Santa Paula Approves Deficit Budget for FY 2016/2017

By Sheryl Hamlin

The good news about the fiscal year ending on June 30, 2016 is that the deficit spending was only $28,372. Why? Because of several unfilled budgeted positions which the city managed with contractual services, the projected deficit of $43,149 was reduced to $28,371. As deficits go, this amount is manageable.

A summary of FY 16/17 shows the following planned deficit spending of $70,959. This means expenses exceed revenues by $70,959. So with two years (or more according to Dr. Gartner), the General Fund balance decreases again. Please see previous report on Dr. Gartner’s cautious fiscal forecast for the next five years.

budget_summary_1617

Limoneira Fees Aggressively Budgeted?

An important fact was revealed during Dr. Gartner’s presentation about the use of calendar year versus fiscal year in the Limoneira fiscal forecast for East Area I and II.

For example, the following clip from the FY 2016/2017 budget shows $200,000 in revenue from Limoneira. If the work associated with this $200,000 in Public Works revenues occurs in calendar year 2018, this could be between January 1 and December 31, 2018 which overlaps with six months of Santa Paula’s 2017/2018 fiscal year which runs from July 1,2017 through June 30, 2018. So, is this a question of a revenue recognition and/or aggressive forecasting? When precisely will the work occur? Slippage of this item could cause the FY2016/2017 budget to become even more in the red than budgeted.

ea_fees_20162017

Sales Taxes Aggressively Budgeted?

As reported earlier, the budgeted sales taxes are aggressive and unsupportable. Please see details from this previous report. Ojai, for example, has seen their sales taxes decreasing over the last few years and they are cautiously forecasting sales taxes slightly above FY2012/2013. These forecasts are produced by consultants (HDL), but the worksheets should be reviewed for a reality check.

Curious Property Tax Commentary

In his public report, Dr. Gartner said the aggressively budgeted Property Tax was done for reasons without explanation. The city declined to elaborate on these budgeting items. The Property and Sales Taxes revenues have been manipulated by Sacramento for the last few years in terms of swaps to meet State needs, so there is no doubt an explanation, so perhaps the annual city audit will elaborate on these revenues.

tax_revenue_20162017

It is essential that these numbers represent reality and not a hypothetical value based on years of tax swapping with Sacramento as the city goes forth to consider a relationship with the Ventura County Fire Department, where the fee is based on property taxes. The joining of Ventura County Fire will be considered in a separate report.

Capital Improvement Plan and Bond Defeasance

The proposed budget showed a Capital Improvement Plan as follows:

CIP_budget

The monies for some of these items will be funded through a $55 million revenue bond sale in 2010 as reported earlier and here. Of that $55 million Santa Paula raised through the bond market, the city lost $27 million through defeasing the remaining 2003 bond debt.

This means that $27 million from the 2010 sale was set aside in a secure account to service the bond interest debt and principal of the 2003 debt, thus allowing the city to remove the 2003 debt from its balance sheet. The downside of this defeasance is that the city LOST half of the 2010 proceeds to pay previous debt.

This practice, of course is legal, but is one of government’s great Ponzi schemes used at all levels of government. At this point, the question SHOULD BE: if more funds are needed could Santa Paulas deficit budgeting fund it for more borrowing?

Who Can Discuss a Complex Budget at 11:00 pm?

Even the most nimble of minds will have difficulty discussing a complex municipal budget at 11:00 pm. What message does this send to the public about the relevance of the budget to the council? For each of the sessions, why was the budget not scheduled at 5:00 pm in a pre-council noticed session when members and the public were fresh?

For more information about the author, visit sheryhamlin.com

_______________________________________________

Get Citizensjournal.us Headlines free  SUBSCRIPTION. Keep us publishing – DONATE

0 0 votes
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments