Visalia Budget Balanced for First Time in Five Years

Because of increased sales tax revenue, the city will not only balance its budget for the first time in five years, but will have a surplus of $1.83 million. Sales tax revenues are ahead of projections by $2,315,500. The department of administrative services is forecasting a total of $24.1 million in tax revenues in the year ending June 30, 2013. This surpasses the city’s pre-recession peak of $23.2 million. The growth in sales tax is being driven by several factors. The city has experienced better than expected auto sales and general improvement in retail sales. There has also been a jump in the Industrial Park sales tax revenue from existing and new businesses.

The city council must now decide how to allocate this surplus.

The department of administrative services has seven suggestions that attempt to repair the damages caused by the recession. For the last five years, the city balanced its budget by cutting all funding to capital improvements and through salary and staff cuts. In the meantime, the General Fund Emergency Reserve reached a dangerously low level. During the last four years, the emergency fund declined to $1.3 million from a high of $15 million in 2009. It is recommended that a city the size of Visalia have an emergency fund of $5 million.

Recommendations presented by staff to the city council Monday night included: depositing $900,000 in the city’s General Fund Emergency Reserve; providing a $400,000 allowance in next year’s budget for General Fund salary increases; appropriating $417,830 in General Fund capital projects; and increasing the total budget of the waste water, solid waste and related storm water funds by $1,092,500.

The staff also proposed budgeting measures that would restore the General Fund Emergency Reserve to $5 million by fiscal year 2014.

City Council Member Warren Gubler said in response to the staff’s budget presentation, “I’m asking that this information be shared with the Blue Ribbon Tax Force Committee at their next meeting. I think these numbers are indicative of an improving economy locally, and should be in the mix when considering whether to impose another sales tax increase on local citizens. If these projections hold up, and the residential real estate market continues to improve, Visalia should be coming out of tough budgetary times, calling into question the need for another sales tax increase.”

Councilman Steve Nelsen wanted to know when the city was going to replace the head of its economic development department. An economic developer ensures that Visalia doesn’t miss out on opportunities to attract high quality industries and businesses, thus increasing the city’s tax base.

Steve Solomon, Visalia’s city manager, responded that staff was going to come back in six months for its mid-year report with a proposal to hire an economic developer. Solomon emphasized that it’s still very hard to tell how the economy will go.

“Sacramento is not helping us and Washington, D.C., is dysfunctional,” he said. “This is a time to be cautious. In good years, we spent a million every year on capital improvements. In the last few years, we had to eliminate it.”

The staff recommended that the city council study these suggestions and adopt the new budget at their June 17th council meeting.

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