Decline in sales tax collection, rising policing costs contribute to delay in city’s efforts to reach $4.1 million surplus target
By Nao Braverman
Looking ahead at the 2008-2009 fiscal year, it is clear that nationwide economic woes have finally reached Ojai. But it’s not too late to prepare for the blow, according to City Manager Jere Kersnar. If the city starts making prudent decisions now, it can maintain current services, despite rising costs.
At a City Council budget meeting Tuesday night, Kersnar told the council that the city’s revenues came in at about $8.4 million for the 2007-2008 fiscal year while expenses were about $7.4 million, leaving a balance of about $980,000.
Revenues came in $240,000 less than expected because of a steep drop in sales tax collections of about 8 percent from 2006-07’s $1.25 million.
Part of the revenue decrease was also attributed to more public works costs that were taken directly out of the general fund, instead of other funds, due to administrative changes.
Expenses were $458,000 less than expected for the 2007-2008 fiscal year, which compensated for the lost revenue. The under-expense was not attributed to any particular operation but rather overall prudence across the board, said Kersnar.
As a result the approximate net of $970,000 is about $217,000 more than originally budgeted.
But the 2008-2009 fiscal year is looking grim. While costs of all services are soaring, from the price of road materials to utility bills, revenues are coming in flat. Revenues are expected to come in at 8.55 million, in the coming fiscal year, about $150,000 more than 2007-2008. However the increase is primarily due to the allocation of some city costs to funds other than the General Funds. So in essence revenues are not really increasing, explained Kersnar.
Expenses, meanwhile, with cost of living adjustments to salaries, increase in health insurance premiums, as well as other rising costs in every other area, have shot up to 8.23 million, 4.3 percent higher than last year.
As a result the 2008-2009 fiscal year budget leaves a measly net balance of about $326,000, much less than the year before.
To make amends for increasing costs, city staff recommended adding the $217,000 of excess funds, from the 2007-2008 fiscal year, to the 2008-2009 budget to get a net balance of about $543,000 to add to the general fund at the end of the 2008-2009 fiscal year. This would enable the City to meet its goal of adding $500,000, or 50 percent of its expenses into the general fund.
With this shrewd move, both budgets will meet their policy target and the general fund balance will be at $3.2 million by the end of the next fiscal year, just short of the grand target of $4.1 million, according to Kersnar. He said that all this can be achieved by maintaining the status quo. So services will not improve, however, existing services can be maintained, despite hard times, said Kersnar.
This puts Ojai in a better state than other cities that will have to reduce services due to nationwide economic woes. But if things continue at this rate, the city staff will have to do some more artful maneuvering to keep the budget intact in years to come.
The city’s largest department expense, the cost of the policing contract with the Ventura County Sheriff’s Department, is expected to go up 5 percent from $2.43 million in the 2007-2008 fiscal year to $2.67 million, in the 2008-2009 fiscal year.
In the 2007-2008 fiscal year the contract costs went up 4.5 percent from the $2.215 million the year before.