Lodi financial outlook stable, but costs loom on horizon

The Lodi City Council heard a presentation on the $48.3 million budget proposed by city staff for the 2017-18 fiscal year during its shirtsleeve session Tuesday morning.

The city anticipates a revenue increase of $1.5 million from the current fiscal year, but also projects significant increases in expenses, City Manager Steve Schwabauer told the council.

Deputy City Manager Andrew Keys pointed out that the majority of the city’s revenue is coming from property and sales taxes, and he anticipates that property tax revenue will increase by 3.7 percent in the coming year as the housing market continues to recover from the collapse of the late 2000s.

The city has just barely matched 2007’s pre-recession revenue with regard to property tax and sales tax, but costs have exceeded these revenues, Keys said. Smaller revenue categories, such as transient occupant taxes and business taxes, have gone up significantly, he added — combined, they are projected to bring in $2 million.

However, sluggish economic growth constrains the city’s ability to expand or provide the same level of service as costs increase, Keys said.

For the coming fiscal year, Keys said police costs will make up 41 percent — the largest portion — of the city’s expenses. The fire department comes in right behind, making up 24.2 percent of the city’s expenses. Internal services, including the finance, human resources and IT departments, will make up 8.1 percent of the city’s expenses, with government and administration departments making up 4.3 percent.

Parks, Recreation and Cultural Services will make up 9.3 percent of the budget, while the library will receive 2.6 percent. Public Works receives about 4.8 percent.

In terms of expenditures by type, salaries will make up 43.1 percent of the city’s expenses for the 2017-18 fiscal year. Normal costs associated with pensions are expected to be about 5.6 percent of the city’s expenses, while 9.6 percent of the general fund will cover unfunded liabilities to the California Public Employees’ Retirement System.

The proposed budget includes one new position for an accountant, which will be funded by transfers from the utility funds. The position will provide accounting support for utility billing and functions, freeing up existing resources to focus on all aspects of accounting and internal controls, Keys said.

To balance the proposed budget, Lodi Fire Department’s Engine 1 will be browned out at least 70 percent of the time and two police officer positions will be unfunded until mid-year, he said. Fire will only contribute $100,000 to the vehicle replacement fund, and the police will not contribute at all.

An administrative secretary position in the library is being eliminated, and the employee will be moved to a senior administrative clerk position at the fire department.

Keys also provided a five-year forecast of revenues and expenses to the council on Tuesday.

Projections for expenses include a 0.7 percent increase in salaries in 2017-18, a 1.5 increase in 201819, a 0.7 increase in 2019-20 and a 0.5 percent increases in 2020-21, 2021-22 and 2022-23.

The projections are based on current employees’ salaries with allowance for step increases to eligible employees, Keys said.