The latter half of Richmond’s 2015-16 fiscal year budget is poised to leave the City in better fiscal condition than the City originally projected.
On Tuesday the Finance Department presented a mid-fiscal year adjustment that showed an operating surplus of $1.5 million for the current fiscal year, but still uncertain is the City’s long term fiscal stability.
The mid-fiscal year adjustment highlighted decreases in expenditures, including lower staffing costs from vacant staff positions, and increases in revenue, including a one-time $2.2 million infusion from a reallocation of solid waste management funds (that must be used for solid waste remediation). The changes are expected to leave the City with a projected general fund balance of $10.3 million at the end of the fiscal year.
However, not all the news about Richmond's financial situation is positive. While the City is running a surplus this year, it is still running a recurring $8.7 million deficit based on an 8 year forecast, according to the City Manager Bill Lindsay, who advised the City Council to remain cautious in its budgeting.
Councilmember Nat Bates asked Lindsay numerous questions about the allocation of money collected under the "Measure U" sales tax.
Measure U created "a general tax, and so as a general tax it goes in the City's general fund, and then how you allocate that is a policy decision," said Lindsay.
Bates described roads and road repair, as "the primary intent of the measure" and asked Lindsay to provide a detailed list of allocations of Measure U money at the next Council meeting. In the 2015-16 fiscal year, $8 million in Measure U funds went to patch a budget shortfall rather than repairing roads.
The positive news about the City’s mid-year adjustment comes after a number of ups and downs for Richmond’s fiscal forecast in the past 12 months. Both Moody’s and Standard & Poor’s credit rating agencies downgraded various credit ratings for the City in 2015. In the final days of the year, however, Standard & Poor’s moved to remove Richmond from its credit watch list, citing in its report the City’s strong economy as reason for confidence.
A five-year fiscal forecast for the City, however, suggests that Richmond could be $40 million in debt by 2021.
Russ Branson, a senior management consultant with Public Financial Management who presented the five-year financial forecast, said in his presentation in December of last year that “Like a lot of cities nationally, Richmond has been scrambling to maintain services with budget cuts. The fight is not over yet.”
The fight is set to heat up in the 2016-17 fiscal year, in which Branson calculates that the City will have an $8.7 million budget shortfall.
Speaking before the City Council on Tuesday, City Manager Bill Lindsay acknowledged this issue: “We do have factors that are changing in ’16-’17, and that will make ’16-’17 a difficult budget year…we do have some additional work to do.”
Additional reporting by Sean Pyles.
Be the first to comment
Sign in withFacebook Twitter