A City, If You Can Keep It: Budget and Expenses — The Why & How

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A Winters Express opinion column

By Richard Casavecchia
Special to the Express

In my previous column about the last 10 years of city financials I discussed the “what.” This will be the “why” and “how.” This is the nuance I mentioned that I didn’t have space for.

The city has overspent for the past decade. This is a fact. The why is less cut and dry. As we all know, in 2008 the housing market crashed. The city had years of zero development which necessitated reserve fund spending. The new homes we see, now popping up faster than weeds in my yard during the spring, were planned to be built over a much longer period of time than the pace we’ve seen recently.

I sat down with Mayor Cowan and City Manager Trepa to get a better understanding of the firehose of a decade of financials that I consumed. I’ll do my mea culpa up front and correct a couple of those nuances I got wrong or phrased incorrectly. Those nuances also result in pushing the potential reserve fund depletion from early 2027 to late 2028, but my conclusion remains the same.

COVID funding (funds sourced from one of the stimulus bills) is not included in the revenues for FY 20-21. As far as I can tell, I cannot directly verify this from what is posted online, but that means our over $400K in revenue growth was organic and not supplemented.

The Planning Commission also doesn’t have any direct effect on proposals with related expenses that hit their agenda, as my awkward phrasing implied. But they do have an indirect influence on revenues and expenses through when and how projects materialize. I consider them as part of the team that helps manage the city and, therefore, assign some of the responsibility for the outcomes.

If we pretend Winters Ranch was built in 2013 instead of 2015, and apply the associated yearly revenue increases starting in FY 13-14, our net over the past nine years is still negative, but rather than by over $2M it is down to $420K. I think it is fair to say City Council was managing the underperformance of the economy and investing in long term growth that simply took too long to materialize.

Another way of looking at it is that the City Council was making decisions based on the information they had at the time, investing in the future of the city. That future just didn’t happen on the timeline they expected. Growth was slower than they could have predicted and expenses continued to grow annually.

So, what is the current City Council doing about the issue?

During the past three years during the budget sessions, City Council has acknowledged the need to correct the trend of overspending. Mayor Pro Tempore Biasi specifically has made comments every year pointing out weaknesses such as a reliance on building permit fees for General Fund revenue. Other councilmembers made similar statements but for some reason, his are the ones that stick in my memory.

Currently, fiscal year 22-23 has the largest budgeted surplus of the past ten budget years with $98K. FY 21-22 budgeted a $10K surplus, and if not for one extra expense, we would have had an over $200K surplus at the end of the year. The budgets under City Manager Trepa so far appear to plan for replenishment of the General Fund Reserve Fund with a trend we want to sustain.

Some more accurate cost accounting is being done in regards to staff time to help increase revenues and offset expenses related to permitting and projects. There has also been some more efficient accounting of resources, requiring staff to accurately track how much time they spend on every project. This allows staff time to be funded by a wider variety of funding sources.

As I mentioned, I don’t think the council realized the extent of the long-term trend it created. They are consciously changing the budgeting behavior, but until I see two years of positive cash flow, I wouldn’t say there has been a change in spending behavior. Government, like a big ship, is hard to course-correct.

So, I have identified a problem, where is my solution? I would start with a listing of all the pandemic cuts. Some of that was due to position vacancies/retirements that were not immediately filled. Obviously, those are not cuts we want to maintain. Other savings were related to the employee union agreeing to forego certain increases (they were made whole later on).

All cuts should be examined, tallied up, and discussed for feasibility, legality, and reasonableness while avoiding cutting people unless necessary. I would need a line-item summary to get more specific.

Revenue growth is a touchy subject and choices are limited. We, as residents, have to vote on any city sales tax. I don’t think we want that. I am not a fan of taxes levied on properties, like maintenance district fees,  for example. Those increase cost of living.

Personally, I think consumption-related fees are a better way to allow people to self-select and shift some burden from the residents to the tourists. Paid parking in the city lots downtown could be a sustainable strategy. A $5 per day lot parking fee could bring in conservatively over $210,000 a year if the downtown parking survey is still accurate.

Employee and Resident parking permits that exempt holders from time restrictions would also bring in a small amount of revenue while minimizing the impact on residents. Permits would be optional for people who choose to not park downtown in timed or pay-per-use zones.

Those are just ideas, from each side of the equation, that could be considered. None of these are easy conversations to have or decisions to make. There is no silver bullet to correct the deficits, and some or perhaps many people will not be happy with the changes that will need to be made.

So now it is on all of us to continue the discussion. What programs or services can we live without for a time? What extra fees or taxes are we willing to pay? It’s going to get uncomfortable before it gets fixed, but these questions need responses.

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