The Impact of Budget Amendments on City’s Financial Health

On Tuesday, the City Council authorized an expenditure that further narrows the financial safety net of our city, a resolution has been proposed to amend the Fiscal Year (FY) 2023-24 Adopted Budget and Capital Improvement Program. This action involves the allocation of $1,084,800 from the General Fund Unrestricted Fund Balance towards several park and facility deferred maintenance and repair projects. While these projects are necessary for maintaining our city’s infrastructure, this decision has significant implications for our financial resilience.

The Dwindling Unrestricted Fund Reserve Balance

It’s important to remember that our fund balance was already under pressure, sitting at less than half of the GFOA’s recommended unrestricted reserve level. This new allocation exacerbates the situation, further diminishing the city’s ability to respond to financial shortfalls . In times of upcoming financial challenges, a robust unrestricted fund reserve balance is our safety net, ensuring we can navigate without resorting to drastic measures. Unfortunately, this action places us in a more vulnerable position.

The Illusion of a Balanced Budget

The City Manager rationalized the postponement by stating that there was a need for more precise cost estimates. Yet, the amount now sought from the unrestricted funds is marginally lower than the initial figure anticipated at the time this year’s budget was finalized. Moreover, the practice of excluding planned items from the annual budget creates a misleading appearance of fiscal balance.

By deferring the appropriation of funds for essential maintenance and repair projects to a later date, the budget superficially seems balanced. However, this overlooks the reality that these are not new or unexpected expenses but planned necessities that have been temporarily sidelined. This approach not only obscures the true state of our financial health but also delays critical infrastructure improvements.

The Proposed Action

The resolution calls for the appropriation of funds for several key projects initially identified in the FY 2023-24 Adopted Budget and Capital Improvement Program but not included in the operating budget. These projects encompass a wide range of infrastructure needs, from sewer line replacement at Castro Park to enhancements at the Swim Center for ADA compliance and electric vehicle parking. Initially projected at a planning level cost of $1.14 million, the proposal now seeks to allocate slightly less, with the understanding that these funds will directly address the deferred and repair needs of our city’s facilities. maintenance

Moving Forward

As we consider this resolution, it’s crucial to weigh the immediate benefits of improved city infrastructure against the long-term implications of reducing our unrestricted fund reserve balance. Maintaining a balanced approach to budgeting—where essential projects are funded without compromising our financial stability—will be key to navigating the challenges ahead. This situation underscores the importance of transparent and prudent financial planning, ensuring that our city remains a vibrant and sustainable community for all residents.

Additionally, these issues are identical to those previously highlighted by the State Auditor three years ago. Initially, the City’s expenditures surpass its income. Subsequently, it taps into reserves to finance assorted projects over the year. This pattern leads the City towards depleting its reserves once again, potentially necessitating the reliance on short-term municipal financing to fulfill its financial commitments.

Here’s how you can help. Write to the Council members or write the city clerk and ask that your letter be included in the council meeting packet. Tell them they should require the City Manager to add all known items in the budget. They should also discontinue the use of reserves to fund known expenditures.

Here is more on how you can help:

• Share this post with other residents.
• Comment on the post
• Attend the monthly Financial Advisory Board meetings in person.
• Post on Next Door
• Voice your concerns with the Council.
• Council meetings are remote and in-person, but public comment is now limited to in-person attendees.

If you want to contact City Council Members or the City Managers, all their emails are below:

• Karen Pinkos-City Manager kpinkos@ci.el-cerrito.ca.us
• Councilperson Gabe Quinto gquinto@ci.el-cerrito.ca.us
• Councilperson Carolyn Wysinger cywysinger@ci.el-cerrito.ca.us
• Councilperson Tessa Rudnick trudnick@ci.el-cerrito.ca.us
• Mayor Lisa Motoyama lmotoyama@ci.el-cerrito.ca.us
• Councilperson Paul Fadelli pfadelli@ci.el-cerrito.ca.us