Chico’s budget is balanced—barely

The Chico City Council adopted an operating budget during an all-day meeting Tuesday (June 21) that calls for spending about $26,500 more than the city expects to receive in revenue. To balance it, that overspending will be made up from the $80,000 remaining in the beginning fund balance, which is money left over from last year. That leaves about $53,000 in the projected ending balance.

However, there is still $5.8 million in the city’s emergency reserve fund, down from $7 million two years ago.

Finance Director Jennifer Hennessey told the council that, while sales-tax revenue is up for the fourth straight quarter and transient-occupancy tax receipts have been trending upward as well, property taxes remain depressed because of a slow housing market and lowered reassessments of property values. She said the desired year-end balance is $3.4 million.

During the all-day meeting the fact the state still has no budget made for a lot of guessing and speculation, particularly when it came to the city’s Redevelopment Agency.

There is a bill in the Legislature that would eliminate the state’s 400-plus redevelopment agencies and switch their money to the state’s general fund, where it would be used primarily to fund education. But without concrete information at this point, the RDA budget for the fiscal year is based on the RDA staying in place.

For the most part, with Councilman Andy Holcombe absent, the council members were on the same page when it came to adopting different parts of the budget. However, Councilman Bob Evans said he was troubled by the seemingly increasing percentage of city spending that goes to employee salaries and benefits. That now accounts for 82 percent of the city’s budget.

“In my opinion,” Evans said, “this is a trend that has to stop. We can’t let it go to 84, 86 or 88 percent. We are already sacrificing services.”

The high percentage, he said, was hurting the city’s ability to provide things like library services or road repair.

But Vice Mayor Jim Walker disagreed.

“This is what we do,” he said. “We provide services, and I would expect those costs to go up as we provide those services.”

Walker noted that there have already been salary and benefit reductions among city employees as well as the elimination of a number of jobs. In fact, since 2008 some 63 positions have been cut, about 14 percent of city employees. Most of those cuts have come through attrition and early retirement, with only three being layoffs.

The budget also includes the 10-year capital-projects budget, which includes work on the Highway 99/Skyway interchange ($7.3 million), connecting houses in the Chapman neighborhood to the city sewer ($7.6 million) and the widening of State Highway 32 ($5.6 million) and Cohasset Road ($5.5 million).

The council also was told how the city will be taking over most of the operations at the Butte Humane Society beginning next year, approved community funding requests as recommended by City Manager Dave Burkland—community agencies ($231,786), art programs ($83,954) and economic development services ($166,377). The council also agreed not to increase the franchise agreement fees for the Saturday Certified Farmers Market.