The 5-0 vote gave the go-ahead to a $158.5 million overall budget for fiscal year 2012-13, which begins July 1.
Included in that figure is the $49.9 million general fund — the part of the budget that pays for police, fire protection, parks and other services. It will be supported by $2.2 million in reserve money, drawing those reserves down to $23 million.
The city predicts only $47.7 million in general fund revenue for 2012-13.
The anticipated shortfall is larger than that of 2011-12, when the council approved a general fund that was $1.4 million in the red. It’s still smaller, though, than the $5.3 million deficit of 2009-10.
The deficit grew from 2011-12 to 2012-13 despite a boost in sales tax revenue from Measure E, the half-cent hike in the local sales tax approved by voters in 2010.
In 2012-13, Tracy Finance Director Zane Johnston expects the special sales tax to generate $5.8 million for the general fund; it brought in about $5.4 million during the present fiscal year.
In previous meetings, Johnston blamed several factors for the deepening deficit, including an increase in the city’s contribution to the state pension program and the expiration of certain concessions from city employee groups.
He added Tuesday that since Measure E was passed, the city had lost an additional $1.2 million in annual property tax revenue, a trend that is likely to continue.
County Assessor Kenneth Blakemore confirmed in an interview that next year’s property tax rolls are likely to decline.
“Measure E was never contemplated to take the place of a continually eroding tax base,” Johnston said, but rather was meant to give the city time to balance the budget for the 2015-16 fiscal year, when Measure E expires.
On Tuesday, Johnston said many steps, including reducing the number of city departments from nine to six and instituting an early-retirement program approved in October, should yield more savings in 2013-14.
“It is a transition budget,” Johnston said. “There are some things put into play here where we’re only receiving half a year’s savings.”
As a source of hope for a balanced budget, he pointed to new business and industrial developments that would pump up the property and sales tax base.
“In the end, perhaps one of the things I know can help this community and help balance our budget, and where we’re putting a lot of effort, is economic development,” Johnston said.
New projects on horizon
The council also approved a $21.89 million capital improvement budget, funded by money that can be used only for one-time projects.
For a list of those items, check back at www.tracypress.com, or read the Friday, June 8, print edition of the Tracy Press.