On April 3, the city’s accounting and review manager provided the City Council with a mid-year budget report indicating that at this point in fiscal year 2018, the city is in the red.
But, let’s examine where these variances are occurring and what the outlook is before we push the panic button.
The bulk of the losses appear to be the result of less tax collection, $165,000; building permit, plan check and developer fees, $290,000; recreation and jail fees, $130,000; and not selling excess property, $400,000.
Another big revenue loss is anticipated street and road fund transfers, $500,000. This adds up to almost $1.5 million of projected revenue loss halfway through the cycle.
As expected, public-safety services comprised the largest expense in the budget. Some cities spend more, some less than Lompoc. The charts presented in this briefing seem to imply we are spending too much on public safety, about $2 million more than the average city.
This situation is the likely result of a revenue shortage. The former city manager tried to explain this to the council during the last budget hearings, but the council majority wasn’t willing to place a tax initiative on the ballot to raise funds. They did, however, prioritize public safety, so the budget reflects their direction.
In the last 10 years the total allowed for public safety has risen, but so have the calls for service at both police and fire departments. The Police Department is short 10 employees, and the Fire Department is short two, so others have to fill in at time-and-a-half until new folks can be hired.
The Fire Department appeared to be $500,000 over budget, much of it for overtime. But, that department is a unique service in that they are part of a statewide mutual-aid response system and are frequently called upon to provide equipment and manpower for large-scale emergencies such as the Thomas fire and the resultant debris flow following the January rains in Montecito.
Councilman Jim Mosby led the discussion, as usual. This time he wondered how the staff could go over budget without council approval. One question Mosby could have asked was, how come the Fire Department is over budget?
He didn’t, but I did. The department completed a five-year analysis of overtime costs and it averaged $500,000 per year — but they are only allowed to budget $285,000. So, automatically they will show a significant over-budget condition in an average year. And there are still several outstanding invoices for those out-of-city responses.
Had Mosby done his homework he would have known this, but he wanted to make political points, so he can press for stiffer budget cuts and tighter rein over city staff. His last budget-cutting effort, after a five-month debate, saved a whopping 0.13 percent. That’s just $347,589 out of a $257,996,631 two-year budget.
Final reconciliation of a government budget doesn’t usually occur until several months after the budget period closes, primarily because projected reimbursements for things like mutual aid, street and road fund transfers, or state and federal grants flow like whipped honey.
The city always pays its vendors promptly, but when they provide services to other government agencies, the paperwork grinds slowly from in-basket to in-basket and then is triple-checked before cash is transferred.
I wouldn’t get all excited about the mid-cycle budget numbers. At this point they mean very little, and micromanagement by politicians with little to no experience in government financing won’t change anything.