The Next Budget Raid from the State
I realize that the majority of the posts lately have focused on budgetary issues. Unfortunately, it is the budget time of year, and this will certainly be the most challenging budget we have faced (along with every other city in State) in the past 30 years. While we've been doing everything we can to reduce expenditures and maximize revenues, there are two major revenue issues that we can't predict yet.
One of those is our property tax collections, the County Assessor will not be coming up with final calculations until July or August. Since property taxes are traditionally a fairy predictable source of revenue, this is typically not a problem. However, as I noted in an earlier post, this year's assessments could be down from 10 to 20 percent, depending on how the assessor weighs foreclosures into his value estimation. Since property taxes are 25 percent of our General Fund Revenue and 100 percent of our Redevelopment revenue, the assessor's final determination could create huge swings in our final revenue estimates.
The second major unknown is the State of California. The State budget is predicated on Ballot Measures 1A-1F winning at the polls on May 19. Right now, all of the ballot measures are in trouble. Even if the ballot measures pass, the State has now revised their revenue estimates and it looks like their original budget is now at least $8 billion in the hole. Win or lose, the State may come back and attempt to withhold or "borrow" some of our revenues again. I'm going to be recommending to the City Council that we adopt a "preliminary" instead of final budget in June. Once our property tax number is set and once the State finalizes their budget, we'll then have enough information to adopt a final budget. During the interim period, we'll continue to do what we are doing today, constantly looking for ways to reduce expenditures both in the short and long term.
I've attached a column from California City News here which talks more about the State's latest budget issues.
One of those is our property tax collections, the County Assessor will not be coming up with final calculations until July or August. Since property taxes are traditionally a fairy predictable source of revenue, this is typically not a problem. However, as I noted in an earlier post, this year's assessments could be down from 10 to 20 percent, depending on how the assessor weighs foreclosures into his value estimation. Since property taxes are 25 percent of our General Fund Revenue and 100 percent of our Redevelopment revenue, the assessor's final determination could create huge swings in our final revenue estimates.
The second major unknown is the State of California. The State budget is predicated on Ballot Measures 1A-1F winning at the polls on May 19. Right now, all of the ballot measures are in trouble. Even if the ballot measures pass, the State has now revised their revenue estimates and it looks like their original budget is now at least $8 billion in the hole. Win or lose, the State may come back and attempt to withhold or "borrow" some of our revenues again. I'm going to be recommending to the City Council that we adopt a "preliminary" instead of final budget in June. Once our property tax number is set and once the State finalizes their budget, we'll then have enough information to adopt a final budget. During the interim period, we'll continue to do what we are doing today, constantly looking for ways to reduce expenditures both in the short and long term.
I've attached a column from California City News here which talks more about the State's latest budget issues.
Labels: Budget
posted by City Manager @ 3:32 AM
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