Petaluma budget better than expected
Published: Tuesday, March 2, 2010 at 12:27 p.m.
Last Modified: Tuesday, March 2, 2010 at 12:27 p.m.
While spending cuts, layoffs and furloughs so far have kept Petaluma's budget from sinking into the red, the city will be nearly $1 million in debt by 2011 if spending continues to outpace revenues at the current rate.
Despite that, City Council members this week breathed a sigh of relief about the financial outlook after hearing Finance Director Sandra Sato's mid-year budget review and projections for the 2010-2011 fiscal year.
Comparatively, a million-dollar deficit is better than what was expected.
At one point the 2011 deficit was projected to be nearly three times that, or about $2.8 million, City Manager John Brown said.
“I feel a lot more confident about these numbers than I did a year ago,” Councilwoman Teresa Barrett said, comparing the estimates to a time when the financial “ground beneath our feet was a lot more squishy than we thought it was.”
Sato told council members Monday night that by the end of this fiscal year in June, the city will have $378,000 to its name, including reserves.
She said spending from June through mid-2011 is forecast to be $1,316,300 more than revenues, which are expected to down about $250,000 from this year.
After spending the $378,000 left in the city's coffers, the city's 2011 deficit would be about $939,000.
“Staff will spend the next few months refining the estimates and evaluating options to deal with a projected budget deficit,” Sato told the council.
Brown said he wasn't recommending any concrete actions now because department heads soon will begin their own budget reviews. He said he will give the council proposals in early May for balancing the budget by June 30, 2011.
“We've been in survival mode, and having $378,000 at our year-end is better than we were in 2008,” Mayor Pam Torliatt said.
With nearly a million dollars to trim somewhere, the city still faces serious cuts or devising a way to raise more revenue.
“We're going to do everything we can do to keep the employees working,” she said. “The glass needs to be half-full, but we are going to be increasing revenues and tightening our belts where we can.”
While the council members thanked Sato, Brown and union employees who accepted pay cuts and furloughs to save money and avoid further layoffs, not everyone was happy with the spending plan.
Former Councilman Bryant Moynihan, a council critic since he left office, called the current budgeting unsustainable and irresponsible.
“At this current burn rate, Petaluma will flame out by October,” he said.
In the past year, the city has cut more than $4 million in services and employees, including eliminating its entire planning department because of a lack of development to generate fees to fund it.
Since the last quarter of 2009, the city has made just more than $1 million in cuts to the $35.5 million general fund budget.
Late last year, employee unions agreed to furloughs that equated to a temporary 3.1 percent pay cut through June 2011. Those givebacks and the elimination of several part-time positions will save the city $455,000 this year. Five percent cuts in services and supplies in all city departments will save $323,500.
But revenues continue to lag.
Property taxes and sales tax revenue — the city's two largest sources of income — have come in at a total of $405,000 less than anticipated. The state reimbursement of motor vehicle taxes also was $215,000 less than expected. And an additional $189,000 in income from development didn't materialize.
Since Brown began as city manager in 2008, he has overseen cuts to city spending from about $40.4 million to a projected $33.6 million next year. Revenues, mostly from sales and property taxes, have fallen from $40.4 to $32.3 million in that period.
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