Friday, Jul. 03, 2009
Council OKs new budget
ENTERPRISE STAFF REPORT
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ReprintAfter a two-week delay for what turned out to be a mistake by Merced County officials, Los Baños finally has its 2009-2010 budget in place.
The budget was passed in a 4-0 vote by the City Council -- Councilman Tom Faria was absent.
The city is estimating that it will have revenues of $41.3 million and expenditures of $58.7 million. The beginning fund balance is $62 million. The city previously estimated the balance at $100 million but erroneously included non-cash assets.
On June 17 city officials postponed the budget after receiving last-minute news from the county indicating a more severe property decline than anticipated. Merced County estimated a 55.27 percent decrease occurred in the city's property tax assessment. The city had estimated the decline to be slightly more than 35 percent. The difference would have amounted to more than a $400,000 decrease in revenue for the city.
But city staff determined the disparity occurred because of an error by the county when it calculated the percentage decrease by dividing the whole (about $2.9 billion assessed value in 2008) by the part (about $1.9 billion assessed value in 2009) and then subtracting 1, rather than vice versa.
The city's portion of the property tax assessment this year will be about 11 percent of 1 percent of the total assessed value, which the city's Chief Financial Officer Melinda Wall estimates will be $2,043,460. That is about $900,000 less than the property tax revenue received in 2008, $1.7 million less than in 2007.
Councilwoman Elizabeth Stone said she was happy the city's numbers, but Los Baños may have more hard times ahead.
"We were very relieved to find out last week that the drop in the property tax of 55 percent was a discrepancy made by the County Assessor's Office. (But) we realize this is far from over, we're gonna have to deal with it next year and the years to come," Stone said.
The council decided to tackle the issue of whether to contribute to the Chamber of Commerce this year at a later date. The chamber usually gets a combined $36,000 from the city and the Redevelopment Agency. This year Los Baños' budget included no money for the chamber.
Stone suggested city staff draw up a four-month contract between the RDA and the city and determine whether to extend it at a later date.
"I believe in a healthy chamber," Stone said of the need to fund the organization. "And I believe that the RDA and chamber have the same end goal of economic development."
Councilman Mike Villalta said his understanding is that in August the City Council will review an agreement between the RDA and chamber that will include the more than $1,300 a month the agency usually gives the business-based group. The four-month agreement will retroactively include July, Villalta said.
The city's general fund includes nearly $11.4 million in revenue and $11.3 million in expenditures.
While the 2009-2010 budget balances the general fund thus maintaining its fund balance reserve, uncertainty about how the state will go about balancing its budget is widespread.
The state's proposal to "borrow" for three years 8 percent of every city's and county's property tax money is still on the table in Sacramento.
Mayor Tommy Jones, as he does often, defended the council's decision to layoff more than 20 people this past January to make the budget meet economic realities.
"We're one of the few communities in the complete Valley that is in the black," Jones said. "That did not come without very difficult decisions being made."
Villalta cautioned against comparing Los Baños to other cities.
"When we compare ourselves to other towns, the other towns aren't going to help us, we have to help ourselves," Villalta said. "We have to worry about Los Baños right now and how we're going to solve our budget problems."
Villalta said he voted for the budget with reservations. He then promised Los Baños citizens that he's going to "continue" until the exact dollar amount of an alleged embezzlement at City Hall is known. Police Chief Dan Fitchie told the Enterprise the money believed to have been stolen has grown to more than $423,000.