Nearing the end of the city of American Canyon’s three-year deficit elimination plan, adopted in the 2010 when the city faced a $1.6 million shortfall, City Manager Dana Shigley proposed a three-year financial “stabilization” plan at Tuesday’s city budget workshop.
Created by declining property and sales tax revenue, the deficit elimination plan ends with the city’s fiscal year June 30. That plan implemented drastic cutbacks, including eliminated positions and 15 furlough days a year for city employees, and scrapped some community programs, such as Friday Nights at the Plaza.
While sales and property taxes — which make up about 60 percent of the city’s total General Fund revenues — are both doing better, Shigley told city councilmembers it isn’t time to return to pre-recession spending levels.
“We’re not at that point by any means,” Shigley said.
According to Shigley’s report, sales tax revenues are expected to end this year at $2.25 million, about $190,000 more than budgeted. In fiscal year 2013-14, sales tax is expected to increase another $100,000 to $2.35 million, about 14 percent more than budgeted in the current year.
Shigley said she was concerned that a significant portion of sales tax revenue was from the city’s industrial sector, not retail, a situation she described as “a little unusual.”
While property taxes did not meet budget expectations this year, they were close and are expected to increase next year with the improving housing market. Property taxes have been “conservatively” budgeted at $7.53 million for fiscal year 2013-14, Shigley said, up about $200,000 from the current year.
Rising home values and reassessment by the county may help generate additional revenue. Shigley said she had spoken to Supervisor Keith Caldwell, whose district includes American Canyon, about working with the county assessor to update American Canyon home values.
Shigley’s proposed stabilization plan would incrementally restore full employee salaries and benefits, contract increases with the Napa County Sheriff’s Department and other services paid out of the city’s General Fund by July 1, 2016. Furlough days, for example would be cut back to eight next year and three the following year.
“We believe this three-year, balanced approach is prudent and helps protect the city from jumping in too far, too fast,” Shigley’s report said.
As an additional boost to city coffers, transient occupancy taxes, a 12 percent levy on hotel room rates, are continuing to bring in money, Shigley said. Hotel tax revenue is expected to come in at $1.13 million or $168,000 greater than budgeted this year. For fiscal year 2013-14, a modest increase to $1.17 million is projected.
Shigley was pleased with the revenue generated by the city’s three hotels.
“I had Buzz (Butler, Napa Junction developer) in my office today,” Shigley said. “I told him to get me another (hotel),” Shigley quipped.
Finally, as a result of the settlement of the card room tax lawsuit, the city expects to receive $145,000 this year and $257,000, including payment of a portion of prior year taxes, in fiscal year 2013-14, Shigley reported.
Among budgetary unknowns, the city hasn’t finalized a labor contract, so the proposed budget uses the city’s last offer to employees, Shigley said.