Sales tax decline in forecast
Nevada City council members will consider a budget tonight that projects a 6.5 percent decline in sales tax revenue in the next year and a request to hike rates for a water department with an expected deficit of $330,000 in 2008-09.
“We’re facing a new reality,” City Manager Gene Albaugh said Tuesday. “We’re down over 11 percent in sales tax in the last three months.”
In 2007-08 fiscal year, which ends Monday, the city expects to collect nearly $1.17 million in sales taxes. City officials are budgeting $1.09 million in sales tax income next year.
To deal with the looming decline, city officials have made 5 percent cuts across all departments, excluding salaries, Albaugh and Finance Director Catrina Andes said. They also eliminated projects and transferred some overhead to enterprise funds when the general fund deficit reached $500,000 in May.
Tonight, they will report a precarious surplus of $307,748 for the 2007-08 fiscal year.
“The city has virtually no reserve fund. Of that $300,000, some has to go into reserves,” Albaugh said. “We’re going to try and hang on to that, considering the economic situation.”
The council will be asked to approve the $3.7 million budget, which is similar to last year’s due largely to a projected 2 percent increase in property tax collections.
The meeting starts at 7 p.m. at City Hall, 317 Broad St.
The city already has taken steps to lock in payroll costs. Police officers, their supervisors and firefighters have agreed to 8.5 percent pay increases over the next three years; the new pact calls for 2.5 percent raises next year and 3 percent raises in each of the following two years.
That comes after informal discussions earlier in the year of 5 percent raises for the coming fiscal year alone.
“We took a look at salaries and benefits and did some definite reductions,” Andes said.
The city’s two other bargaining units, supervisors and miscellaneous employees, are expected to agree to a similar wage package, Albaugh said.
“There was the potential for 5 percent raises, but that did not come to fruition,” he added.
Water rates could rise soon
Albaugh also will recommend the council consider increasing water rates in the near future.
The Water Department is projected to face a deficit of $330,012 in the next fiscal year. In the past, some of the department’s overhead costs came from the general fund. Now, the department needs to pay its own way, Albaugh said.
“The general fund is pumping money to cover water rates that are insufficient,” he said, adding that it has been at least three years since rates have been increased.
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