At the regular meeting of the Lindsay City Council on Tuesday, the dais was presented with a draft budget for the 2020-2021 fiscal year (FY). While it is still uncertain how the budget will end up due to the effects of COVID-19, City Manager, Joseph Tanner, is cautiously optimistic.
According to city staff, the budget for FY 2020-2021 is $12.8 million, including a $11.1 million operating budget and a $1.7 million capital improvement program budget. It is projected that the budget will have a deficit of $193,000 and a year-end General Reserve Fund of $3.6 million. Sales tax, property tax, hotel tax, permits and Wellness Center memberships will be negatively affected. Most, if not all, revenues generated by the city will be negatively affected at different points throughout the next FY. Without knowing exactly how COVID-19 will impact the city, it is difficult to predict revenues and expenses. The draft budget is based on the best available data to the city.
“Should the impact of COVID-19 on the economy be greater than currently projected, adjustments will need to be made during the mid-year budget process completed in early 2021,” read the staff report.
The beginning balance for Lindsay's General Fund at the start of FY 2020-2021, which began on July 1, is $566,130. The city's water budget balance has a negative balance of $193,608. The sewer balance is $258,365. The refuse balance is $106,578, and the Wellness Center budget balance is $21,567.
“There are things to be optimistic about although very cautiously,” said Tanner.
According to Tanner, the property and utility users taxes in the city are stable so far, and the city is looking to receive $164,000 in CARES funding. He also stated that revenue from the newly opened recreational cannabis dispensary is looking positive, and that the city may still be able to do street and road projects.
Tanner briefed over his areas of concern when it came to the proposed FY 2020-2021 budget. He highlighted his concern for the General Fund, the Wellness Center, meeting capital improvements in sewer and water and the uncertain future Lindsay may have with CalPERS funding while trying to meet their investment goals.
Finance and Accounting Manager Juana Espinoza dug into the specifics of the budget after Tanner had finished his overview of the draft budget.
Espinoza stated that compensation and benefits to city employees will not change this year, meaning that there will be no annual city-wide increase in salaries for city employees, but that the minimum wage will increase to $14 an hour in 2021.
Espinoza went on to speak specifics regarding the General Fund and stated that the city is expected to end the upcoming FY with a General Fund deficit of $293,000. She also stated that the expected revenues have also decreased by quite a bit.
“The bulk of that really is operational but we did increase our transfer into the Wellness Center by $100,000 to help them operate for the year,” said Espinoza.
She continued on to the city's water budget and stated that the water fund does not generate enough revenue to cover its capital improvement needs, and the projected deficit for the water fund by the end of the next FY is just under $929,000. It was a similar outlook for the city's sewer budget which is projected to have a negative balance of roughly $371,000.
When it came to the Lindsay Wellness Center, the city is looking at a projected deficit of only $500 for the next FY.
“I would like to thank at this time the Lindsay Hospital District Board,” said Espinoza. “They've been amazing in their support of us in this unprecedented time, so I would just like to thank them and everyone on the Wellness Center committee.”
The Council will vote to approve the final budget at their next meeting on July 28.