Property tax shortfall troubles Finance Committee, director ? The ...

By Donna Beth Weilenman
Staff Reporter

KARAN REID.
File photo

Just when Benicia thought it had budgeted so conservatively that it was done with revenue and expenditure surprises, the city got an $800,000 bombshell from Solano County?s assessor office last month, the Finance Committee heard Friday.

With no previous indication that last June?s property value figures would change radically, the county office said those values had dropped, and the city?s share of the collected taxes would be $800,000 less than anticipated.

Property tax revenues make up 41 percent of the city?s General Fund budget, Finance Director Karan Reid told the panel.

Other economic indicators have suggested that the economy is starting to recover from the recession. But last summer, city officials took what they thought was a conservative approach during the summer budget sessions, and crafted the budget as if no additional revenue would be received.

They didn?t plan for a revenue decline, however.

?There were no economic numbers that indicated this was coming,? Reid told the committee. She said Benicia will experience a 6-percent drop in revenue because of lowered property values. Countywide, the drop was 8 percent. ?It was a shock to everyone,? she said.

While the figure is about 3 percent of the city?s total budget, the amount represents almost 20 percent of the city?s mandated reserves.

?This is a significant drop,? Reid said. ?We?re not set up to react to this.?

The city won?t be broke by this revelation, she said. But if Benicia officials don?t act, the city?s reserves would be only 17 percent at the end of the fiscal year, or about $5.1 million.

However, she said, City Manager Brad Kilger has instituted a hiring freeze on positions paid through the General Fund, and is examining both one-time cost savings and possible restructuring, not only to address this shortfall but to prepare the city should property revenues continue to fall.

Every other city in Solano County, except Vallejo, saw a similar or greater drop in property tax revenues, Reid said.

What has frustrated her has been her inability to learn how Solano County arrives at its figures. ?I?m not getting the information to tell you why,? she said.

The problem wasn?t significant in the past, when property values were booming, she speculated, but since the recession cities have tried to budget more cautiously.

In fact, Benicia?s departmental expenditures are tracking within its conservative budget, she said.

Reid said she and Fairfield?s director of finance, David White, have been asking for additional information from Solano County?s assessors.

?We want to know the data they?re using so we can estimate, but we haven?t gotten it. We?re at the mercy of the county,? she said. She said the city was told it wouldn?t get any additional assessed value information until next June.

She said she and White would be happy with a conference call, ?but they did not agree.? However, she said Solano County, like other government agencies, is experiencing its own financial challenges and staff cutbacks, which might account for the staff?s declining to respond to White and Reid.

?They?re struggling like we are,? she said.

?I?m surprised that any city doesn?t know the criteria they use, no matter how complex,? Commissioner Chris Carvalho said. ?I assume their computation is something they can?t keep secret.?

?They?re a public entity,? Vice Mayor Tom Campbell observed.

However, only a dozen California counties provide good reporting to their cities, Reid said. In the past, she has worked with one, and could get data she needed with a single phone call. ?This county does not do that.?

Chairperson Dennis Lowry suggested that after cutbacks and turnover at the county level, the current assessor staff may not know the answer to Reid?s questions.

Reid said she and White would continue to ask for the county?s criteria, which her department then would use to make the city?s own prediction about prospective revenues.

If county employees continue to decline a meeting, ?we may escalate,? she said.

Lowry suggested the city request a document that describes the county?s process. ?At least we would know the rules,? he said.

?If they refuse, escalate the heck out of it,? he said.

The city has other expenses ? from accepting a four-year plan to underwrite senior residents? discounts on water and wastewater bills, to addressing enterprise funds that continue to lose money ? that are about equal to the property revenue shortfall, Reid said.

?The reserve gives us time to put together thoughtful solutions,? she said.

Developing ways to increase city revenues is desirable, but will take time, she said. ?We will have to ratchet down expenses.?

In other matters, the committee agreed with changes to the city?s purchasing policy, making the city manager or the manager?s designee Benicia?s purchasing officer. It modified approval authority and processes for purchases of materials and services.

The committee also weighed in on proposed revisions to the city?s inter-fund advance and loan policy, asking that repayments be made within the fiscal year, and suggesting that more detailed accounting of the city?s loans, grants and advances is needed.

Reid also told the committee that software and computer program changes that would improve efficiency in the Finance Department and help it interact more smoothly with Human Resources is progressing, but at a significantly slower rate than expected.

Because increased training is needed on the complex program system, and because that training will be done as staff prepares for the city?s next round of budget sessions, the transfer to the new program may not be completed until summer, Reid said.

However, the new programs are needed desperately, both she and Administrative Services Director Anne Cardwell said.

Employees fill out paper time sheets, and changes in the Human Resources Department that impact the Finance Department have to be reconciled manually.

?Everything is being done with pieces of paper,? Reid said of the current, 20-year-old system. ?We have reams of paper in storage.?

The current programming makes report-generating more complicated, too. A one-page report on the city?s General Fund takes a day to finish, Cardwell said.

?It?s manual. It?s awful. And it?s redundant,? she said. ?We have to bring these two divisions together.?

Like this:

Be the first to like this.

Source: http://beniciaherald.me/2012/11/16/property-tax-shortfall-troubles-finance-committee-director/

george zimmerman charged big sean sherri shepherd sherri shepherd arkansas razorbacks trisomy 18 ozzie guillen