Sacramento City Hall is finally past the dire budget crisis. But it’s way too early for the City Council to even think about going on any spending spree.
The 2014-15 budget proposal that City Manager John Shirey released Monday is the first in seven years with a projected surplus in the general fund, which pays for police, fire, parks and other basic services. While it’s less than $2 million in the black, that’s far preferable to the deficits that forced deep cuts in programs and layoffs during the Great Recession.
Tax revenue is rebounding with the local economy, but a big difference is Measure U, the half-cent local sales tax hike approved by voters in November 2012 that is filling city coffers with about $31 million a year.
That windfall – being paid by everyone who shops in Sacramento – is reinforcing the police force (14 more officers in this proposed budget); ending “brownouts” of fire companies; opening city swimming pools; and reopening community centers.
Shirey’s spending plan includes some limited increases in high-priority programs, such as cleaning up blighted properties, coordinating services for the homeless, and feeding and treating animals at the shelter.
Overall, however, Shirey wisely counsels for continued frugality. For instance, he calls for putting $1 million toward paying down the city’s $473 million unfunded liability for retiree medical benefits. He also wants to add $400,000 to the city’s rainy day fund, bringing it to $29 million.
There’s another important reason not to blow the surplus. The budget assumes that on June 3, voters will pass a supplemental parcel tax for public libraries. If they don’t, that would create a $1.9 million hole in the library budget.
Unless there’s an unexpected economic boom, the city could face a deficit again as soon as 2016, largely because of pension increases imposed on local governments by CalPERS. Combined with the expiration of Measure U in 2019, the projected deficit could grow by then to $41 million – a potential “fiscal cliff.”
“While optimism is contagious, it is essential that we are realistic in consideration of the challenges ahead,” Shirey writes in his budget submittal letter to council members, who plan to hold the first public hearing on the budget on May 8 and to adopt it June 10.
There are many pent-up demands for new programs. It’s also an election year, so council members going before voters might be tempted to open the funding spigot. The entire council, however, would best serve their constituents by being very selective in spending.
And if council members are scrounging for more money for worthy programs, there’s one obvious place to look – the $391,500 earmarked for their discretionary accounts. That’s $43,500 each, on top of the $55,000 each already at their disposal. As we said when they pulled this maneuver last year, grabbing more money for their pet projects is symbolically stupid. If it comes at the expense of prudent fiscal stewardship, that would make it even worse.