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Jim Wood
By CLARK MASON
THE PRESS DEMOCRAT
In the budget equivalent of pulling a rabbit out of a hat, Healdsburg officials on Monday said they have identified an extra $2 million to help cover deficits in the general fund and avoid layoffs in police and fire departments.
The money will not only plug budget gaps for this year and next year, but also will prevent the planned layoff of two patrol officers, allow a sergeant’s position to be filled and add back a fire marshall and fire inspector.
“It’s good news for this year,” said Mayor Jim Wood, but added that the city has only managed to push out for another year the “plane crash” that is coming as expenditures outpace revenues.
Council members cautioned that the one-time money still does not address the long term structural deficit in the general fund budget and projections that the city will eat through its reserves by 2013.
“We have a disturbingly large deficit this year and next, turning into black hole in the future,” said Councilman Eric Ziedrich. “We have to come up with aggressive moves.”
“We have been able to dodge a bullet. It continues to be a tough situation,” said Councilman Tom Chambers. “Unless we do something fundamentally different over the next couple years, we will have a problem.”
The $2 million comes from an outstanding “loan” that was made to the public works department from the general fund more than a dozen years ago.
City officials said they were not immediately certain what the transfer was for, but apparently it was to pay for a waste water improvement project. The money was supposed to be paid back to the general fund by 2014.
Now, said Councilman Mike McGuire, it will be “paid off three years early.”
“We have some breathing room,” he said.
“We have a little more time to work on some of the issues,” said City Manager Marjie Pettus.
Monday’s meeting was attended by a couple dozen members of the police and fire departments who have been asked to take a 7 percent cut in their salary and benefits packages. The city is seeking concessions from other employee groups as well.
Jason Boaz, a representative for firefighters, said they have countered with a 5 percent reduction proposal.
Mayor Wood said both labor groups knew about the extra public works money before making their counteroffers.
The proposed 2010-11, $6 million general fund was projected to have a $327,000 deficit, but now will have a positive balance of $70,000.
The 2009-10 general fund, which had an anticipated $624,000 deficit, will now have a $415,000 positive balance.
But Healdsburg officials were still cautious about what lies ahead fiscally, particularly as the state seeks to balance its budget by taking money from counties and cities. Healdsburg just lost $2.7 million in redevelopment money.
City Finance Director Heather Ippoliti said the economic downturn “continues to wreak havoc on the city’s financial picture.”
Sales tax revenues, for example, are down almost 17 percent this year compared to last year and are not projected to improve.
Property tax revenues are also expected to be flat in the next fiscal year.
The picture for transient occupancy taxes, or the city bed tax levied on hotel guests, is a little brighter. They were down this year over last, but next year are expected to increase by 19 percent.
“We’re all having to find ways to cut and change the way we’ve been doing business, because it’s not sustainable,” said Councilman Gary Plass. He noted that medical and pension benefit costs for employees are projected to continue increasing by double digits the next several years.
“There was always this high reaching level of service we’ve tried to give to our citizens,” he said. “Now, instead of reaching for a high level of service, we are saying, ‘What’s the level of service we can live with?’ That’s what has to be determined.”
The City Council is expected to formally adopt the budget at its June 7 meeting.
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Good for them, but this still seems shady for some reason…