Porterville City Council OKs 2009-10 budget with red ink

The City Council on a split vote Tuesday approved Porterville’s 2009-10 budget, complete with more than $200,000 in planned overspending in the General Fund.

And the situation could become worse depending on future state action to wipe out an estimated $24 billion budget deficit.

City Manager John Lollis, in presenting the proposed budget, termed the fiscal plan “structurally balanced.” He then cited four potentially significant threats to city funding:

-- The state’s suspension of Proposition 1A, which would allow the state to borrow 80 percent of the city’s share of property tax dollars this coming fiscal year with a requirement to repay the money — with interest — within three years. That’s a potential $600,000 budget hit.

-- County termination of the “Teeter Plan,” through which the county pays the city for unpaid property tax money. That’s a potential $190,000 budget hit.

-- Seizure by the state of 100 percent of the city’s share of gas tax money, with no requirement to repay the cash. That’s an estimated $840,000 budget hit. Lollis said the state could then come back a year later and take 75 percent of the city’s share of gas tax money.

-- Sale tax volatility. For every $10 million in taxable sales in Porterville, the city sees $95,000. As taxable sales decline during an economic downturn, so fall the city’s sales tax totals.

The overall budget shows $75.5 million in revenue against $87.3 million in spending.

The General Fund portion of the proposed budget shows $23.6 million in revenue and transfers against nearly $25 million in spending for a cash deficit of $1.3 million and a structural deficit of $209,000.

The General Fund pays for basic city services such as police and fire protection, and general city government.

Various cash reserve accounts total more than $12.4 million.

The council questioned why it was receiving a deficit budget proposal without any alternatives to consider.

“I wish we had a few choices,” Mayor Cameron Hamilton said.

Lollis said the budget proposal was discussed in detail during a study session last week with the City Council, and reiterated that options to reduce or eliminate the structural deficit are limited.

“The only opportunity, or strategy, that you would have to deal with is elimination of positions,” he said.

The budget does not call for slashing any positions.

Public Works Director Baldomero Rodriguez outlined “a very ambitions year” of planned capital improvement projects throughout the city, but acknowledged that several would be jeopardized if the state takes the city’s share of gas tax money.

“If we lose the $840,000?” Hamilton asked.

“I’ll be back,” Rodriguez said.

“That’s what I was afraid of,” Hamilton said.

All the planned projects would not necessarily be scrapped under the lost gas tax scenario, Rodriguez said.

“There’s a number of strategies,” he said, “and we’d bring them before you.”

Various council members debated specific line-item expenses contained in the proposed budget before voting 4-1 to approve the spending plan.

Councilman Brian Ward, who questioned some of the proposed Measure H expenses as well as a handful of other proposed projects, cast the lone dissenting vote.

The city’s fiscal year begins July 1.

-- Contact The Recorder newsroom at 784-5000, Ext. 1040, or gfaison@portervillerecorder.com.