The 5-0 vote authorized a $195 million budget for the 2013-14 fiscal year, which begins July 1.
City Manager Leon Churchill Jr., explained to council members during a presentation that the city projects revenue of $50,630,360 — a total that will cover the city’s expected general fund spending of $50,025,440.
Before its passage, Churchill characterized the FY 2013-14 proposal as “a conservative and guarded approach to budgeting.”
“The City Council asked us to adopt a balanced budget by 2014, and that has now been accomplished one year ahead of schedule,” Churchill said.
The anticipated revenue reverses a trend that saw the general fund in deficits of $2.2 million in 2012-13, $1.4 million in 2011-12 and $5.3 million in 2009-10.
During FY 2012-13, the city used $2.2 million from reserves of $23 million. Reserve funds this year are at $29 million, according to city staff.
Churchill said sales tax revenue is “outstanding” and told council members that “we should be proud of that.”
Fulfillment centers for companies such as Amazon.com Inc. — which plans to open a 1 million-square-foot center in the fall off Chrisman Road south of Grant Line Road — are predicted to boost the total sales tax.
“We do not know the full impact of Amazon and other facilities like it,” Churchill said. “We do not know if others like it will come to Tracy in the future.”
Following the meeting, Churchill said the city is drawing on revenue from distribution centers — such as Crate & Barrel at 1605 N. Chrisman Road — that have already converted to fulfillment centers.
Fulfillment centers have call centers that take orders directly, and according to Churchill, the city can begin receives the 1 percent local sales taxes from them.
Churchill said the “general level of spending by consumers has grown at a very healthy rate” — a theory the city hopes will also improve sales tax revenue.
“Maybe this is something that is going to be sustained for a long time,” he said. “That’s why we are encouraged by our sales tax growth.”
Councilman Robert Rickman also alluded to “several different types of restaurants that should be coming here shortly, as well as different businesses,” which he said would further increase sales tax revenue.
“I know there is a lot of stuff we can’t say because of confidentiality reasons … but that should help a lot too,” Rickman said.
Churchill told council members that property tax revenue growth “has been slow” but said that “based on current real estate realities, we do hopefully expect to see some improved performance next year.”
The city has budgeted in the coming year to hire an economic development analyst — a position Churchill said “should pay dividends soon” and demonstrate “that the city will be active in all sectors of the local economy — industrial, commercial and the like.”
An anticipated rise in home prices in Tracy should drive property tax revenue and attract buyers to the city, the city manager said.
“The long term is that those additional rooftops mean additional consumers and that will also continue to drive sales tax growth,” Churchill said. “Hopefully we’ll get both benefits in time.”
The revenue-growth predictions, according to Churchill, won’t be fully calculated until the spring of 2014, when this year’s collection is counted.
The FY 2013-14 budget has factored in the $3.6 million loss that will be created in 2014 with the end of Measure E — a half-cent hike in local sales tax approved by voters in 2010. The increase in sales and property taxes forecast for next year should offset that gap.
Churchill said the city’s revenue is expected to exceed spending for the next three fiscal years. He also plans to bring several “cost-reduction proposals” to council members in the “coming months” so they can determine a new fiscal policy direction.
Another component of the FY 2013-14 overall budget is a $57,464,300 capital improvement budget, which is money used for one-time projects.
Three people spoke in favor of the FY 2013-14 budget during a public hearing before council members approved it.
• Contact Joel Danoy at 830-4229 or firstname.lastname@example.org.
At a glance
WHAT: Tracy City Council
WHEN: 7 p.m., Tuesday, June 4
WHERE: Tracy City Hall, 333 Civic Center Plaza
PRESENT: Mayor Brent Ives, Mayor Pro Tem Michael Maciel and council members Robert Rickman, Nancy Young and Charles Manne