The city is expected to spend about $46.1 million from its general fund in the coming fiscal year but take in only about $42.4 million, leaving a nearly $4 million gap in the budget.
The council approved a plan Tuesday night, June 15, to use $4.8 million of the city’s reserve money to plug that hole and cover more than $1 million in city debt.
The city’s financial director, Zane Johnston, estimated the city has about $27.3 million in reserve money. Up until the 2008-09 fiscal year, the city’s annual revenue stream exceeded its expenses, and the extra money was put into the reserve fund.
In 2006-07, the city took in $50 million in revenue but spent only $44.3 million. In the most recent fiscal year, the city made $42.7 in revenue but spent $50.2 million.
In a presentation to the Tracy City Council last month, Johnston said the city has cut expenses by $5 million in two years with layoffs and supply expenses, among other things.
The city has lost $8.6 million in property and sales tax over the past three years, according to Johnston, and the sharp decline in revenue makes it more difficult for the city to have a balanced budget.
He estimated property taxes could decline at least another 3 percent next fiscal year, which means the city will lose some revenue, while taxpayers will pay less in property taxes.
Last year, the council passed a resolution that lets the city to use reserves through fiscal year 2011-12 to make up for annual general fund deficits. Johnston said the council still wants to protect its reserve money and insisted that the city balance its budget — to have expenses no more than equal income — by fiscal year 2012-13.
The council also wants to have at least 15 percent of the city’s general fund expenses saved in the reserve account at that time, he said.
Johnston said the city has been able to save during the good years for “a rainy day,” which has left the city in a much better place financially than most cities around the state.
“It’s that this rainy day has become a storm,” Johnston said.
Last-minute changes since the council’s May 18 budget workshop included deducting about $227,000 in revenue that had been expected to come from an emergency services fee the council decided to postpone earlier this month. The council also sliced out $60,000 it had earmarked for D.A.R.E., which teaches elementary and middle school students about crime and drugs.
Johnston said the police department plans to evaluate D.A.R.E., and the council will talk about money for the classes during its July 20 meeting.
During Tuesday’s meeting, Tracy Sister City Association president Bob Elliott called D.A.R.E. “one of the most important investments” the city could make and urged the council to find money for D.A.R.E.
“We owe it to our kids,” said Elliott, who has filed papers to run for a seat on the City Council in November.
Other changes to the budget since the workshop included more unpaid furlough days for city employees.
Johnston announced Tuesday night that four groups of city employees, including department heads and managers, agreed to work fewer hours, amounting to a 1½ percent pay cut.
He said the agreement means four more furlough days a year for those specific work groups, but the city’s office hours will not change. He estimated the added furloughs will save the city another $200,000 and that ongoing negotiations with two other unions, including the fire department union, could save even more money.
City employees agreed last year to eight furlough days — equal to a 3 percent cut in pay — which closed city offices an extra Friday each month from March through October.
City employees have agreed to the same terms for the coming fiscal year, Johnston said.
• Contact reporter Jaclyn Hirsch at 830-4223 or email@example.com.