Marysville’s budget has benefited from the implementation of a sales tax increase over the past couple years, but one-time expenses and capital projects are projected to counter-balance the growth this year.
City officials approved a balanced budget for Fiscal Year 2019/20 on June 18.
City Council members will have a general fund budget of $10.05 million this fiscal year. That number has grown consistently since Measure C first started generating revenue for the city in FY 2016/17. Last year’s general fund budget was 9.2 million.
“As you can quickly see, Measure C has made all the difference in the city’s general fund coffers and the Measure C sales tax revenues are growing,” said City Manager Marti Brown.
The city starts the fiscal year with a general fund reserve balance of $2.46 million – or about 25 percent of the overall general fund. Its enterprise wastewater fund is running at a deficit of about $500,000 because of costs related to the city connecting its wastewater treatment plant to Linda County Water District.
“The city is considering a sewage rate increase as a result of the running deficit in the enterprise wastewater fund,” Brown said.
Marysville’s three main revenue generators – property tax, sales tax and Measure C (sales and use tax increase) – generated $16.10 million for the city to operate. All three of the revenue generators met expectations, even showing a few percentage points increase over the previous year.
That said, the city’s expected costs are projected to outpace those revenues for a total of $17.16 million in expenses. The additional expenses are due to the approximately $500,000 running deficit in the wastewater fund and a little more than $500,000 in the general fund for one-time expenses. Brown said the city expects an opportunity to recoup the difference in the next fiscal year because most of the expected costs are one-time expenses.
The city’s biggest costs go toward salaries and wages, which make up 42.1 percent of its expenses. After that, capital projects take the next biggest chunk at 16.2 percent. Debt service makes up 12.7 percent of total expenses.
The approved budget does not project any cuts to positions, operations or departments.
“We did restructure some of the departments and the allocation of their expenses to create greater transparency and monitoring of true operating costs of all departments,” Brown said. “For example, the budget reflects new departments and funds including the city attorney, IT, human resources, homelessness and community sponsorship (to support special events). This does not reflect new monies being spent, rather a restructuring to show the money we’re already spending in the appropriate categories and disciplines.”
Brown said the city’s biggest concerns include a rising unfunded pension liability, large bond payments incurred by the general fund (e.g. B Street property); keeping pace with market rate salaries; rising health care costs; high commercial vacancy rates; real limits to city growth; changes and potential volatility of the economy; and the expiration of the Measure C sales tax in 2026.
Priorities moving forward, Brown said, include controlled spending, economic development, seeking revenue generating and cost-saving opportunities; re-evaluating and improving the city’s role and position in the cannabis industry; disposing of the B Street property; and driving down the cost of healthcare.