Things for Santa Fe Springs are good financially this year and are on track for next, but according to a midpoint review of the city’s two-year budget, hard times may be on the horizon.
The 2014-15 fiscal year, which ended Tuesday, saw a net surplus of $774,100. Likewise, it’s estimated the fiscal year 2015-16 $45 million general fund budget will net a year-end surplus.
However, increasing pension contribution rates for all full-time personnel could lead to a projected deficit of almost $250,000 by 2018-19 and $2 million by 2019-20.
“This is a broad outlook, worst-case scenario,” said Jose Gomez, assistant city manager and director of finance. “We would never let a potential deficit get anywhere near those numbers.”
City Manager Thaddeus McCormack called the review a “forecasting tool,” one that is used to head off any possible financial pitfalls. “We’re in good shape, but as we go further out, we need to be cautious.”
The five-year outlook, McCormack continued, is the city’s first formal attempt to construct a longer-term financial picture beyond the current budget cycle. “It creates a framework for current decisions to be made,” he said.
Councilman Bill Rounds noted the city’s current solid footing is due to being conservative with finances. “A lot of the things we’ve done over the last few years are paying off,” he said.
Officials adjusted forecasted revenues and expenditures in the general and water utility funds, since the two-year budget was passed last June.
The anticipated growth in sales taxes ($1.63 million), property taxes ($287,000) and utility users taxes ($250,000) will be partially offset by a $500,000 decrease from the water utility lease payment to the general fund.
“State-required conservation efforts, as well as the increasing cost of pumping and purchasing wholesale water will continue to take their toll on the city’s water utility revenues and expenses,” Gomez said.
Other adjustments were onetime expenditures, including the purchase of 23 laptop computerss for the library at a cost of $40,900; furniture for the Clark Estate at $3,000; patio furniture for the Heritage Park Cafe at $7,500; and $20,000 to place historical records and ordinances in hardbound covers.
Adjustments to department budgets accounted for about $863,000, notably a $294,000 increase in pension costs; a $100,500 increase in the contract with Whittier Police Department; a decrease of $300,000 in building permit fees; an increase of $10,000 in code enforcement environmental contractual services; an increase of $80,000 in code enforcement contractual services; and $112 for a new community services position.
