to the next fiscal year’s budget, which begins July 1 and continues through June 30 of 2021.
The city is currently projecting a $1.4 million drop in sales tax revenue next year: shrinking sales tax revenues from $12.5 million down to $11.1 million. That shortfall in part is made up for by a projected $182,000 increase in fees from motor vehicle licensing, which was budgeted to bring in just over $9 million over the next fiscal year.
Adding to the projected revenue shortfall is a nearly half-million-dollar projected increase in property and general liability insurance costs, as well as workers’ compensation claims costs.
These factors have doubled the next fiscal year’s projected shortfall — which is now anticipated to hit $3.4 million, up from $1.7 million. The city’s adopted budget for the year planned to make up for the shortfall with a $1.2 million draw from the line of credit, coupled with $500,000 coming from reserves.
The additional shortfall of $1.7 million could also come from reserves, which the assistant city manager estimates will be about $5.4 million at the end of the current fiscal year. An alternative option would be to implement a hiring freeze on current vacancies “where possible,” Rivera’s report says.
“While this will negatively impact current service levels, it would reduce the need to further erode the City’s limited General Fund reserves,” the report says.
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While other cities have proposed furloughs and pay cuts for city staff and managers in budget discussions, Rivera’s report does not mention anything similar being proposed in Citrus Heights. The report also does not mention potential outside funding from state or federal sources, but says staff intend to come back to the council within a few months when more information is available to provide a more detailed update related to the budget.
The City Council will meet on June 11 at 7 p.m. via teleconference to decide whether to receive and file Rivera’s fiscal report and adopt a resolution amending next year’s budget to reflect the projected reductions in revenue and increases in insurance-related expenditures.
The meeting will be closed to the public due to coronavirus concerns, but can be viewed live at citrusheights.net. Those wishing to submit public comment in advance can submit up to 250 words to cityclerk@citrusheights.net.
