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Grass Valley projected budget feels pinch of pandemic

Grass Valley budget rises like a Phoenix from pandemic

Even with all the challenges brought on by the pandemic and drought, the city of Grass Valley can expect to accumulate a surplus for the coming fiscal year, the City Council learned at its regular meeting this week.

Financial Director Andy Heath on Tuesday presented the projected budget for the fiscal year 2021-22 to council, which was approved unanimously.

“We anticipate a General Fund surplus of $350,000 for 2021-22 because sales tax keeps coming in nicely, and it could be possibly a little higher than that,” said Heath. “But one thing not built into the budget are any pay raises. So as contracts are negotiated with various branches of city workers, it may impact the budget.”



The fiscal year begins July 1.

The General Fund is just one of multiple funds that comprise the entire budget. It is the primary operating fund for all economic activities, except for those legally required to be accounted for in other funds.




Total estimated revenues for 2021-22 are projected to be $31.6 million, compared to $32 million for 2020-21. Expenditures for 2021-22 are $36.8 million, an increase of $5.1 million from the $31.7 million for 2020-21.

“A lot of things impacted the budget, particularly COVID,” said Heath. “Over a year ago the city confronted putting together a budget not understanding where exactly COVID was going to take us.”

Last year council approved what Heath characterized as a draconian budget which impacted the city’s finances due to businesses temporarily closing or shutting down altogether as fewer people traveled or lodged at hotels.

“Grass Valley is remote, but has a central economic base here yet did not experience the impacts of other towns, but we have a big tourism base which we depend on from year-to-year, particularly for sales tax and transient occupancy (hotel) tax,” Heath said. “Those saw more strain on those taxes, but not as much as we originally anticipated.”

DETAILS

The General Fund increased $900,019 for 2021-22 over 2020-21 — an increase linked to the city adding back significant positions that were defunded because of COVID-19. Core positions added back included three in the police department and a new city clerk.

Grass Valley also added a Nevada City fire contract, providing fire services for that town. Grass Valley gets reimbursed, so it is a revenue and expense built in.

Heath also briefly reviewed the city’s water and sewer funds. These are for the operation, maintenance and capital improvements of water and wastewater treatment plants and collection facilities. Both saw an increase, water for $2.1 million and sewer for $847,000. Heath cautioned the council that they will need to determine whether rates need to be increased.

A Capital Projects Fund account for money collected and spent for construction of public facilities and projects has $15.5 million

“Keep in mind, many funds are transferred into capital project funds, such as street rehabilitation, the Memorial Park pool,” said Heath. “Fortunately, that projected is funded by Measure E.”

Measure E was a ballot initiative approved by voters in June 2018 that increased the sales tax from a half cent to 1 cent and repealed the original 2012 Measure N initiative’s expiration date of 2023.

Heath pointed out there are also reserve funds. The General Fund was projected to have $6 million in designated reserves for the end of 2021-22.

“That’s very good reserve levels and I congratulate the council for getting us to that point,” said Heath.

City Manager Tim Kiser was pleased by the unanimous vote to approve the budget.

“We’re fortunate this budget passed, especially coming out of COVID,” he said. “This budget put us in a good position to provide essential services.”

William Roller is a staff writer with The Union. He can be reached at wroller@theunion.com


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