Santa Rosa signed off on the single largest city budget increase in its history Tuesday as it faces sharply higher fire recovery costs that far exceed the revenues needed to pay for them.
The City Council voted to expand the city’s $447 million budget by $62 million from the current year, or a 16 percent jump.
Much of that stems from $47 million in capital improvement projects the city has planned for next year. Most of the money is related to the cost of replacing the water system in Fountaingrove, which is contaminated by chemicals from melted water pipes and components.
It is likely the city will recoup some of those costs down the road, but when that might be is unknown. The city estimates it needs $111 million to repair all of the damage from the fire, from the contaminated water system in a part of Fountaingrove to its lost fire station and destroyed roads, sidewalks and streetlights.
“Do we have any idea when those dollars could be potentially coming into the city?” Councilman Chris Rogers asked hopefully.
“Um … no,” City Manager Sean McGlynn replied.
So, with no bailout in sight, the city is being forced to dig deep into its savings next year. It will use reserves to pay not only for physical repairs, but for a city staff that is growing — 17 new positions are being created — and whose compensation and benefits costs are steadily rising.
To pay the bills, the city expects to withdraw another $14.2 million from its already depleted savings account.
What began as a $37.3 million cushion at the end of the 2017 fiscal year has now been drawn down to an estimated $17 million by the end of the month. If the city really spends $14.2 million more than it takes in next year, it will have less than $3 million left in its reserves.
McGlynn said the council is going to have to work hard to find budget savings during the year to reduce its deficit spending and to rebuild the reserves, without which the city would be having a “very, very difficult conversation” following the fires.
“I want to make it clear there is hard work that will commence immediately following the adoption of the budget,” McGlynn said.
City staff gave the council the option of making cuts to fund a $1.5 million batch of programs that council members wanted to enhance but didn’t have the money to pay for.
Instead, the council chose to put off some upgrades and pull back an $800,000 loan it had promised the bus system, which is suffering from a decrease in ridership and higher costs. The council also chose to postpone $200,000 in accessibility upgrades to city facilities, to push off for a year the conversion of streetlights to LED lights for a savings of $300,000 and to shrink McGlynn’s budget by $150,000.
Those moves helped the council support a handful of programs that it wanted to fund despite its huge deficit. These included working to make it easier to build housing downtown ($250,000), purchasing and installing a downtown bathroom ($250,000), drafting a sunshine ordinance to codify the city’s rules about transparency ($25,000) and boosting efforts to help homeless people find housing ($852,000).
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