Santa Rosa’s finances are “slightly improved” due to higher than expected sales tax revenues and concessions from employees, according to the city’s chief financial officer.
In his mid-year financial update to the Santa Rosa City Council, Lawrence Chiu said Tuesday the city is on track to end the year $1.7 million ahead of the budget plan.
The city expects $100,000 more revenue to flow into its general fund than originally expected. In addition, the city was able to negotiate $1 million more in concessions from employee groups, bringing the total to $2.4 million this budget year.
City Manager Kathy Millison stressed that the improved finances would not have been possible without cooperation from employee groups.
“The employees have stepped up and really put more money on the table than we initially anticipated getting, and that’s a very positive message,” Millison said.
The city’s 1,200 employees struck various deals last fall. Most agreed to pick up more of their healthcare costs. Many also agreed to continued furloughs. Firefighters agreed to spend most of their salary increases over the next two years toward paying more toward their pension.
But the financial picture was far from rosy. Sales taxes were just about the only revenue rising to the upside. Sales taxes are now projected to be $34.8 million for the year, $1.2 million higher than projected.
But most other revenue streams are expected to be off. Recreation revenues are tracking 7.3 percent below expectations. Permits fees and fines are coming in more slowly, as are vehicle license fees and property taxes, Chiu explained.
Despite the $1.2 million higher sales taxes, the total revenue is only expected to be $100,000 higher than expected, bringing the anticipated general fund to $116.9 million.
The overall $1.7 million improvement will allow the city to begin rebuilding its reserves, which fell to 10 percent of the general fund in 2009-2010, well below the council’s goal of 15 percent.
The $1.7 million improvement would give the city a cushion of 12.7 percent, Chiu said.
To stay ahead of increasing operating and employee costs, the city would need to trim another $5.7 million over the next four years to hit a 15 percent reserve level, Chiu said.
Additional long-term savings will need to be found to wean the city off of Measure P, the the eight-year, quarter-cent sales tax passed by voters in 2010.