Roseville looks to fill $4 million operating deficit
Signs indicate the local economy is on the upswing, but Roseville is still addressing a structural deficit, according to the city's treasurer.
Operating revenues have been less than expenses for a couple years, but the city has used carry-over money and one-time monies - from developer fees - to fill the gap. The current operating deficit is around $4 million and funding for future liabilities is about $7 million short.
City Treasurer Russ Branson said balancing the budget won't happen in a single year.
"The biggest piece of discussion is how do we do this ... how do we get ourselves back on track?" Branson said.
During a 2012-13 fiscal year budget workshop Thursday, Branson presented an overview of budget priorities to the City Council. Staff will provide a draft budget to council in late May, budget hearings will take place the week of June 4 and council members will vote on the budget June 20.
Overall revenues will likely be flat in fiscal year 2012-13 and the city has an ongoing goal to expand revenues, Branson said. This year, sales tax comprises 37 percent and property tax makes up 28 percent of the city's total general fund revenues of $101.4 million. Branson said sales tax is trending up. He expects a sales tax increase of $2 million a year beyond 2013.
Roseville Automall sales went up 9.7 percent in the 2010-11 fiscal year.
"After two years of drastic cuts, people who put off buying new cars had to buy them," Branson said.
Property taxes are showing a slowing decline. The Placer County assessor expects about a 2.5 percent decline for 2012-13, Branson said.
Roseville has been hit hard with decreasing revenues as a result of the housing downturn, declining sales and property taxes, and decreasing utility revenues because of vacant buildings or people saving energy. Roseville businesses have also suffered unemployment, which impacts sales tax and housing.
"We need jobs to help move housing forward, as well as business," Branson said.
Unemployment in Roseville is going down, so far at 10 percent in 2012. Last year, 11.3 percent of residents were unemployed.
In terms of development, single-family building permits dropped from about 650 in 2008 to 400 in 2011. No new permits were pulled in the last four years for multi-family housing and only a handful were pulled for commercial. Tenant improvement permits have remained steady.
"Our (office) vacancy rates have climbed dramatically," Branson said.
The office vacancy rate is approaching 29 percent - regionally, the rate is about 23 percent. Meanwhile, retail vacancy rates are down to less than 10 percent, below the regional rate of about 13 percent.
The city expects additional burdens on the general fund in 2012-13 primarily due to CalPERS rates increasing, retiree health care costs going up with new retirees and higher operating costs because of fuel prices.
Roseville is also determining the financial impact of the elimination of its redevelopment agency. The repayment of city loans to the agency remains uncertain. In the agency's 24 years of existence, the city paid about $30 million in advance funding to the agency, said Assistant City Manager John Sprague.
"So this is critical to us," Sprague said.
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