City Council to Look at Midyear Budget Status

The City Council will get its latest look at the current fiscal year budget Tuesday night, while hoping for a recovery from the economic recession. Finance Director Richard Loomis' report to the council argues that some relatively minor shifting of funds is needed to keep the city's fiscal house in order for the immediate term. However, the report also warns that any meaningful increase in revenues is not coming soon.

The latest round of employee layoffs, in December, saved about $316,000 and will buy some time for the current budget year that ends June 30. But any significant rise in sales tax and property tax revenues is projected to take "several budget cycles," according to the report. The city "continues to rely on temporary cash borrowing in order to sustain normal operations," Loomis wrote. It is using a $3 million internal line of credit to meet its employee payroll. That is funded by a legal settlement awarded for alleged construction defects at a senior housing development.

The city has eliminated 45 full-time jobs in three rounds of layoffs since the economy took a dive about two yeas ago. That hasn't been enough to stabilize the disparity between revenue and expenses. Sales tax receipts for the first fiscal quarter of 2010 rose by only about $10,000 from the corresponding quarter the previous year, Loomis reported.

Meanwhile, property values have dipped, so the city also has taken a hit on property tax revenues. A city consultant estimates that the city will lose between $232,310 and $295, 595 as a result of property owners' pending appeals on the amount of taxes assessed by the county. Those property owners appealed on the premise that they had been taxed at too high a rate, given property values. In particular, properties of big-box retail stores appear likely to win appeals.

At a special meeting last week, the of numerous properties from the city's redevelopment agency to the city itself. That was an attempt to protect revenues that the city would lose under a proposal by Gov. Jerry Brown to dissolve redevelopment agencies. It remains uncertain whether the tactic will work, given the uncertainties in the state's own struggle to balance its $25 billion deficit.

The council will assemble for its Tuesday meeting at 5 p.m. for a closed session, with the open session expected to begin at about 7 p.m. in the council chamber at 2131 Pear St.