PLEASANT HILL -- Although the city is projecting a boost in sales tax revenue to pre-recession levels, the $41 million two-year budget the City Council adopted Monday still includes projected deficits.
Councilman David Durant, who with Mayor John Hanecak served on the budget committee, described the budget as "rational" -- neither overly pessimistic or unduly rosy in its projections.
Sales tax makes up more than a third of the city's general fund revenue. For the fiscal year ending June 30, the city expects to receive $6.4 million in sales tax revenue, about $300,000 more than projected. A consultant is projecting an increase to $6.9 million in fiscal year 2012-13 and to $7.4 million in fiscal year 2013-14.
Pleasant Hill hasn't taken in more than $7 million in sales tax dollars since the 2007-08 fiscal year. The projections assume new businesses will open in the city and consumers will spend more money as the unemployment rate falls.
At the end of this fiscal year the city expects to have $10.6 million in its reserve fund. But the projected total shortfall of $838,000 would reduce reserves to about $9.7 million by June 2014.
Salaries and benefits make up about three-quarters of the general fund expenditures. During negotiations with the city's four bargaining units last year, the council pushed for higher employee contributions toward health care and retirement costs. The city expects to save about $1.8 million over
"I deeply appreciate their willingness to come together and do the right thing for the long-term health of the city," Durant said.
A mediation session is scheduled this week with the Police Officers' Union with whom city leaders have been unable to reach agreement. The budget assumes $1.5 million in savings over four years based on the city's last formal offer.
Durant pointed out that the city can curtail spending in certain areas, for example on technology, if the economy doesn't improve.
Although he voted for the budget, Councilman Jack Weir said he would prefer to begin with a balanced budget and then make adjustments. But he praised the city for avoiding the financial pitfalls some neighbors have experienced in the past few years.
The end of redevelopment will cost the city. The general fund will absorb $330,000 in salaries and $650,000 for economic development programs that previously were paid by the Redevelopment Agency.
Property taxes are expected to remain flat at about $2.2 million for fiscal year 2012-13 and increase by $50,000 in the following fiscal year. Business license revenue came in about $125,000 higher than projected in the current fiscal year and is expected to increase slightly in both budget years.
The council also approved the $26 million, five-year capital improvement plan which includes street resurfacing, sidewalk installation and repair, and storm-drain maintenance work. The city also will continue several major infrastructure projects such as widening Buskirk Avenue, replacing the Golf Club Road bridge and improving Geary Road.
Lisa P. White covers Martinez and Pleasant Hill. Contact her at 925-943-8011. Follow her at Twitter.com/lisa_p_white.