Elk Grove City Manager Jason Behrmann on May 26 announced that the city is projected to have a balanced budget for the next five years.
“I’m happy to report that the budget is balanced for the next fiscal year and is anticipated to be balanced through our five-year forecast, and the reserves are fully funded,” he said.
Behrmann stressed that this five-year forecast does not anticipate any recession, pandemic or other major interruptions that could impact the city budget.
The city’s proposed, $272 million annual budget for the upcoming 2021-22 fiscal year is $32 million less than the current year’s budget, Behrmann noted.
“(That figure) is a ($32 million) decrease from the current fiscal year,” he told the Elk Grove City Council during their May 26 meeting. “The main reason for the decrease is because of some large capital projects that were completed in the current year, and also the transit services.”
Last month, the council unanimously voted to authorize an annexation agreement in which the Sacramento Regional Transit District will operate the city’s transit services as its own member entity. This annexation will become effective on July 1 – the same day that the city’s next fiscal year begins.
Behrmann also reported that the city’s proposed General Fund budget for the 2021-22 fiscal year totals $78.7 million, which amounts to a $4.4 million increase from the current budget.
“(This increase is) largely due to COVID(-19),” he said. “We made significant budget cuts in the current fiscal year, and many of those cuts are being restored in the upcoming fiscal year.”
Within the General Fund, sales taxes continue to be the largest revenue source, at 38% of that fund. Second to sales tax in the General Fund is property tax, at 18%.
The city’s fully funded reserves include the $18.7 million “Economic Uncertainty Reserve” and the $3.7 million “Opportunity Reserve.”
As for General Fund expenditures, police services continue to use the greatest amount of that fund, at 67.7%.
The city’s governance – which includes city manager, city attorney, city clerk and administration – is projected to account for 10.5% of the city’s General Fund spending.
Behrmann told the council that the projected upcoming budget reflects signs of economic recovery from the COVID-19 pandemic.
“Our sales taxes and some of other revenue sources have done better than expected,” he said. “There are certainly others that are flagging and continue to struggle, such as our hotel taxes, but even those are seeing remarkable rebounding, as recently, in particular.”
Behrmann also mentioned that the city is expected to receive nearly $22 million through American Rescue Act funding.
Those funds, which will be allocated for lost city revenues, infrastructure projects and within the community, are not included in the city’s budget. They will instead be presented separately in a future council meeting.
Capital projects are projected to account for 41% of the city’s overall expenditures in the upcoming fiscal year. Operating expenses and compensation each make up about a quarter of those overall expenditures.
Among the economic development highlights for the 2021-22 fiscal year are the city’s new Small Business Incentive Program, the Sky River Casino, and the Grant Line Business Park, which includes the city’s 100-acre property, southeast of Grant Line Road.
The front 60 acres of that acreage is currently being pursued by Kubota North America – a multinational corporation that designs, builds and sells tractors and other heavy equipment.
Behrmann announced that the city will add 17 full-time staff positions in the upcoming fiscal year.
“A lot of these are public works positions,” he said. “These are as a result of changing some contract positions to city positions. We brought this forward to the City Council a couple months ago, and so, this is an official action of incorporating those positions.”
Other new positions include four police recruits, a code enforcement officer and an administrative analyst.
Following Behrmann’s report, City Council Member Darren Suen responded to the positive projection of the city’s budget.
“I’m happy to see that we were able to weather the COVID(-19) storm, so to speak,” he said. “And it looks like the future years are looking good. I hope those projections continue to hold up.
“I do recognize there’s still a lot of pain and recovery that needs to happen with our small businesses, our nonprofits. But having our city in this position just enables us to be of more help.”
The council will hear additional details on the proposed city budget later this month, and potentially approve the budget during that meeting.