Finance Director Zane Johnston told the City Council on Tuesday that the 2012-13 general fund budget, if adopted as proposed by the staff, would be about $2.2 million in the red.
That’s despite nearly $5.8 million in anticipated 2012-13 revenue from Measure E, the half-cent sales tax hike that was approved by voters in 2010 to preserve essential services.
Measure E took effect in April 2011 and is set to expire in March 2016. According to a February report, it was on track to raise about $5.4 million in the 2011-12 fiscal year.
Johnston attributed much of the 2012-13 shortfall to things beyond the city’s control, including a $700,000 one-year decline in property tax receipts, a $300,000 reduction in investment income and the end of voluntary worker furloughs that will add $600,000 in costs to the city’s ledger.
“If we had the same property tax levels that we had when Measure E was passed,” he said, “we’d have a balanced budget tonight.”
But the budget presented to the council showed general fund revenues of $47.7 million, with expenditures of $49.9 million. Proposed spending for the 2011-12 budget was $48.4 million, according to city documents from a year ago
Johnston pegged actual 2011-12 general fund spending at $48.5 million Wednesday, May 16.
The plan presented by city staff members would close the 2012-13 gap with reserve funds, leaving an anticipated $23 million in backup money as of June 2013.
In the longer term, Johnston expected the city’s general fund budget to be balanced finally in 2015-16, the final year of Measure E, when the tax is supposed to give the city about $6.5 million. After that, however, he predicted the city would be back in the red by about $4.5 million.
“That’s not light at the end of the tunnel,” worried Mayor Brent Ives. “That’s a train.”
Johnston said the deficit was predicted despite a “legitimate” plan to generate $8 million in savings or increased revenue by June 2016. That, he said, included reducing city staff.
By the time the city’s plan to trim staff is finished, Johnston said, Tracy will have the equivalent of 436 full-time workers, 122 fewer than in 2006-07.
“We’ve been doing it for the past three years, and we’ve been doing it strategically,” he said.
The council scheduled another workshop to discuss the budget June 5, before the regularly scheduled City Council meeting.
During the regular meeting, the council will have the opportunity to approve the general fund, capital improvement, debt and overall operating budgets for 2012-13, city staff members said, though the decision could be postponed until the June 19 meeting, the last before the 2012-13 fiscal year begins.
At a glance: General tenants
• The general fund receives income from sales tax and property tax collected within city of Tracy limits, as well as some fees, such as recreation fees and park rentals. The general fund is used to pay for police and fire protection, park maintenance and other personnel expenses.