The good news is that the deficit of $94,000 in a $12.9 million budget is significantly less (0.7 percent) than previously expected, due to savings from closing City Hall on the third Friday of the month and for the last two weeks of the year, not filling staff vacancies, replacing the full-time city attorney with a part-time attorney and eliminating the Planning Commission.
“There is a deficit that is proposed. It’s very small in comparison to the reserves that are available,” City Manager Bryan Montgomery told the City Council at its May 26 meeting. “If this is the worst that local government (faces) … and we are riding it through with just a $94,000 deficit, we are doing very well.”
Montgomery said it might not even be that bad, noting that he is using a conservative estimate that property tax revenue will decrease 10 percent in the coming year due to lower property values. Some governmental agencies are estimating an 8-percent reduction. Since every percentage drop equals about $50,000, if property taxes drop only 8 percent, Oakley will not run a deficit in the 2009-10 budget year.
But even if the deficit is $94,000, Oakley’s finances will still be in good shape because the budget ran million-dollar surpluses from 2005 to 2008 that allowed the city’s reserve fund to build up. The reserve is expected to drop to 27 percent of expenditures from the 32-percent level two years ago, but that’s still quite healthy considering that the city’s policy is to maintain at least a 20-percent reserve.
The other piece of good budget news is that city officials are projecting that the city will begin running surpluses again in the 2010-11 budget year, albeit smaller than the surpluses of prior years.
Council members are pleased that the city’s budget appears to be in relatively good shape, especially in comparison with other government budgets in tough economic times.
“This is very promising,” said Councilman Jim Frazier. “When we first heard about the budget (deficit) possibilities, it was four times this amount. My hat’s off to staff for really working hard and bringing the (deficit) numbers down. This makes it somewhat easier to swallow a reserve draw. You guys did an exemplary job, and I want to thank you.”
Frazier added that he’s concerned about the increasing costs to the city for animal control services that are contracted with the county. “They have raised our rates 183 percent in, I think, the last three years,” he said. “The amount is ludicrous and we need to put a cap on it.”
Frazier suggested looking into forming a partnership with other cities to jointly fund an independent animal control service. In a memo to the council, Montgomery said that Antioch officials are looking to do just that as a way of helping fund that city’s animal shelter.
In addition to the General Fund deficit, the other piece of bad budget news is that some of the city’s lighting and landscaping maintenance districts continue to run deficits. Most city residents are paying $14 per year for this service, while recent residents are paying $40-45, “which is more consistent with what it really costs,” said Montgomery.
To help make up the funding gap, the city is using $86,000 from the gas tax fund, which is supposed to go for road maintenance.
Due to the city’s healthy reserve fund, Montgomery is not concerned about the probability of state government borrowing $400,000-$500,000 of city funds, with the understanding that the funds would be paid back with interest in three years. As a result, city officials would consider that state raid just an investment.
In other budget news, Oakley has applied for $750,000 in federal stimulus funding under the COPS program to add two more officers to Oakley’s police force. The grants would pay for most of the officers’ salaries and benefits for three years. After that, the money would need to come from the city’s General Fund or the officers would be laid off.