Updated Nov. 8, 2:55 p.m.–
Sentinel staff report– Budget cuts and threats to police services appear to be a thing of the past in Citrus Heights, as preliminary figures released last month show the city ended the most recent fiscal year with a surplus of $6.5 million and projections showing another $6.7 million surplus for the current fiscal year.
The city brought in $1.5 million more in revenue than anticipated and also had expenditures come in at $3.6 million under budget, according to an update from Administrative Services Director Susan Talwar during the City Council’s Oct. 25 council meeting. A budget surplus occurs when revenues exceeds expenditures, which in the case of fiscal year 2021-22 refers to the difference between the city’s total revenues of $36.7 million and total expenditures of $30.2 million.
Of the $6.5 million surplus, $3.5 million went to pay off the city’s line of credit in full, bringing the city back to its debt-free status. The other $3 million went to the city’s General Fund Reserve Balance, bringing reserves up to $11.4 million.
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That increase in reserves is a significant change. In 2018, the city had projected reserves would drop to just $350,000 in fiscal year 2022-23. The city’s grim budget outlook was also cited as a key reason for the Measure M sales tax measure, which was proposed in 2020 to bring in an estimated $12 million per year, but failed.
Vice Mayor Tim Schaefer, who was a vocal opponent of Measure M, cited the city’s surplus in a recent guest column and said he believes “the cuts and consolidation of CHPD critical police units were nothing more than retaliation for the failure of Measure M in 2020.”
Other council members who voted in favor of the cuts at the time said cuts were necessary to balance the budget and not rely on one-time federal funding.
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Citing reasons for the increased revenue, Talwar reported that sales tax revenue was up about $300,000, bringing in $14.4 million in fiscal year 2021-22. She attributed the increase as being primarily due to inflation: “Naturally, as costs have gone up, so has the tax.”
Revenue from building and permits also came in at healthy levels, attributed to the increase seen in residential and commercial building activity over the past year. Talwar also said the Community Center brought in $200,000, with more events happening with an ease in pandemic restrictions. Another $1.4 million came in under the category of “other revenue,” attributed primarily to reimbursements for damage to city property and liability coverage.
In expenditure savings, Talwar said the Police Department saw a significant savings of $2.4 million due to vacancies and offset costs covered by American Rescue Plan Act funds (ARPA). The city also saw operating cost savings of $1.2 million.
10-year outlook
Total budgeted revenues for the current fiscal year, ending June 30, 2023, are $42.1 million, with expenditures of $35.4 million, resulting in a projected surplus of $6.7 million.
The city for the first time will be retaining its share of property taxes, estimated at $6.8 million. Talwar said the payments are expected to be received in two installments, in January and May next year. For the past 25 years, the city has had to hand over its share of property tax revenue to Sacramento County as part of a “revenue neutrality” agreement when Citrus Heights became its own city.
The city’s ten-year financial forecast shows money being allocated from the city’s General Fund to cover street maintenance, with $2 million allocated in next year’s budget and $4 million in subsequent years, up from $0 allocated from the General Fund last year. That amount will be in addition to annual spending of several million dollars from SB 1, gas tax, and Measure A funds for roads, which has annually been allocated to road repaving projects.
Talwar said the allocated amount for roads is still below the target of $12 million annually. During a September council meeting, the city’s General Services Director said the city currently has a backlog of road repairs totaling $82 million, with the city’s pavement condition index still slated to drop over time if current funding allocations continue.
The ten-year forecast also shows the city’s reserves increasing to $18.2 million in the current fiscal year, and then dropping to $15.2 million the following year, before gradually increasing to hover around $17 million.
Watch the city’s budget presentation on Youtube, beginning at the 2-hour 35-minute mark: click here.
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