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At the April 22 meeting, City Council approved the budget for Fiscal Years 2021-22 and 2022-23. Development of this budget has been a challenging process, given the fiscal uncertainties caused by the ongoing COVID-19 pandemic and limited financial resources available to fund the City’s operating and capital costs.
Throughout the past year, we have seen our community band together, supporting neighbors and emergency response workers; City staff worked hard to innovate and keep all City service lines operational remotely; the City partnered with local restaurants to provide thousands of free meals to our at-risk seniors; and we have learned to connect in new ways, while staying social distant. Despite all the challenges of the pandemic, the City of Citrus Heights has continued to honor our long history of fiscal prudence and the balanced budget approved last night is a testament of those efforts.
As we look ahead and balance our budget, we are up against several challenges. We have known since our City incorporation that there would come a time when our expenses would be higher than our revenue, largely because of our revenue-neutrality agreement with the County. For more than two decades, we have had to balance our budget without property tax revenue, which has had compounding consequences. On top of that, our City has felt the significant impacts of a gradual sales tax decline over the last decade. These factors have led to our current budget reality and, like many cities in our region, we have had to make cuts in order to balance our budget.
While we are optimistic about being included in the Federal American Rescue Plan funding, our budget does not rely on Federal relief, so that we can ensure our plan is viable. We know that the Federal relief funds will not be able to address all of our City’s concerns, as they will come with specific spending guidelines. At this time, we are still waiting for clarification regarding the amount of funding the City will receive and the guidelines on permitted use of those funds. Once that information is available, staff will return to City Council for discussion and recommendations of possible amendments to this two-year budget.
Public Safety: Without additional general fund revenue, we must look to further reduce City expenses. Because we already operate on a lean budget, the biggest area of opportunity lies in personnel costs, the majority of which are in our Police Department as is typical for cities like ours. Our budget includes holding 26 positions in the Police Department vacant for the next two years. We know from our City’s largest engagement effort that public safety is a priority for our residents. It is important note that even after these cuts, the Police Department still makes up about 70 percent of our personnel expenses from the General Fund, just as it has in past years. We want to ensure our residents know that while police services are going to be streamlined, the Police Department will continue to respond to emergencies as always. Since its creation, our award-winning Police Department has achieved significant decreases in crime. Although our current budget reality requires us to reduce services, including reductions in the Police Department, staff will continue to provide the quality work our residents and businesses deserve.
Roads and Infrastructure: Third-party analysis tells us that Citrus Heights needs at least $12 million annually to improve our roads, and there is not enough revenue to support that kind of annual expense. City staff aggressively apply for – and have a history of being awarded – competitive grant funds, and those efforts will continue. In fact, we were just awarded a historic amount of grant funding from SACOG (more than $11 million) for our “Complete Streets” plans on Auburn Blvd. and Old Auburn Rd. As always, we are obligated to apply grant funds for very specific purposes and services, like widening sidewalks, increasing safety, supporting alternate modes of transportation, and more. The newly-approved budget funds $72.7 million of operating and capital costs in Fiscal Year 2021-22 and $67.9 million in operating and capital costs in Fiscal Year 2022-23, across all City funds. The Five Year Capital Improvement Program, which will be presented to the Planning Commission on April 28th and to the City Council for adoption on May 13th, totals $56.6 million.
Economic Development: While we plan to reduce expenses to balance our budget, we will also continue to steward along important development projects that diversify our economy and are important for our community’s economic future. Our staff continue to usher in significant projects for the City, like:
Planning for the Future: Planning for the Future: We have always engaged in long-term and comprehensive financial planning to ensure our City can keep its budget balanced. Again, while we are hopeful about being included in COVID-19 Federal relief funding, we know our City needs a viable plan that doesn't rely on outside money, in case the Federal dollars come with restrictions or are delayed. Looking at the projections for the City’s main operating fund, the General Fund, we anticipate continued balancing of our budget:
A large part of balancing our budget involves holding 27 permanent positions (26 within the Police Department) and 7 limited-term/part-time positions vacant throughout the next two-year budget period. We know those vacancies will impact City services, but we will continue to align with our community’s priorities as best we can. I know that during this lean time, our existing staff will continue to work hard for our community.
I want to end by thanking City staff, the Police Department, and all our community members for resilience through COVID-19. I also wish to thank our City Council for their continued leadership and support.
Chris Boyd, City Manager