The Turlock City Council received some good news on Tuesday, namely that revenue from both property taxes and sales taxes was higher than expected mid-way through the fiscal year. However, a number of departments within the City are asking for additional expenditures — to the total of over $400,000 — that, if adopted by the Council, would deplete the General Fund reserves even more than it is now.
The City received $2.22 million in property taxes in January, an 8.17 percent change over 2014-15. First quarter sales tax revenues were also 8.5 percent higher than the same quarter of last fiscal year. Other revenue increases included $240,000 in administrative reimbursement from the Redevelopment Successor Agency and $90,100 in franchise fees from the increase in garbage rates.
These promising numbers prompted Senior Accountant Marie Lorenzi to increase the 2015-16 projected revenues by $699,148, which will see the City ending with a surplus of $59,478 instead of the originally projected deficit of $459,934, which takes into account the hiring of three additional firefighters.
The projected surplus, however, does not take into account the $466,138 in additional expenditures the City Council is being asked to approve.
The Turlock Fire Department tops the requests with a total of $245,914 in expenditures, with $39,499 for the addition of a Fire Operations Chief position, $61,860 to pay overtime for state and OSHA mandated training, $70,000 to cover overtime costs incurred during strike team deployments, $20,000 for equipment repairs and $12,560 to purchase safety clothing just a few of the items requested.
The City ended the 2014-15 fiscal year on a high note with a surplus of $314,328, following an anticipated deficit of $1.2 million. The City's General Fund Reserves, however, are just above the minimum amount of $6.5 million following the Council's decision in June to pay off outstanding debt of $5.5 million between the fire and police departments' Public Employees' Retirement System.
Paying off the debt saves the City approximately $615,000 a year, and it will take six and half years to replenish the General Fund Reserves.
If the current increase in property and sales taxes continue, then the five-year outlook for the City of Turlock is bright with projected surpluses increasing from $1.06 million in 2017-18 to $2.94 million in 2020-21.
The economy doesn't always progress as planned and Lorenzi presented two less-than-ideal scenarios to the City Council on Tuesday as well.
After discussions with the County Assessor's Office, Lorenzi reduced projected property tax increases from 4 to 5 percent to 2 percent. Under that scenario, Turlock sees a surplus of $734,000 for 2017-18 and for 2020-21 the surplus is reduced to $1.8 million.
The first five-year projection assumes an average sales tax growth of 6 percent from 2017-18 and 5 percent growth for the years thereafter. Lorenzi also presented an outlook that reduces those growth expectations by 50 percent, which sees a surplus of $639,000 in 2017-18 and $1.28 million in 2020-21.
If both property and sales tax revenues decline, it reduces the projected surplus by $751,000 in 2017-18 and $2.76 million in 2020-21.
"This shows how fragile some of our revenue sources can be," said Lorenzi.
She also said the projections assume no other economic downturns.
The budget report presented Tuesday was informational only and the City Council took no action.
"With this information, over the next month or six weeks we can hopefully make some informed decisions," said Mayor Gary Soiseth.