CLEARLAKE, Calif. – The Clearlake City Council passed the city's fiscal year 2014-15 budget on Thursday.
The vote was 3-1-0 vote, with Councilwoman Jeri Spittler casting the dissenting vote. Councilwoman Joyce Overton excused herself for unknown reasons earlier in the meeting prior to the budget discussion and subsequent action.
Operational budget expenditures in the general fund total about $4.5 million, of which about $2.7 million is allocated to the police department.
Finance Director Chris Becnel, who began employment with the city of Clearlake on July 1, said the budget is “fairly balanced.”
“It's about $37,000 (in expenditures) more than (revenues) taken in but we do have the reserves to cover that,” he said.
City Manager Joan Phillipe said a fiscally conservative approach was used in developing the budget and that all department heads were involved in the process.
In addition, two budget workshops were conducted that included the participation of council members.
Phillipe said financial management policies that were adopted last year established specific reserve accounts, which – as revenues increase in coming years – will bring the city to a healthier overall position and enable it withstand economic downturns much better than it otherwise would.
“As I cautioned during discussions in developing the city's goals and have continued to caution since, as revenues begin to increase, the city cannot allocate them to increased expenditures,” Phillipe said. “Rather, the belt tightening will have to continue and the reserve accounts will need to be funded, including those that address future liabilities.”
The general fund is projected to have a positive ending fund balance of $622,238. However, when the city's $150,000 risk management reserve, as required by the city's insurance, is subtracted, a projected $472,238 fund balance remains.
Additionally, with reserve for economic uncertainty set at 5 percent, totaling $226,136, an unallocated fund balance of $246,102 remains.
“That doesn't mean those funds are there waiting to be spent,” Becnel said.
Phillipe said budget projections include a $166,000 anticipated increase in sales tax revenues.
Decreases in revenues, she said, include the following: school resource officer ($101,722), property taxes ($139,229) and transfers in from gas tax and the economic development fund.
According to Phillipe, expenditure decreases are projected as follows: city council health insurance reduction, $30,542; general plan draft environmental impact report, as it nears completion, $80,000; city liability insurance premium reduction, $116,846; and audit cost reduction, $23,000.
Phillipe said salary and benefits costs are projected to increase $14,469 because of scheduled step increases, longevity pay, a projected 5-percent increase in health insurance premiums and increased Cal PERS rates.
“With the implementation of the tiered retirement system, new employees have saved the city money on retirement costs,” she said.
Phillipe outlined new aspects of the budget as follows:
- Measure P Fund costs are now balanced to Measure P revenues (Measure P requires 63 percent of the general fund be allocated to the police department).
- The economic development and the building development funds were closed and are now included in the general fund.
- A new parks and development fund was established to account for the $50,000 received from Lake County for improvements to Highlands Park.
- Transfer of $100,000 from the Supplemental Law Enforcement Services Fund to the general fund to finance front-line police personnel costs. Phillipe said this also occurred in last year's budget.
- Planned police officer position vacancy resulting in a cost savings of $60,529.
- A total of $62,727 in transfers to the general fund for administrative cost allocation charges provided to other funds, as supported by a consultant's cost allocation plan. Phillipe said the gas tax fund is not contributing this year as funds are not available because of active street improvement projects.
- The first year of loan repayments to the general fund from the redevelopment successor agency is budgeted in the amount of $103,933. Of that amount, 20 percent or $20,787 must, by law, be allocated to the low/moderate income housing fund, Phillipe said. The successor agency oversees the dissolution of the redevelopment agency.
- A first installment payment on a $241,000 debt owed from the general fund to the successor agency is budgeted at $48,200. Phillipe said the net effect of this transaction and the aforementioned loan repayment from the successor agency is an increase of $34,946 to the general fund.
- A new capital projects fund is established to transfer the available project funds out of the successor agency. Phillipe said this will enable better tracking of the projects as they progress. The current transfer is $500,000.
- The budget includes health insurance coverage for council members only and not extended to their families.
- The budget includes funds associated with potential costs for animal control.
Despite Becnel's emphasizing the importance of getting a budget in place for the coming year being that the previous budget has already been extended, Spittler requested more time to review the document.
While she claimed the document is convoluted and difficult to understand, other members of the council praised staff for its easy comprehension.
Vice Mayor Gina Fortino Dickson offered to go over the document with Spittler page-by-page at another time and clarified that the budget before them was a working document that can be amended as needed.
Fortino Dickson said the document is finalized at the time of the midyear budget review, which was reiterated by Phillipe.
Spittler continued citing expenditures of $20,000 or less that she said caused her concern.
Expenditures cited by Spittler involved building maintenance costs and equipment costs within the public works budget.
Councilman Joey Luiz described those expenditures as being minuscule and said concerns brought up by Spittler were addressed in detail during the budget process.
He said if Spittler had further concerns, she should have addressed them during the budget workshops, which were held in June and July.
“We've been working on this for weeks,” Luiz said. “It is not beneficial to hold off (on adoption). It keeps department heads from spending (accordingly) to their budgets.”
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