New City Budget Draws $50,000 in Reserves

The Sonoma City Council passed a tentative budget Monday night that will draw about $50,000 from city reserves to make up for and other shortfalls.  

The measure, which passed unanimously, earmarks $49,508 in reserve money –  $39,508 from the city’s operating reserves and $10,000 from its special project reserves – for the upcoming fiscal year, which begins July 1. The city determined that money could be safely drawn from those two funds because neither has any major projects in the pipeline, according to a joint presentation delivered Monday by City Manager Linda Kelly and Assistant City Manager Carol Giovanatto.

 “We feel we have a sustainable balance, for this year, in those two reserves,” Giovanatto said. “We don’t have any long-term building problems, and the big hit we took in vehicle reserves was when we bought the ladder truck (for firefighting) a couple years ago. That’s already been paid for, and we don’t anticipate another huge purchase like that for another 30 years.”

Kelly said city officials “anticipate needing to amend” the city’s budget after the state passes its budget (a budget ratified by the state legislature last week was vetoed by Governor Jerry Brown ), and her presentation highlighted redevelopment funds as an area of special concern.

According to Kelly, the city is preparing for a several scenarios for the future of redevelopment, which is used to fund blight-combating projects through property taxes. One is that the state will replace local oversight bodies with “successor” agencies that will appropriate some or all of a given jurisdiction’s redevelopment monies for the state.

Such an agency would replace the existing body on October 1, at which time it would have complete discretion over redevelopment funds and other operational considerations – including, potentially, the phasing out of redevelopment altogether, according to Kelly.

“They will have a wide latitude in deciding what to do with the funds,” Kelly said.

Another possibility is that California will give cities the chance to retain their redevelopment agencies, in their current form, in exchange for an annual payout. Kelly said city officials anticipate such an arrangement would cost Sonoma about $1.7 million up front for the first year, with unknown future costs.

 She added that losing its redevelopment  program would cost the city about $5.7 million a year; however, whether yielding the program to a “successor” agency would bring about its elimination (and, if so, how quickly it would be phased out) or simply split off some of its yields to state coffers, is unknown.

Kelly said it was possible the city could make up for possible budget shortfalls with added revenues generated through measures like an increase to the Transient Occupancy Tax and a renegotiated labor agreement (a session before Monday’s meeting, closed to the public, centered on labor negotiations, according to Kelly). Kelly said the city has already saved money in the last several years – without layoffs – by keeping vacancies open for government positions and cutting workdays.  

Meanwhile, other programs remain in limbo as the city awaits a finalized state budget. Much of Monday’s discussion focused on the state-funded Community Oriented Policing Services (COPS) program, which officials worry might be cut under the new budget. The program aims to prevent crime through various community outreach initiatives, some involving partnerships between the police and other civic organizations.

If the state does cut the COPS program, Kelly said her office has it down as a “deferred expense,” meaning the city would look at funding options if and when the state decides to cease financing. Councilmember Stephen Barbadose said this and other “gray areas” of spending concerned him, but added that “we may not have to cross that bridge” if the state decides to continue its funding or the city generates better than expected revenues (Kelly said the tentative budget errs on the side of caution) . Meanwhile, Councilmember Ken Brown called the COPS program indispensable.

“I think it’s important we show ongoing support for COPS no matter what,” he said. “Continuing to fund it is crucial to the city and its residents.”