A slight budget deficit due to a lack of permits and other projects not coming online during the last fiscal year will make for a “very tight” 2019, but future projects could help beef up the city’s overall budget long-term, officials said during a review of the city’s finances at last week’s council meeting.
The comments were made during a presentation of the city’s comprehensive annual financial report (CAFR), what amounts to a through progress report of the city’s financial responsibilities, expenses and cash on hand.
The report covers the financial year starting in the middle of 2017 and ending June 30, 2018. During that time frame, the city’s fund balances dropped from $1.57 million to $1.37 million with an operating deficit that exceeded revenues by around $79,000.
The deficit was caused in large part by two projects that did not pull permits during the year, triggering a loss of around $250,000 in revenue for the city, the report said. Those projects were the Domus Senior Apartment Complex and an anticipated Fairfield Inn-Marriott hotel slated to be built next to Interstate 505, Winters Director of Financial Management Shelly Gunby told the Express in an email.
If those two projects had pulled their permits during the 2017-2018 fiscal year, the City of Winters would have seen a budget surplus of $700,000, Gunby told council members last Tuesday.
“That’s the swing of what happens,” Gunby said. “We would have been right where we wanted to be on the budget if all of our projections had come true on our revenue side of the equation.”
Other areas weighing down the budget include post-employment benefits — namely, health care for retired city personnel. For the first time, the previous year’s fiscal progress report includes a calculation of the city’s unfunded liability for post-employment health care benefits. Eight retired employees receive health care benefits through their CalPERS plan at a cost to the city of around $133 a month per person, adding $1.3 million to the city’s unfunded liability debt, Gunby said.
The unfunded liability issue has come up before: Last August, Gunby and other officials told the city council that City Hall needed to start exploring ways to bring down that additional $1.3 million unfunded liability debt (the city’s overall unfunded liability debt is over $5 million). At that meeting, Gunby suggested a scenario where the city pays down its unfunded liability debt from future economic windfalls.
Such windfalls are unlikely this fiscal year, with city officials warning of tighter pursestrings all around.
“This year is a very tight year for us,” City Manager John Donlevy said. “Shelly, the staff, we are using everything we can to manage things.”
But it’s not a long-term doom-and-gloom scenario: Donlevy said the $79,000 deficit is projected to be covered this year through projects that are expected to come online. In addition to the two projects mentioned, the grand opening of a downtown boutique hotel is expected to generate transient occupancy tax (TOT) that could bring one of the economic windfalls the city is hoping for.
“That’s going to be a game-changer for us,” Gunby expressed. “A lot of people have a lot of ideas on what to do with that [money], and I have a couple of ideas on what to do with that, and it’s not going to make me the most-popular person in the building…but people who retire with us may be really happy with us at that point.”
Gunby said additional development in the city’s housing sector could also bring in additional revenue, even though the newer homes will also result in an uptick in use of city services like water and sewer.
“I’m looking forward with the economic development engine coming along, because I really think that’s going to be the best thing for us,” Gunby said.
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