LAKEPORT — The Lakeport City Council adopted the city’s 2019-2020 budget on Tuesday, approving a $16.3 million spending plan which will pull funds from reserves in order to complete infrastructure projects.
The city’s $12.7 million in predicted revenue—6 percent lower than the current year’s estimated total—is $3.6 million less than the city’s planned expenditures for the upcoming fiscal year.
Lakeport Finance Director Nick Walker said that repairs necessitated by the winter storms of 2017 and 2019, which caused millions of dollars of damage to the city’s infrastructure, make up most of the difference between spending and revenue.
“The majority of that difference (is) $2.5 million in storm repair projects,” said Walker, who noted that “advance funding” from the Federal Emergency Management Agency has already been received by the city, and added that reimbursement from FEMA is expected as the projects are completed.
In addition to storm-specific projects, a set of other infrastructure improvements, including road repairs and more, are planned for the upcoming year, making for a total budgeted $5 million to be spent on capital improvement projects, which is 31 percent of the city’s total expenditure plan.
This spending, which will create a $131,000 deficit in the general fund, does not amount to a fiscal concern, according to comments from city officials who cited the city’s high reserve levels, which are expected to stand at 74 percent of budgeted appropriations at the outset of the 2019-2020 year.
“When your reserves are way too high,” said Lakeport City Manager Margaret Silveira, “are you spending enough on projects for the community?” Silveira said those extra reserves are “wisely spent on one-time projects.”
Council member Kenny Parlet argued that “having a healthy reserve is not as important as getting capital projects done sooner rather than later,” stating that capital projects continually increase in cost over time, along with the price of labor and materials.
Walker noted that the State of California recommends a city maintain a 25 percent general fund reserve level, “and we’re at 60 (percent).”
In a letter prefacing the city’s adopted budget, Silveira outlines her goals for the 2019-2020 year. Among the list of 13 goals, the first three are public safety, road improvement, and amending the city’s “sidewalk and right-of-way improvement ordinance” to speed infrastructure projects. Other priorities for Silveira include making improvements to the city’s parks, annexing the County of Lake-owned South Main Street area into the city, and attracting a “national brand lodging facility.”
Silveira and others have noted that the volatility of pension and health insurance costs will pose a significant challenge to the city’s finances in coming years.
“One of our greatest cost challenges in the 2019-20 and future budgets is in the realm of pensions and retiree health insurance obligations,” writes Silveira, who notes that even with higher costs to the city, the pensions and health insurance plans of city employees are not getting better.
Lakeport’s water service is operating with a $26,000 structural deficit. This is because “operating costs in the water enterprise fund have caught up with the last rate increases,” noted Walker on Tuesday. Rising pension payments make up a large part of those operating costs, he noted.
Silveira writes in her budget preface that “salaries and benefits city-wide will be 14 percent higher” in 2019-2020 than they were during the current fiscal year. CalPERS pension costs, she notes, “are expected to increase $238,000 or nearly 5 percent of the 2018-19 total costs of payroll.”
