Tuesday Jun 02 2009
City hit hard by tax, revenue decline
By: Craig Robinson, Roseville city manager
The following is an excerpt from the City Manager’s budget message online at www.roseville.ca.us/budget and click on “Proposed FY2010 Budget.” We face the year ahead expecting continued economic sluggishness challenges and preparing for the challenges it brings. In the past year the city, which had enjoyed consecutive years of steady revenue increases until 2007, has been hit hard by sales and property tax declines of 10 and 2.5 percent, respectively, as well as major declines in development-related revenues. Since the 2008 fiscal year, the city has seen a $19 million decrease in General Fund operating revenues—mostly from declines in sales and property taxes. Fortunately, the city took early and significant action. Anticipating a prolonged period of uncertain revenues, we began cutting expenses in the spring of 2007. Looking to the 2010 fiscal year and beyond, we anticipate a slow economic recovery. We project that property and sales tax revenues will continue to decline and we cannot anticipate what may still be lost through state action, so we must continue our prudent approach. Even as we balance the 2010 fiscal year budget, we know that additional reductions are likely. So even after significant cuts, 2010 expenditure levels may not be sustainable. We know that more difficult decisions remain. One decision is how and for what purpose to use one-time monies. Our philosophy has been to set aside and maintain one-time funds to address one-time needs and to meet ongoing costs with anticipated revenue streams. The 2010 fiscal year budget does not propose to use one-time funds because this would provide only a short-term fix to what is likely a long-term problem. Further, using one-time funds rather than restructuring to balance the 2010 budget would exacerbate any budget deficit in the 2011 fiscal year budget and require even deeper cuts than would otherwise be necessary. Given the signs of extended financial uncertainty, the 2010 budget is balanced without using one time funds; by the 2011 fiscal year, we may tap these monies if necessary to maintain core staffing and services. Another decision is how to use federal stimulus funds. We are actively pursuing grant opportunities for transportation, energy, public safety and water projects. Some Energy Efficiency and Community Development block grant funds have already been allocated. While they could easily be spent on a variety of city needs, our priority is to invest them in our community’s economic recovery. For example, we are planning to allocate some funds to help small businesses and nonprofits reduce their energy costs and thus increase their profitability. We hope that local contractors will participate in this energy efficiency program so that the investment continues to generate broad community benefits. In these times, we must both manage for the near term and position ourselves for the long term. In the near term we have made reductions strategically in order to withstand the volatile financial climate with essential organizational capacity intact. For the long term, we are striving to re-size the organization so it is positioned to emerge strong and competitive. Even when business rebounds however, we do not anticipate a return to “business as usual.” The days of rapid growth may give way to a slower, more sustainable pace. The current recession provides an opportunity to examine services and programs, evaluate their effectiveness and restructure how we deliver them. We are implementing fundamental changes in how we budget, staff and deliver services. We expect as we emerge into a new economic climate, it will be to a “new normal” –a new way of doing business that may be fundamentally different. Budget workshops, held at 5 p.m. June 9 and 10 in Council Chambers at 311 Vernon St., will provide another opportunity for the City Council and the public to review and discuss the proposed budget, which begins July 1. The budget can be viewed online at www.roseville.ca.us/budget and the workshops will be broadcast on COR-TV (Comcast 14 and SureWest 73) and on the city’s Web site.