City balances 2013-14 budget without attrition
Editor’s note: In the Sept. 18 edition of the Tahoe Daily Tribune, the annual contribution to the City of South Lake Tahoe’s employee pensions was reported incorrectly. The $53.6 million figure is the city’s unfunded pension liability, which is what the city has accounted for total future pension payments, not its total in annual pension payments. The annual pension payment for the city’s portion is $3.6 million, according to the city’s preliminary budget analysis.
South Lake Tahoe City Council adopted its fiscal year 2013-14 operating budget during its regular meeting Tuesday.
City officials expect to have a balanced operating budget this fiscal year, one that does not require terminating any public employee positions, dipping into reserve funds or other means of fiscal supplementation for the first time in five years, the City Council announced.
Officials said large expenses and dwindling public funds brought on by the 2008 recession forced the city into staffing reductions during the last few years. The city reduced staffing across the board to get expenses down as much as possible, according to officials.
For the most part, looking at South Lake Tahoe’s city budget now shows the city is statistically beginning to recover, but economic growth has been slow.
For fiscal year 2013-14, the city expects to make $90 million in overall revenue but expend about $93.5 million overall, City Manager Nancy Kerry stated in her presentation slides during the meeting. Despite the estimatated higher expenses than revenues, Kerry said during the meeting the budget “is technically” balanced.
“The budget was balanced by adopting a budget philosophy of eliminating one-time expenses from the budget where feasible, conservative revenue and expense budgeting, capturing revenue from the new paid parking management program, elimination of a potential transfer to cover redevelopment debt service deficit, and implementation of the first step of a three step health care benefit plan cost containment strategy,” Kerry stated in the presentation slides.
Some of the major expenditures mentioned in a staff report include rising costs of employee pensions and calculating actual expenses before projected revenues. This way, the city can better track what it expects to make instead of assessing expenses and trying to fill them with possible, unfounded revenue projections, officials said.
The city’s contributions to public pensions, particularly to its fire and police departments, have risen 155 percent in total cost to the city in the last 10 fiscal years. The city’s pension liability is accounted for $53.6 million annually, with payments in fiscal year 2014 of $3.6 million for all retirees.
Benefit costs the city incurs also were increasing, but officials have taken some measures to curb that expenditure. Coverage may have been changed to what Kerry called extreme measures, but she said she hopes to avoid cutting any facet of those services to public employees.
In Kerry’s memo, she stated when the city’s the city’s self-insured health care program for retirees and their dependents collectively were compensated more than $4 million and $5.2 million including active employees — a cost that was on a rising trend until the 2013-14 fiscal year. It was also stated gains in revenue may not have been able to cover the escalating cost of benefits.
“In fact, had the City not been able to implement the first step in our three step approach to solving our fiscally unsustainable health care program in this year’s budget, the budget would not have been balanced,” Kerry stated in her slides.
Some of the contracts with CalPERS cannot be changed once they’ve been established, and current contributions from the city have tied their contributions to their current employees and retirees to their agreement.
From the budget forecasts in the fiscal year 2012-13 budget, analysts expected South Lake Tahoe to lose $5 million for the next two fiscal years, but that has now been downgraded by a margin of $1.5 million and could be further reduced by any unexpected mid-year revenues, such as more Transient Occupancy Taxes or sales tax boons.
“Our economy is in slow recovery,” Kerry said, adding some background to recent United States and local area gross domestic product trends. “And if there is excess revenue, is there an opportunity for an investment that could go somewhere else besides excess reserves.”
Employment, cost of living, layoffs, less government spending and more factors have all shown slow — but upward — economic movement in the last couple years, according to national statistics provided by Kerry.
With that in mind, Tahoe will have to combat these outside factors with its own frugal efforts and being innovative with the resources at its disposal, Kerry said.
Additionally, property tax revenue is slated to bottom out this year, increasing a quarter of a percent in the 2013-14 fiscal year, according to city documents.
Declining property values and foreclosures, according to the budget analysis, had negatively affected the market in recent years by pulling previously fostered money out of the city’s general operating fund.
Transient Occupancy Tax, which taxes 10 centers per dollar on the bills of patrons at all South Shore lodging facilities, is showing steady growth within the last few years. City officials predict the final numbers from the tax should raise 1 percent from fiscal year 2012-13 to next fiscal year, but this year is not yet over for South Lake Tahoe.
Although no examples were given, city officials said some of the lodging businesses they had talked to have had one of their best years ever in the last five years for occupancy.
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