City manager Joe Tanner expects to see decline in revenue and added deficits in 2021 fiscal year
LINDSAY – Lindsay has lagged behind other cities getting around to passing their budget, and with the numbers starting to settle down nobody is expecting a boon in revenue.
The Lindsay City Council reviewed their 2020-2021 budget a month late and opened a public hearing last week at their July 28 meeting.
New city manager Joe Tanner said the budget is “risk-averse.”
“We didn’t want to take any chances. We didn’t want to put all of our eggs in one basket,” Tanner said.
The budget takes nothing for granted this year and assumes that COVID-19 will take its toll on public funding. Yet, overall the budget resolution assumes the city will spend $14,637,800. Of this amount, $5,972,800 will be dedicated to the general fund, $8,665,000 will be dedicated to non-general fund accounts divided in aggregate. The city expects to spend $1.2 million for debt service, $613,323 in unfunded liability for CalPERS, $3.1 million for capital improvement projects and $9.67 million for operations.
Almost every major aspect of the budget is expected to underperform one way or another. Lindsay’s general fund, the city’s largest discretionary fund and bell whether for a city’s overall financial health, had managed to create some level of savings from 2018 through 2020. All the while increasing the total size of the fund. June 2017 was the last year the city saw a deficit in the general fund which was $571,300.
The same month the city passed their one cent sales tax, Measure O, which added more than $908,000 in annual general fund income.
In 2018 the city increased their general fund revenue from $4 million to $4.8 million and added a savings of $502,900. In June 2019 the city increased the size of their general fund yet again going from $4.8 million to $5.5 million, and saved $379,500. By the end of June 2020 the city increased its general fund marginally, going from $5.5 million to $5.65 million and saving $411,700. Tanner’s budget has the city’s general fund staying practically stagnant projecting a modest increase from $5.65 million to $5.68 million. Tanner also projects the city will be facing a deficit of $288,600 by the end of next June.
McDermont X, the once city owned recreation behemoth, brought no revenue into the city by the end of the 2020 fiscal year in June. Tanner’s budget expects the city will get no revenue from the business next year either. However, he hopes the city will not have to spend much to keep up the building, as the city plays landlord to the half block sized facility.
The Lindsay Wellness Center had netted a meager $2,000 by June 2019 and increased that amount by $38,600 at the end of June this year despite the onset of the pandemic. But conservative projections expect the center to lose about $500 by next June. Although, Tanner’s budget does expect the wellness center to increase their total revenue from $723,000 from June 2020 to $792,800 by June 2021.
Lindsay’s water fund had managed to carry a reserve of $668,800 from 2018 into 2019. By June 2019 the city’s water fund brought in $2,134,600 in revenue but had spent $2,080,400 netting the fund with $54,200 heading into the 2020 fiscal year. By June 2020 the city’s water fund had dipped into reserves by $9,100. Tanner expects a drastic decline in water fund revenue for the 2021 fiscal year showing a $928,700 shortfall by next June.
Things are not much better for the city’s sewer fund. After averaging $383,000 in savings over the last four years, Tanner projects the city to face a $370,900 deficit by next June. Refuse, the city’s fund for trash, recyclable and organic collections, has been all over the map. In 2017 the city had a deficit of $13,300; in 2018 the city netted $146,800; in 2019 the city had a deficit of $64,800; and by June this year the city netted $146,300. Keeping with the ongoing trend, Tanner projects that the city will face a $34,600 deficit by the end of June 2021.
Lindsay’s latest moves on their budget are for all intents and purposes late. Cities traditionally pass their next year’s budget in June. However, Tanner told The Sun-Gazette in June there were too many “unknowns” to appropriately plan a budget in a normal time frame.
A city staff report from the June 23 Lindsay City Council meeting accurately noted that several aspects of the budget would be impacted.
“Most, if not all, revenues will be negatively impacted at different points of the upcoming fiscal year…Sales tax, property tax, hotel tax, permits, Wellness Center memberships will be affected negatively,” the report stated.
Tanner began his role as city manager at nearly the beginning of the novel coronavirus pandemic, and he expected budget woes from the outset.
Tanner said the largest challenge Lindsay has is their general fund, the city’s largest discretionary asset. The passage of their 1% sales tax increase in 2017 has added over $1 million a year to the fund, but their annual general fund debt is still over $10 million. The looming question for Tanner is, how can the city maintain their level of service when revenues are destined to take a hit?
“One of the things I’m working on is having some scenarios for the council to think about. What the budget might look like next year, the year after that and the year after that…the budget is going to be number one going forward,” Tanner said in an interview with The Sun-Gazette in April.