City budget update shows shortfall
Storm costs estimated over $10 million
SANTA CRUZ >> A mid-fiscal year budget update given to the Santa Cruz City Council by the city's finance director Tuesday showed that after numerous adjustments, the city budget has an approximate $9.3 million deficit.
“When we closed `22 and began `23, we had solid reserve balances,” said Santa Cruz Finance Director Elizabeth Cabell at the City Council meeting Tuesday. “As you can see right now, the adjusted budget is a deficit, and the plan is to cover that deficit with the reserves I previously mentioned.”
According to Cabell, the reserves included about $7.5 million in a restricted pension reserve, $7 million in an emergency reserve and $6.3 million in a general fund operating reserve.
The resolution to amend the city budget included more than 50 line item adjustments, which are corrections for oversights or unexpected circumstances since the City Council adopted the budget in June. The update showed that revenues for the general fund and all others gained $5,788,384. However, the total adjusted expenditures — or money spent by the city — was calculated at $15,048,374, which leads to the budget shortfall of $9,259,990.
Adjustments to expenditures include $50,000 for professional and technical services, which was provided for grant writing. According to the agenda report, “Reallocation of this funding was inadvertently missed during the FY 2023 budget process and is requested to be added again.”
The city's Climate Action Program Carbon Fund initiative provided $40,000 toward carbon-reducing projects such as $4,000 for 10 induction cooktops, a lighting upgrade at Depot Park and the Santa Cruz Civic Auditorium, electric bike incentives for city employees and electric landscaping equipment to replace equipment that ran on fossil fuels.
Due to the loss of an anticipated grant, the Capital Improvement Plan Street Maintenance & Rehabilitation Fund showed revenue reductions of $1,185,168.
On the revenue side, the Santa Cruz Economic Development Department showed a revenue increase of $300,000 as the loan payment for Kaiser Permanente Arena was missed in budget preparation, according to the city. The DeLaveaga Golf Course provided revenue increases of $325,500. Payments for recreation classes are also increasing as attendance went up.
The city also anticipates increasing the revenue by $170,000 in the general fund with California Electric Vehicle Infrastructure Project incentives and Low Carbon Fuel Standard credits from public parking lot charging stations.
The city will transfer $1.1 million from the general fund to the capital improvement project street maintenance and rehabilitation fund to clarify how different street improvement projects receive funding, according to the city. A total of $5,000,000 was also transferred from the general fund to the capital improvement project reserve fund for “high priority projects.”
Despite the numerous modifications made to the revenues and expenditures for this fiscal year, Cabell said at the meeting that the city budget is on its expected course.
“At the end of January, we are running about where we expect to be,” said Cabell. “We usually see the largest or significant portions of our revenue and expenditures in July and August and we accrue them back, so we're right on track.”