Lodi Council to tackle financial future of city

City officials: Pension costs present challenge for future budgets

The Lodi City Council is slated to receive a presentation on the proposed $48,369,550 budget for the 20172018 fiscal year during its shirtsleeve session scheduled for 7 a.m. today at Carnegie Forum.

According to City Manager Steve Schwabauer, during the presentation council with be presented with staff recommendations for 2017-2018 along with a five-year general fund forecast. He said projected revenues for the 2017-18 proposed budget are up approximately $1.5 million from the current fiscal year, and revenue continues to grow at about 2 percent per year. However, he said expenses — driven by soaring pension costs — are accelerating much faster than revenue.

“Right now, without making any changes, we’ll be upside down on a revenue-expense basis by about $5 to $6 million a year in the fifth year and increasing every year up to that point,” he said.

On a bright note, Schwabauer said the city has recovered more than 100 percent from the 2008 recession lows in terms of revenue.

“The revenue is not the problem. It’s the expense side. It’s rapidly outpacing our historic expenses,” Schwabauer said.

He pointed out that sales and property taxes are the major drivers of revenue growth in the budget, bringing in about $20 million a year combined. With the upcoming budget, Schwabauer said salary costs and health care expenses are expected to hold steady while pension costs go up.

“We’re having to hold all of our costs steady in order to divert resources to pay the skyrocketing pension costs,” Schwabauer said.

Schwabauer said with a pension crisis looming, balancing the upcoming year’s budget was challenging.

“It took a fair amount of thinking and effort,” he said. “Some things that are

happening in the proposed budget is that Engine 1 is being staffed less. We cut some money that would normally go into vehicle replacement funding. We scaled back some projects that were going to be funded with general fund dollars.”

According to Schwabauer, the upcoming budget was not as difficult to balance as the challenge the city will face in coming years.

“For this year’s budget when we looked at what we needed to close our budget we thought we’d need about a half a million in cuts, and those things were a culmination of unfunding positions for a period of time, unfunding an engine. In the police department, there are two open positions that we won’t fill for the first half of the year.”

Schwabauer said balancing the budget will be tougher next year and the

year after that because every year the pension bill grows, and it starts growing at a higher yearly rate in the 2018-19 fiscal year.

“I’m very pleased staff was able to come up with a proposed balanced budget that we can recommend to the council, but it didn’t come without some sacrifice in terms of services that we won’t be able provide,” Schwabauer said. “These are relatively small. This year we’re going to have the opportunity to have a very important discussion with the citizens of Lodi about what services are going to change and what we’re going to do to address the pressure on the expense side of the budget, and we welcome the community’s input. We really do care about what services are most important to them and their ideas about how we might resolve the expense crisis that we’re facing.”