In a budget meeting Tuesday, city officials saw what effect losing funding from a 2009 amendment could have on Los Banos' future budgets.
Measure A covers $760,000 for Los Banos police and $284,000 for Fire Department personnel. The year's projected general fund expenditures on police is $5.5 million and $886,000 for fire.
"It's imperative to have an extension on Measure A," said Brent Kuhn, the city's chief financial consultant.
In 2009, Measure A was approved with 82 percent of the vote. It allows salaries of police officers and firefighters, which usually come out of the city's general fund, to be paid through the ½-cent sales tax approved in 2004, known as Measure P. It sunsets in 2014, and officials are looking to put it on the November ballot.
Depending on general fund revenue, Kuhn said, not renewing Measure A would leave the general fund with a deficit of as much as $1.6 million and as little as $259,000.
The unrestricted general fund balance at $6.6 million has climbed steadily since 2009, when it was $3.3 million. Kuhn attributed that to former City Manager Steve Rath's planning.
"We were trying to use other funds for safety that would allow us to build up the fund reserve in the general fund for the inevitability of Measure A sunseting," he said.
Under the best-case scenario, Kuhn said, the city's reserve could cover the revenue lost from the expiration of Measure A for three years before hitting a reserve of 30 percent, which is required by law.
Fire Chief Chet Guintini said he thinks recent growth in town will offset some of the projected loss from the measure's expiration. For example, the town has a more robust new-car dealership in Santos Ford and a Dollar General is set to open in spring or summer, both of which could lead to more tax revenue.
Fiscal year 2012-13
Kuhn pointed out what is perhaps a good sign. The city brought in a 9 percent increase in sales tax revenue through Jan. 31, Kuhn said. "Sales tax is an interesting revenue, because it is most susceptible to any recovery or recession," he said.
The water, wastewater and solid waste funds are all operating at a surplus.
Police and Fire are the city's two largest departments in terms of expenditures.
The Police Department expenditure is projected to be $526,000 under budget by the end of the fiscal year. That is in large part due to three officer positions that remain unfilled.
Mayor Mike Villalta said the city does not want to rush into hiring any officers.
"If you have to terminate an employee, it's a lot harder than finding the right one in the beginning," Villalta said. "Although we can't find the exact employee we need, it's not because of lack of trying."
Fire Department costs for personnel, services and supplies are also projected to finish under budget by $297,000.