CALIFORNIA CITY — The proposed fiscal year 2021-2022 budget for California City is still a work in progress, more than four months after the start of the fiscal year on July 1.
The Council held a special workshop meeting, on Nov. 8, and again discussed the proposed budget, as it stands, during the regular meeting
on Nov. 9.
The city has contracted with more than one consultant to help the short-staffed finance department with preparing the budget, as well as the remaining two years’ backlog of annual audits, which help determine the city’s current financial standing.
The budget reviewed in the workshop showed projected General Fund revenues of $7.25 million, against projected expenses of $7.43 million. With a projected starting fund balance of $8.16 million, the General Fund would end 2021-2022 with a balance of nearly $8.29 million.
The General Fund covers the main city functions, with the exception of the police and fire departments, which remain separate funds supported by a special parcel tax approved by voters in 2018.
One stumbling block to approving the budget is in regards to that special tax, and how it should be calculated in regards to providing funds to the police and fire departments.
When the tax was passed, the idea was that taxes on the emerging commercial cannabis industry would eventually make up the difference to fund the public safety functions. The special tax measure included a provision to reduce the tax rate for property owners.
In the three years since its passage, debate has continued on how that reduction is calculated and applied, with differing results. The cannabis industry has not taken off as quickly as hoped, resulting in less tax revenue collected from that source.
The proposed 2021-2022 budget shows the Police Department beginning the fiscal year with a deficit of just over $900,000. Projected revenues of $3.35 million and projected expenses of $4.83 million are balanced by grants and other similar sources to leave the department with a net income of $11,500.
Of the projected $4.83 million in revenues, $3.13 million is the department’s share of the special parcel tax.
For the Fire Department, the proposed 2021-2022 budget estimates a starting balance of $410,000. Projected revenues are $3.35 million, nearly all from its share of the special tax, and $3.75 million in projected expenses would mean an infusion of nearly $400,000 from the city’s General Fund necessary to balance its budget.
During the Nov. 9 discussion, Mayor Jeanie O’Laughlin brought up concerns that the union contracts enacted after the special parcel tax was passed required the departments to share the full amount possible under the tax, which does not allow for any growth in salaries for the six-year duration of the tax.
The Council has, in the past, allowed the departments to budget at that full special tax rate level, but that rate has not been levied each year, leaving budgets at an unsustainable level, she said.
“I don’t see how we can keep going on this path,” she said.
O’Laughlin proposed allocating less of the special tax revenue to the departments this year, allowing for increases in the following years.
Councilmember Karen Macedonio said that setting the budget this year without provisions for the future does not inform the community what the public safety departments face when the special parcel tax expires in 2024.
“We’ve got to find a way to increase our revenue stream so we can afford police and fire,” she said. “If we have to cut services, our community needs to know.”
Councilmember Jim Creighton said that all departments will need to tighten their belts this year.
“I just think this year is a mess,” he said.
While Interim City Manager Anne Ambrose agreed that such policy discussions are needed, the more pressing issue is passing a budget for 2021-2022, something that really can not continue to be put off while such policy questions are continued to be debated.
“The challenge that we’re in right now is we need guidance to adopt a budget,” she said. “We need to adopt a budget of some kind.”
“What is it that you need us to try to do in order to bring you a budget that can be considered for adoption?” she said.
The Council should pass a budget, “good, bad or ugly,” and then tackle the policy questions in earnest, Creighton said.
“I think we need to set aside some of these philosophical questions and get a budget passed,” he said.
The Council is scheduled to meet in a special workshop to discuss the Police and Fire Department budgets at 5 p.m., on Monday. The meeting will be held in person at the Council Chambers, 21000 Hacienda Blvd., as well as via Zoom.
The link to participate via Zoom is https://us06web.zoom.us/j/84207090237, meeting ID 842 0709 0237.