Lindsay budget is stable, water fund is lacking

City manager Joe Tanner says the Lindsay general fund is in a stable position, but staff reports show concerns over water fund revenues

LINDSAY – Lindsay’s budget woes are getting a little less woeful according to their draft 2021-2022 budget. City manager Joe Tanner believes the city’s finances have stabilized, and he maintains an encouraging outlook for Lindsay in the year ahead.

“Overall, I’m pretty optimistic about next year. Our general fund has stabilized, and so that allows us to do a lot more things like hiring new people or taking on new projects,” Tanner said.

The general fund—a bellwether that indicates the strength of any city’s finances—has a reliable source of income. According to a city staff report the general fund revenues for property tax, sales tax and the city’s 1% sales tax measure, Measure O, are expected to remain stable bringing in $8.5 million.

By June 30, the end of the 2020-2021 fiscal year the city’s finance department expects to have a general fund surplus of $890,750. That is a $1.2 million swing from what the city projected last year, which was a $307,000 deficit.

If all goes well and nothing changes between July 1, 2021 and June 30, 2022 then the city expects to have a $135,500 surplus in the general fund going into the 2022-2023 fiscal year.

Among some of the revenues for the city is their single cannabis dispensary, Valley Pure. The city gathered $300,000 in cannabis revenue last year, and expects another $300,000 this year. And according to Tanner the city is glad to see them thriving, and the revenue they bring to the city has a “huge” impact on Lindsay’s finances.

“They’ve been a good community partner…and I think going forward they’re going to continue to succeed and we’re going to help them out as much as we can,” Tanner said.

The biggest difference coming into this fiscal year is the pandemic. Lindsay, like most other cities in the state, widely assumed that the pandemic would suppress the city’s economic activity. Fortunately the city’s sales tax continued to trend in an upward direction.

“It’s kind of been a pleasant surprise that we haven’t been impacted like we originally thought we were going to be…We’ve been very pleased with the results, obviously, you know, the restaurants downtown have been affected, but people are still going to the grocery store and the drugstore. And they’re still shopping online,” Tanner said.

American Rescue Plan

Lindsay is also counting on a hefty sum from the $1.9 trillion American Rescue plan that passed in March of this year. According to the city’s draft budget Lindsay is expecting to receive $1,985,500. Tanner said one project the money will go towards is renovating city hall. But he was cautious to say that some of the changes won’t necessarily be noticeable.

“It’s not going to go toward $10,000 desks…this is addressing health and safety issues with the building and [Americans with Disabilities Act] requirements and you know, roofs and things like that,” Tanner said. He added that some of the building’s wiring is original to the building itself.

More specifically the ADA requirements will be focused on bathrooms, but also the roll-up doors for the vehicle bay at the public safety department. Tanner added that they may use some of the money to purchase new police cars that have been overdue for replacement.

The city’s newest vehicles is a 2020 Toyota Highlander with only 6,500 miles. But the department’s next newest cars are 2011, Chevy Silverados with an average 125,500 miles. They also have five 2011 Ford Fusions with an average 120,000 miles; three 2011Ford Crown Victorias with an average 114,000; one 2011 Toyota Highlander with 111,000 miles; one 2007 Ford Crown Victoria with 106,000 miles; one 2006 Ford Crown Victoria with 142,000 miles; three 2006 Toyota Highlanders with an average 125,000 miles; and one 2005 Ford Crown Victoria with 148,000 miles.

Public safety chief Chris Hughes said former city manager Bill Zigler made efforts to replace the city’s public works fleet before investing in the police department. Which was a decision Hughes did not disagree with.

“He took care of them first, because their, their vehicles were worse than ours,” Hughes said. “[The plan was] if we needed a new vehicle, you know, we’ll reach out to surrounding agencies for their cars.”

Enterprise funds

Right off the bat the city staff report noted that there are concerns over the city’s water fund. The report stated that the fund, “presents a challenge as revenues do not sufficiently cover operating expenses. This leaves no provisions for unplanned maintenance and other necessary capital work to keep the water system running safely and efficiently.”

The city’s finance department expected the water fund would be almost $1 million in the hole by the end of the fiscal year. Instead it has ended up only $88,900 in the hole, but that hasn’t given staff a better outlook heading into the 2021-2022 fiscal year. The water fund is expected to come up $922,600 short by the end of the year and require an $880,000 general fund transfer to shrink the gap to just $42,600 in the red.

The city is hoping to avoide a Proposition 218 process—a utility rate increase proposal where 50% plus one of property owners in the city would have to protest to defeat it – and look at all of their options to boost revenues in the water fund.

“We’ve got to want to make sure we improve or get to a point where we’re as efficient as possible and maximizing the existing revenues based on the rates we have,” Tanner said. “We are very, very conscious of our community and what they pay. And that is definitely a priority with the council and with myself.”

The city’s sewer fund is expected to boast a large deficit heading into the 2021-2022 fiscal year. Lindsay expected to have an $871,800 deficit at this point in 2021, but instead have a $91,853 in the black. Barring any major changes to the budget between July 1 of this year and June 30 of next year, the city finance department projects the sewer fund to have $153,000 surplus.

There is some reason to expect there to be an even larger surplus with the city’s new billing process. Instead of issuing a monthly bill to customers, the city decided in April to tack the cost on to property tax rolls.

As of May the city had 325 delinquent utility accounts worth $229,164.87 spread out over all three utility accounts. Tanner said that Lindsay pays at least 38% of what is collected by their contracted collection agency. The percentage could be even higher depending on how onerous the collection process might be. Tanner told the city council in April that the rate of pay for property taxes is much higher, which would hopefully lead to fewer delinquent accounts. But the budget is not accounting on any improvement on collections.

“Because it’s the first year we’re doing it and there’s no history. So, we are just going to be very conservative as far as how much we were anticipating to collect,” Tanner said.

Lindsay staff and their trash collection contractor, Mid Valley Disposal, came to terms on a new franchise agreement during the council’s May 25 meeting. Mid Valley Disposal told the council that new state regulations have increased their costs. As a result, the city’s rate payers are going to be asked to pay a little more for their service.

Tanner said the city will have to initiate a Prop. 218 process where property owners have 45 days to formally protest the increase in writing. The public hearing, which is the last chance for property owners to protest is slated to take place on July 27.

Tanner said the city is trying to alleviate the increase by reducing their franchise fee that goes toward administrative services by the city.

“So we’re not increasing any revenue on our end,” Tanner said.

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