Citrus Heights Sentinel Logo

Discussion during Citrus Heights budget meeting gets heated

Citrus Heights City Manager Chris Boyd, left, has had several contentious discussions with Councilman Tim Schaefer, right, during budget meetings.

*Note: This article is a subscriber exclusive. You must be logged into your subscription account to view this full article.

Sentinel staff report–
The Citrus Heights City Council met Thursday evening for a special budget study session, which included a contentious exchange between several council members and the city manager.

Following staff review of accomplishments over the prior fiscal year, City Manager Chris Boyd called out Councilman Tim Schaefer by name during the meeting, asking him to clarify critical statements Schaefer had made during meetings in January and February.

Schaefer had accused the city manager of presenting inconsistent and “misleading” figures relating to the budget, and also had said proposed budget cuts appeared “reprisatory” towards residents who voted against the city’s Measure M sales tax proposal. But the councilman’s tone was markedly different in responding to Boyd on Thursday, saying he “stand(s) corrected” on a past claim that several budget figures presented were “almost completely different.” He also commended staff efforts to balance the budget as “making the best of a bad situation.”

Boyd continued to press Schaefer for answers until Councilman Bret Daniels stepped in to say the manager should “stop this highly improper dialogue” with Schaefer during a public meeting. Mayor Steve Miller said he agreed the council should move on, and the budget presentation continued without further controversy.

The mayor later issued a clarifying statement to The Sentinel, saying his comment in agreement with Daniels to “stop the improper dialogue” was directed at Schaefer and not the city manager. Miller said he fully supported the city manager’s public questioning of Schaefer, and accused Schaefer of making “multiple false accusations of inaccurate financial reporting” in the past.

“As Mayor of the City of Citrus Heights, I will not stand for the continued disparagement of our City Manager and hardworking staff,” Miller said. “I ask Councilmember Schaefer to cease his reckless and false allegations so that we can focus on the critical task at hand of continued fiscal prudence.”

The Sentinel gave Schaefer an opportunity to respond to Miller’s statement, to which Schaefer said it sounded like the mayor “might be trying to talk his way out of” comments made during the meeting. Schaefer also called Boyd’s questioning “prosecution style dialogue,” and said as a council member he has an obligation to ask clarifying questions about the budget.

What’s in the budget?
Interim Administrative Services Director Bill Zenoni presented budget plans to the council, calling it a “hold the line” budget, with the city in a tight financial position.

The two-year budget is slated for approval at the City Council’s April 22 meeting, and currently calls for a $3 million reduction in the Police Department’s budget, cutting it from $22.5 million to $19.5 million for the next fiscal year. Zenoni said the reduction largely comes from leaving 34 positions vacant, including 26 positions in the Police Department, in order to balance the budget.

An additional $540,000 for the Police Department would come the following fiscal year, when an estimated $6.4 million will be received in property taxes for the first time in the city’s history. The city has had a 25-year agreement with the County of Sacramento to forfeit its property tax revenue to the county, as a condition of becoming a city in 1997.

Zenoni said as a result of the property tax revenue, the city’s general fund reserves are projected to increase by roughly $3.7 million in 2023. Sales tax revenues are also projected to recover, increasing from $11 million to more than $13 million annually beginning with the next fiscal year.

Notably, Zenoni said the budget calls for repaying the full balance of the city’s line of credit by 2024, with a $2 million payment in 2023 and the remaining balance paid off the following year. He said the city also will not need to tap into the line of credit to meet operating costs over the next two years.

The budget also allocates full or partial funding for a list of deferred expenses, including building maintenance, vehicle replacement and other costs Zenoni said the city hasn’t set aside funds for in prior years. The only item to be left without any funding from the general fund is roads

The list includes seven deferred expenses, which have been the focus of contention between Councilman Schaefer and the city manager. Schaefer has said various costs on the list have changed in different presentations, while the mayor and city manager’s office have said changes are due to the “evolving” budget process, with costs being categorized differently or shifted to different budget years.

Editor’s note: Schaefer’s prior comments from Jan. 28 can be viewed online here, beginning at the 1-hour mark. His comments from Feb. 11 can be viewed here, beginning at the 19 minute mark. The dialogue between council members and the city manager from the April 8 meeting can be viewed here, beginning around the 57-minute mark.

Zenoni said next year’s budget faces a $77,000 shortfall, while the 2022-23 budget will see a nearly $3.7 million surplus. He said surplus revenues will go to increasing the city’s dwindling reserves, which were at $2.1 million at the start of the current fiscal year. Zenoni said reserves must be increased in order to meet cash flow needs, noting the city regularly has to front costs before revenues are received.

Council comments regarding the budget figures presented on Thursday were minimal. Vice Mayor Porsche Middleton credited staff with helping make the budget be “not as terrible” as initially projected, and Schaefer reiterated his appreciation for staff work.

No mention of temporary pay cuts was made during the presentation or council comments, although Schaefer and Daniels have both floated the idea in the past.

Asked why more funding isn’t proposed to be allocated to police or roads, both of which have been top resident priorities listed in city surveys, Miller told The Sentinel on Saturday that increasing reserves for cash flow must take priority and will take several years to get to a healthy level.

He also said maintaining city streets would need a minimum of $7.4 million annually, with partial funding being inadequate to meet the city’s infrastructure needs. He said the council “will continue to explore possible alternate sources of funding for this major capital requirement.”

Miller said further questions and adjustments to the proposed budget will likely be made over the next two weeks, prior to the budget’s final approval. The mayor also said he was pleased the budget doesn’t call for any staff layoffs, with cuts only made through attrition.

Councilman Bret Daniels later told The Sentinel he opposed the proposed cuts and called the meeting a “waste of time,” due to the budget not accounting for federal funding coming to the city from the American Rescue Plan.

How much federal funding will Citrus Heights get?
The City of Citrus Heights is slated to receive an estimated $15.9 million from the $1.9 trillion American Rescue Plan passed by congress this year. According to a presentation to the council by Congressman Ami Bera following the budget meeting Thursday night, the city will receive 50% of that money by May 11, and the rest within 12 months.

The city plans to pass a two-year budget on April 22 which does not account for federal funding. The city manager’s office said the budget will then be revised later this summer once COVID relief money has been received and more is known about what restrictions are put on the funds.

The city’s general fund budget for the next fiscal year currently includes revenue projections of just under $39 million, not including any federal relief funds.

Bera said the city will largely have discretion where to put the money, but specific guidelines have still not been released at the federal level. He listed several eligible uses like hazard pay increases of up to $13 per hour for essential city employees, replacement of revenue lost due to the pandemic, costs associated with responding to the pandemic, and investments in water, sewer and broadband infrastructure.

Funding pensions with the money are a specifically prohibited use, the congressman said.

Want to share your thoughts on this topic or another local issue? Submit a letter to the editor or opinion column for publication: Click here

Like local news? Sign up for The Sentinel’s free email edition and get two emails a week with all local news and no spam, ever. (Click here)