Tuesday Feb 21 2012
Folsom leaders brace for budget shortfall
By: Laura Newell, Telegraph Staff Writer
Mayor said she wants 'everything looked at'
The Folsom City Council was hit with grim financial news at their Feb. 14 meeting as the city faces a possible $1.6 million shortfall this fiscal year. And, if things continue as they are, the city could face a $4.6 million deficit the next fiscal year. Jim Francis, with the city’s office of management and budget, presented the fiscal year 2011-2012 second quarter report and preliminary fiscal year 2012-2013 budget preview. In his presentation, Francis explained that unemployment rates had a slight decrease in 2012 and has a continued decrease in the fiscal year 2013 to 4 percent. He said that employment levels “see signs of improvement, but we’re not back to where we were.” He also said the price of home sales per month will continue to drop in fiscal year 2012, but should stabilize in the 2013 fiscal year. “Sales are up, but the price continues to drop,” Francis said. In July 2006, median home prices of homes sold were $522,750. In December 2012, they were $299,900. In the projected budget preview presentation, City Manager Evert Palmer said the budget needs to be balanced. “We are going to bring back a balanced budget and work for a better budget,” Palmer said. First he said the budget development principles are to maintain the functional balance of services that provide the unique Folsom experience. Second they will allocate financial resources based on functional priorities and program goals. Planned expenditures must not exceed expected revenues and actual implementation must keep this balance, he said. They will also work to insure that the financial stability of the city is sustainable beyond the next fiscal year. Their goal, he said, is to maintain effectiveness of their primary services and functions. Next, they will maintain or grow the general fund balance. Also, they will consider “alternative service delivery models” to preserve services to the community. He said they will also address capital replacement and maintenance needs as well as operational costs. Palmer also said they will “locate for today, but prepare for the future.” The forecast for 2013’s fiscal year shows $63,377,790 in revenue with expected expenditures of $67,951,549, representing a $4.5 million deficit. The city’s rainy day funds, known as the “undesignated, unrestricted general fund balance,” was at $16 million in 2006. That has dropped at a project $2.6 million this year and will be depleted by next year if nothing changes, according to Palmer’s presentation. Palmer said they will explore all opportunities for collaboration, partnerships, consolidation, and restructuring, both internally and externally, as a means of enhancing the cost-effectiveness of services and functions. He said his operating budget will be presented to city council on Tuesday, April 10. Vice Mayor Steve Miklos said the city needs to be prepared. “Looking at what we can do, and restructuring … policies if needed, I don’t think we are there yet,” Miklos said. “But, I think we are getting there.” Councilman Jeff Starsky was shocked by the numbers. “This is the worst I’ve seen it in my 12 years of council,” Starsky said. “This is a serious deficit that we will have to get through.” Mayor Kerri Howell urged diligence. “We need to do everything we can to seriously fix this budget,” she said. “I want everything looked at.” ~ Editor Don Chaddock contributed to this report.