EL CAJON SOCKS AWAY MILLIONS WITH AN EYE ON A POSSIBLE RECESSION

City leaders are uneasy about state of the economy

Even as strong tax revenues bolster governments around the region, East County’s largest city is setting aside more than $18.4 million in case of “economic uncertainty.”

That’s on top of another $18.4 million the El Cajon City Council has in an emergency fund, signaling leaders’ unease with the state of the economy.

“We are a little bit more susceptible than some cities if we have a recession,” City Manager Graham Mitchell recently said, citing the high number of car dealerships and construction companies in the area, which can be early casualties in a downturn.

“Having that extra cushion will help us,” Mitchell added.

The council agreed and approved those funds Tuesday as part of a balanced budget for the fiscal year beginning July 1. Each of the five required budget measures passed unanimously.

While President Joe Biden has stressed that a recession is “not inevitable,” the government has had to walk a fine line combatting high inflation without crippling the economy. The Federal Reserve recently hiked interest rates, making borrowing costlier, and signaled more increases may come.

“That may become very painful,” El Cajon Councilmember Gary Kendrick said Tuesday.

“The last thing I want to do is have to lay off police and fire,” he said. “I sleep better at night knowing that we have that 20 percent set aside.”

The $18.4 million represents a fifth of what the city plans to spend this fiscal year. Said another way, if all revenue disappeared, El Cajon could still cover several months of its $92 million general fund budget.

There is no state law mandating municipalities keep a certain amount of savings.

The Government Finance Officers Association recommends setting aside enough to cover at least two months of spending, which El Cajon has exceeded.

Officials also projected they would bring in far more than they spend, which will add to their reserves.

The city should have more than $6 million of largely unrestricted cash, and leaders have said they’ll use future public meetings to discuss what to do with the surplus.

Like other municipalities, most of El Cajon’s budget goes to public safety. While the city recently made room for 10 new cops, Councilmember Steve Goble said he was keeping an eye on the local Heartland Fire and Rescue Department.

Firefighters extinguished nearly 500 fires last year, according to city records. That’s a sharp increase from 360 the year before, and only 125 in 2019.

“We’ve got more people in the city, we’ve got more housing in the city, I’m just concerned about the wear and tear on the staff and on the equipment,” Goble said.

In a brief interview, Fire Chief Steve Swaney said they were always looking at staffing levels, but he did not cite an immediate need for more people.

Resident Malik Thornton was the only member of the public to comment on the budget. The community volunteer asked the council to give people more time next year to review city spending, especially since meetings happen in the afternoon when many are still at work.

The Associated Press contributed to this report. blake.nelson@sduniontribune.com