LAKEPORT >> The lynchpin on which city the of Lakeport can maintain a balanced budget comes down to monitoring revenues and expenditures closely over the immediate future.
“But it takes time and sales taxes, which we are highly dependent upon and it’s a volatile situation,” cautioned the city’s financial director Danielle Dizon. “We will primarily look at increasing revenues or decreasing costs to avoid having to overly rely upon those revenues during future years,” she said. “The goal will be to grow revenues in order to avoid service reductions but there’s no magic solution.”
City Manager Kevin Ingram praised Dizon for her efforts and for the amount of work she has accomplished in such a brief time since she was appointed finance director. “Danille joined us May 12 and (was) tasked with putting a budget together,” he informed the council.
Dizon presented a budget workshop on Tuesday evening in preparation for a final budget summary at a special meeting for June 30, which includes a proposed budget for fiscal year 2025-26. “A budget is nothing more than a plan but like any plan, it requires execution and follow through and includes continuous monitoring of revenue to be sure revenues are being received as anticipated and adjusting our spending if need,” she said. “Given the timing of this budget I anticipate a more robust mid-year review.”
Lakeport has many projects going on, water main replacement and several paving projects around the town. Some of the challenges the town faces include stagnating revenues and rising costs, due to several factors. These include inflation, cost of living and an uncertain economic future. “We are still experiencing a post-Pandemic volatility,” she said. After several quarters of decline, the first quarter of 2024, was marked by a 6 % increase. that returned to a decline but then experienced a large jump of 18.7 % in quarter four, which aligned with a new Marshall’s opening … “Our sales tax showed a 56.8 % for retail from Fiscal Year 23-24 to FY 24-25 so, we really hope to see this trend coming, which proved the addition of Marshalls and Tractor Supply are doing what we had hoped,” said Dizon.
And council priorities are still a first consideration noted Dizon. For example, for FY 25/26 the General Fund Budget included $30,000 for a community center and $20,000 for recreation programs. Some highlights of the budget are; total revenues came in at $31.9 million, $15 million which was from grants and $1.2 million for ADA compliance. Meanwhile, expenditures were $37.5 million that include $7.2 million for operations, Affordable Housing development was $11.9 million, while debt services were $2.5 million and various CIP projects were $7.2 million and other expenditures were $1 million.
Turning to the General Fund, it is primarily supported by taxes, which 70% comes from sales tax. Also, salaries and benefits and debt service accounts from 95% of this year’s costs with another 5% for CIP projects. It’s also called a capital plan—lays out the financing, location, and timing for capital improvement projects over several years. A capital improvement plan typically consists of one or more capital improvement projects, which are financed through a capital budget.
Currently, the deficit between revenue and expenditures planned for FY 25/26 are in the amount of $624, 232. This is supported by a fund balance that carried forward from previous years revenues received, and expenditures incurred, ended with a surplus of $208,047 for FY, 2022/23, and FY 23/24 ended with a surplus of $458,452. Likewise, Dizon anticipated funds carried forward from FY 23/24 and will likely come from projects previously budgeted, to carry forward. She said the final budget for FY 24-25 was approved with a deficit of $286,868. but the final budget for FY 24-25 is actually being estimated to end with a surplus of around $300,000.
Regarding the water fund, the finance department noted it is completing some significant infrastructure improvements, that was funded by bonds already received in prior fiscal years, which is why there is still a continued appearance of a deficit, because the revenues are not being received in the same year as the expenditures were made. A rate study is planned to ensure all costs associated with operations and necessary improvements are being properly captured. A deficit is expected in the water operations and maintenance fund for projects that are carrying over from FY 24-25, including bond funded projects and funds carried forward from prior years. “So, you’ll see that the water fund is structurally balanced,” Dizon said.
A similar state applies the sewer fund where the current deficit is expected to be covered by the fund balance carried forward. The Capital Improvement Program (CIP) is a comprehensive planning tool for the construction, replacement, and repair of City infrastructure reflective of council and the public’s priorities to ensure that the needs of a livable community are appropriately met.
“This fund has significant reserves it can rely on over the next few years for a variety of CIP projects,” said Dizon “In accounting for the FY 24-25 projects that are in the budget.”
The General Fund’s Balance has been consistently in balance during the last five years, yet can be problematic while costs increase and revenues have plateaued. meanwhile failing to keep up with ever increasing costs. One of those ever-increasing costs is CalPERS. This is the California Public Employees’ Retirement System and is one of the largest pension plans in the United States. Established in 1932, it provides retirement and health benefits to public employees and their families across the state of California. Yet, it is an unfunded accrued liability.
Insurance premiums and deductibles have increased by 16% for the last year. A pre-Pandemic graph demonstrated a steady increase in revenues. “This is the ideal to maintain,” Dizon said. “Havig a reserve fund that we do not have to dip into. But that is not the reality we live in. But we still have the OPEB,” she said. OPEB (Other Post-Employment Benefits) is the method by which the State of California, as the employer and its employees jointly prefund health benefits that current active employees will receive as state retirees.
