Cities in Sacramento area check budgets at midyear

Published: Monday, Feb. 18, 2013 - 12:00 am | Page 1B
Last Modified: Tuesday, Feb. 19, 2013 - 11:01 am

It's not over yet.

The recession that clamped a stranglehold on governments in the Sacramento region about four years ago is showing signs of relaxing.

But cities from Elk Grove to Lincoln are still feeling the effects, a check of midyear budgets in the region shows.

The long malaise is prompting some cities to hold the line on added spending to seek innovative ways to bolster local economies.

"We see the economy slowly crawling forward," said Graham Knaus, finance and budget operations manager for Placer County. "But there is still some uncertainty in the underlying strength.

"So proceeding with some level of caution is warranted. And it's how our board has directed us to move forward with the budget."

Knaus said there's no great expectation that the county will "bounce back" to prerecession status. Rather, he said, there likely will be a retrenching within the economy and more gradual economic growth in the years ahead.

Placer County supervisors are to receive the midyear report in March. Knaus said it should show modest gains in both sales and property tax revenue.

Elsewhere, the nitty gritty of sales and property taxes – the two largest sources of discretionary revenue – tell the story of uneven recovery.

In Folsom, Elk Grove and Lincoln, for example, sales taxes have been on track to outpace budgeted expectations. In Galt, they remain flat; and in the city of Sacramento, they showed gains over the prior year.

But property tax revenue for all five cities lagged in yearly comparisons.

"While property values continue to stabilize, transaction volume in the region remains stagnant," Sacramento city officials reported Jan. 29 to the council.

Slow to recover in property taxes have been cities like Elk Grove and Lincoln, where new home sales – and home prices – soared a decade ago just before the market collapsed.

However, a DataQuick report last week showed Sacramento-area home prices rising twice as fast as the national average.

But there's a lag between activity in real estate and revenue to local governments. So those higher home prices won't translate to higher tax proceeds in many places until after the current fiscal year, which ends June 30.

That's likely the case in Woodland, where City Manager Paul Navazio said he believes the local real estate market has endured the low point, when housing values declined precipitously and now are showing signs of modest recovery.

Woodland's midyear report, due March 5, will show a less-than-expected decline in property tax proceeds this fiscal year and a modest upward trend in sales taxes.

The recovery has gained some steam in Roseville. On Wednesday night, the Roseville City Council is to hear how property and sales tax proceeds are about $2.2 million above what was budgeted. On the flip side, the midyear report shows operating expenses have increased, pushing a structural deficit for the city $1 million higher.

To improve their financial prospects, cities are stepping up their search for economic development opportunities and creative ways to attract shoppers, diners, jobs and businesses. On Wednesday night, the Elk Grove City Council approved a new city job – community events and projects coordinator – with a salary range of $62,948 to $84,357 a year. Recruitment will begin soon.

"We are starting to be more involved in the festival business," Elk Grove City Manager Laura Gill told the council. "We need a designated person to handle everything, from hiring to making sure community folks are in place."

Related to that, Mayor Gary Davis said in a recent Bee interview that one of his priorities for 2013 is to see Elk Grove become "more of a destination" with more amenities, more events, more activity in Old Town.

The "destination" strategy is at work, too, in Rancho Cordova, where the city's midyear budget will be shared with the City Council on Friday. Rancho Cordova is aggressively marketing itself to companies nationally and commissioned a "Today in America" video at a cost of $19,800 to boast, among other things, the city's culture as a jobs center and the ease of businesses in working with the city.

The video is to run in 15 television markets, including New York, Los Angeles, Chicago, Philadelphia Boston and Las Vegas, said Troy Holt, city spokesman.

West Sacramento, which delivers its midyear budget report March 5, has been pursuing public-private business partnerships and other economic development opportunities.

In Sacramento County, the budget calls for a $10 million drop in property tax proceeds from the prior fiscal year, or about $192 million through June 30. But sales taxes are expected to grow $5.1 million in the period. Because the county's projections are on track, officials say there will be no midyear review.

In Yolo County, property tax proceeds remain flat for the current fiscal year, said Yolo County Administrator Patrick Blacklock.

"We're seeing some growth in sales taxes," he said, "but it's a very small portion of Yolo County's budget. So we don't get the same benefit that other jurisdictions see."

Other locales have yet to deliver their reviews. Among them, El Dorado County's report is due Feb. 25. The Citrus Heights review is planned for Feb. 28.

© Copyright The Sacramento Bee. All rights reserved.

Read more articles by Loretta Kalb



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