Elk Grove City Manager - Budget Good For Now, But Could Face its Own 'Fiscal Cliff' in Future

May 23, 2013 | At their regular meeting tonight, Elk Grove City Council members were told that the city's budget for the next two y...

May 23, 2013 |

At their regular meeting tonight, Elk Grove City Council members were told that the city's budget for the next two years looks fine, but could face its own version of the fiscal cliff in as little as two years.

Those comments came as Elk Grove City Manager Laura Gill made the initial presentation of the city's proposed budget for fiscal year 21014 which starts on July 1.

"While I consider the two year plan to be a good news in nature, the five year projection indicates that revenue will cover projected operational costs over the next two years," Gill said. "However, we face our own version of the fiscal cliff in fiscal year 2015, 16 because of a couple employment benefit issues."
Gill warns of 2015 fiscal cliff.

Gill identified those issues as the Affordable Health Care Plan which is scheduled to take effect on January, 2014 and the employment retirement benefit increases administered by the state employee retirement system, CALPERS.

"What has happened is that the Calpers has sustained quite a bit of investment losses during the great recession," she said. "The Calpers board has approved a plan which recoup those losses over a shorter amount of time which means that the employer contributions to pers will increase substantially."

According to a report from the Sacramento Bee, Calpers is asking government employers to raise funding by 50 percent over a five year period starting in 2015. 

Regarding the Affordable Health Care Act, Gill said there is quite a bit of uncertainty on how it will affect health insurance premiums. Gill said the proposed budget for 2014 reflects a 16 percent increase in premiums the city will pay.

Because of these two factors and the uncertainly of their financial effects over the next two years,  Gill said unrepresented employees, primarily those outside the police department, will not have current wage and benefit concessions given back. However Gill proposed that once the books are closed on the current budget, unrepresented employees will be allocated a pool of $135,000 in raises for retention purposes.   

As for the overall 2014 budget, it has a proposed increase of $10 million to $164 million and the general fund budget will go up by $3 million to $54.8 million. The proposed budget also includes five new positions including a full time police dispatch manager, one finance analyst and a compliance specialist for the the city's recently adopted climate action plan sustainability element.       

A budget workshop will be held during the June 12 city council meeting. By statute, the budget must be approved prior to July 1.

The proposed budget will be available tomorrow afternoon at city hall and in the city's website.

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Anonymous said...

Look out Elk Grove PD! Those employment issues on the horizon, Gill is talking about you!

Bob L said...

Lynn Wheat has been warning our city officials of this "fiscal cliff" for years now. Frivolous spending on poorly conceived and thought out projects may be finally catching up to us.

This will be the legacy of Davis, Cooper, Hume,& Detrick. We're headed for bankruptcy if business as usual continues.

Wake up, fellas!
MLS soccer? Really?

Penny Beancounter said...

The devil is in the details, and in this case, what's not being said is more important than what is being said. What kind of union agreements are being ironed out with the police officers and police managers? How is the budget reserve doing? It's been on a downhill slide each year. How much will be squirreled away for "economic incentives"? How much will this contract city attorney continue to cost? How much is being set aside for street maintenance, since the cracks are growing and the soundwall along 99 sucked the funds this year? What big ideas will cost us this year and require the need to hire consultants? Just thinkin...

Anonymous said...

Just a quick observation but if the message from the City Manager is that we as a City face a challenge in the future related to benefits, then why are we adding 5 positions to the budget. That is five more people adding to the long term costs. I thought we prided ourselves on being a contract City and model for the region.

Sach Jones said...

During Gill's presentation she quickly said that there would be economic incentive money included in the budget. Who will this money go to - consulting fees to Fabian Nunez and his MLS cohort?

Anonymous said...

Speaking of 5 new positions next year. Haven't heard about the recruitment for Event Coordinator that was approved a couple months ago. A wise investment I'm sure!

Friend of the Capt. said...

Based on the budget concerns, I can't see the need to hire a full-time, fully benefitted position to host city parties and events. The city has just done fine without this position until now and based on projections, it may be best to put this position on hold until we have adequate surplus.

Events Coordinator is a "luxury" that may need to take a backseat to current and necessary needs.

Guess, we'll see if the council agrees.

Anonymous said...

So how do the cost of the SOI process and the actual cost of maintaining the SOI area come into play? It will be years until the land is buildable, but if we acquire it, won't we be responsible for the police, fire, water, sewer, etc, etc, etc??? Until those 1,000's of jobs materialize out of the blue (winky winky), who will pay for those costs? Must be the 10,000 more homes they plan on building out there, right? Remember those words from Mr. Hume....Homes first, commercial second, jobs third. This city is heading for a fiscal cliff that might just parallel Stockton's mess. Is there no lesson to be learned from Stockton over spending on their famous "waterfront"?

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