'Minor' adjustments necessary

Anderson's five-member city council sat through an informative 45-minute budget workshop Tuesday, Jan. 19, at the midway point in the 2009-2010 fiscal year.

The discussion, led primarily by City Manager Dana Shigley, also marked the end of the first quarter of the city's current two-year budget.

"The two-year budget was based on a spending plan that included many different revenue and expense projections. It is time to review how well those revenues and expenses are meeting our previous budget projections," Shigley explained, noting all assumptions are based on the state making no further reductions to resolve its own budget woes.

Anderson's primary source of revenues that flow directly to the General Fund come from property tax, retail sales tax and other sources.

For the 2009-2010 fiscal year, the previously adopted budget assumed General Fund revenues from each source as nearly $1.59 million in property tax, almost $2.2 million in sales tax and $1.6 million from other sources for a total of just under $5.4 million, she noted.

"Assessed valuations have declined at a slightly faster rate than originally anticipated, decreasing from $678.4 million in 2008 to $638.9 million in 2009, a drop of nearly 6 percent," Shigley noted.

Therefore, prudence would dictate reducing projected revenues for 2010 by another 2 percent leaving $1.57 million as projected revenues, she said.

"Looking forward as homes currently under construction are completed, I anticipate by 2011-2012, we will see a modest rebound in assessed valuations and property tax revenues, nearly returning to the levels we enjoyed in 2008-2009," Shigley said.

Sales tax revenues, on the other hand, have dropped significantly in 2009-2010, she added.

On the expense side of the ledger, Shigley had projected spending nearly $4.086 on salaries and benefits in 2009-2010 and slightly more than $1.29 million for other costs such as professional services, supplies, travel, vehicle and building maintenance, communications, insurance and similar costs, all of which are expected to increase along the lines of 2 percent.

While labor costs typically rise at least 4 percent to 5 percent each year due to merit step increases, health insurance cost jumps and increases in costs for the state-financed Public Employee Retirement System or PERS, that number can grow dramatically when cost-of-living raises obtained during the negotiation process are also factored in, she said.

Therefore, when matching estimated revenues with anticipated expenses, the city will be $124,432 in the red in 2009-2010 unless cuts are made in the budget.

The deficit climbs to $218,328 in 2010-2011 if no changes in spending are made, she added.

While these amounts are relatively small when compared to the total General Fund, they would drop the city's reserve pool of $912,591 at the end of 2008-2009 down to $569,859 or just 10.5 percent at the end of 2010-2011 unless "minor" changes are made, Shigley noted.

Following Shigley's report, individual council members weighed in with their comments and budget priorities.

"These are difficult times," noted former Mayor Butch Schaefer. "I know that we suspended our $20,000 contribution to the Anderson Chamber of Commerce and reduced our contributions to the EDC (Economic Development Corp. of Shasta County), but I think we need to sever those relationships. I don't want that money to be costing us any jobs."

True to form, Keith Webster was unyielding on allowing the budget reserve to dip below 15 percent.

James Yarbrough, whose wife Janet was recently elected President of the Anderson Chamber, countered both arguments, however, noting, "I don't think we are going to benefit ourselves by cutting out the Chamber or EDC completely. They could really get us some new businesses."