The Turlock City Council on Tuesday approved a preliminary, status quo General Fund Budget of between $30.2 and $31.5 million – up from a $29.1 million budget a year ago – but cuts are expected before final budget adoption.
The preliminary budget currently makes no changes from last year’s budget, save for the addition of an assistant city manager. For the past year, other city employees have been rotated into the post, while at the same time being responsible for their normal managerial duties.
The increasing costs, despite the status quo budget, come from an expected $900,000 in systematic cost increases, including pension, retirement, and health insurance costs. The increase would push Turlock’s General Fund to a $2.8 million deficit, more than the $1.5 million deficit spending goal previously identified by council.
City Manager Roy Wasden credited employee groups for attempting to keep those costs down, but noted that some projections could still be low. Health insurance is currently budgeted at a 4 percent increase, while some jurisdictions are projecting a 22 percent surge –an amount “hard to get your arms around” in Wasden’s words.
The General Fund budget will likely see revisions before final adoption, in hopes of reducing the deficit to $1.5 million.
Wasden and city staff are currently preparing a “scrub budget” which would make “every reduction that’s judicious to take,” in Wasden’s words. The scrub budget proposes savings from combining police and fire support services, consolidating development services and municipal services, as well as other structural changes.
In one potential sign of hope, the City of Turlock learned that 2010-2011 tax revenues have surpassed expectations by $853,000, possibly signaling an impending economic recovery.
“I think that $853,000 is a bright spot,” Councilwoman Mary Jackson said. “We just don’t know what it’s going to be like at the end of June or in December.”
Those sales tax figures are up less than 5 percent, but any increase was welcomed by council. Tax revenues are still far down from a high of $33 million, but Jackson expressed hope for further tax revenue recovery from planned new businesses like the Mi Pueblo Food Center suggested for the intersection of W. Main Street and Soderquist Road.
Any recovery will likely be slow in coming, though, according to Wasden.
“I’m not sure we’re ever going to see an explosion in revenue. It might just be a very gradual increase we see over time,” Wasden said.
The council has been working on the budget since the March 8 meeting, when the Capital Improvement and Capital Equipment Replacement budgets were reviewed and accepted. On March 22, council continued the budget process by approving preliminary non-general fund budgets.
Following Tuesday’s discussion, work on the budget will continue at the April 26 meeting, when self-insurance funds and equipment replacement funds will be considered. Redevelopment agency and Housing Program Services budgets will be on the May 10 council agenda, and final adoption of the 2011-12 budget is scheduled for the May 24 meeting.
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