Following a series of community meetings that solicited public input and feedback, the City of Sacramento’s Finance Department on April 9 provided an update to the Budget and Audit Committee about the ongoing work to address the City’s pending $66 million budget deficit.
The update included a detailed explanation of the City’s current process for developing potential revenue enhancements and expenditure reductions for the City Council to consider as well as next steps for the budget-development process.
“I know that this has been and will continue to be, undoubtedly, a painstaking process because it is never fun to have to cut, especially when you are in the service delivery business and trying to help more people and trying to find more for people,” said Mayor Darrell Steinberg, who chairs the Budget and Audit Committee.
To address the $66 million structural deficit currently projected for the coming fiscal year, City Manager Howard Chan previously directed departments under his purview to prepare a plan for reducing their use of City general funds by 15% by lowering expenses and increasing revenues – including increasing fees in accordance with the Citywide Fees and Charges Policy.
A combination of 246 revenue enhancements and expenditure reductions totaling $85 million were submitted and then reviewed, categorized, and finalized by City staff. Potential reductions were placed in one of four levels of impact on the community: low (level one), moderate (level two), high (level three) and severe (level four).
The complete list of potential revenue enhancements and expenditure reductions and their level designation can be found here (starting on page five).
Staff also identified 30 citywide strategies that are available with $46.3 million in savings, creating a suite of choices totaling $131.3 million that could be employed to address the deficit.
“This is the universe of options” for the Council to choose from, said Finance Director Pete Coletto during the update to the committee.
As part of the presentation, Coletto also updated the committee on the City’s ongoing unfunded liabilities, which are in addition to the City’s structural budget deficit.
They include unfunded capital and deferred maintenance needs, unfunded pension liabilities and unfunded retiree health benefits and will need to be addressed over time as well.
Following the update, Steinberg said he would like to pursue a deeper discussion of the revenue enhancements and level one and two reductions and their impact on services.
Councilmember Mai Vang said she would also like to examine certain level three reductions as part of that discussion.
“This is a matter of choices … affecting the people we represent,” Steinberg said.
City staff is developing the proposed budget, which must be balanced and will be released the week of April 29. The proposed budget overview is scheduled for May 7 for both the Budget and Audit Committee and the City Council.
Budget hearing meetings will continue throughout May. The Council will adopt a final budget in June.
Chan has said that the proposed budget for the coming fiscal year will take a strategic approach to addressing the $66 million deficit and will not include across-the-board cuts. He has also given direction that the proposed budget will not eliminate any filled City positions.