Fresno’s mid-year budget review revealed that the city is still projected to be in the black, but the finances are going to be tighter moving forward.
While the poor economy is somewhat to blame, the city’s venture into allowing cannabis sales is not yet the financial boon it was predicted to be.
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The big picture: The fiscal year 2022-2023 budget adopted last summer totaled $509 million for the city’s general fund. The estimate, as of Thursday’s city council meeting, is now down to $494 million.
- Fresno’s sales tax revenue was projected to total $158 million in the adopted budget but is now estimated to drop to $150 million.
- The city’s cannabis dispensaries are not making the expected contributions yet, either. Cannabis revenues were projected to bring in over $5.3 million this year, but the updated estimate has dropped that total to $2.1 million.
- Ultimately the city expects to end the fiscal year with a net balance of just over $1 million.
Driving the news: Why has the city’s much-anticipated cannabis industry not gotten up to speed yet?
- Thus far, only two of the 19 dispensaries that have received preliminary approval from the city have opened up shop: The Artist Tree in north Fresno and Embarc in central Fresno.
- The city’s cannabis ordinance does not have a deadline in place for the dispensaries to open, meaning dispensaries that are part of a larger corporation that operate in multiple cities could be focusing their operations elsewhere for the time being.
- Some dispensaries, according to city staff, are also struggling with landlord related issues, preventing them from readying their storefront for business.
- City Manager Georgeanne White said the city is in the process of putting together a timeline within the parameters of the ordinance to push the dispensaries to open faster.
What they’re saying: Although the city is still projected to be in the black, the council is preparing for the possibility that a deficit could be on the table.
- Councilman Mike Karbassi cautioned against dipping into the around $40 million that the city has in reserve to make up for any potential shortfall.
- “I personally run a pretty tight budget, so I do have a rainy day fund. It’s hard to run a rainy day fund in this day in age because expenses are up,” Karbassi said. “But I can tell you that for me I will first support belt tightening before I support raiding our reserves, and the reasoning for that is the last thing we need for this community are layoffs. I use that word, it’s a very serious word, because what makes this city so great are the employees that provide the services to residents.”
