Following a trend seen across California, Fresno is staring down a $37 million budget deficit next year.
Fresno Mayor Jerry Dyer presented a five-year forecast to the City Council on Thursday, setting the stage for deliberations over the next few months to balance the budget.
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By the numbers: If Fresno went about its business without making any changes, the city would be down $37,168,400 by the end of fiscal year 2025.
- That number includes $21 million in salary savings from vacant positions projected for attrition.
- The deficit would reach $180 million over the next five years if no action was taken.
Driving the news: Some key factors leading to the deficit projection include an expected $4.8 million increase in PG&E expenses. That’s on top of a $16.3 million increase over the last three years. Dyer’s administration is factoring in an 11 percent increase into the fiscal year 2025 budget.
- The city also faces a $6 million increase for retirement contributions, $5.2 million for workers compensation, $2.9 million for health and welfare, $4.9 million to cover 42 grant-funded firefighters that are rolling into the general fund, $1.8 million for the risk and liability fund and $1.7 million for public safety communications upgrades.
- Sales tax revenue is coming in $5 million under projections this year, although property tax revenue is balancing that out by being nearly $5.7 million over projections.
- But business license (-3.8 percent), room tax (-4.2 percent) and cannabis revenues (-58%) are all coming in under expectations.
Statewide trends: According to the nonpartisan Legislative Analyst’s Office, California is staring down a $73 billion deficit over the next couple of years.
- Looking at other major cities in California, Fresno is starting its budget process in much better shape despite the deficit projection.
- Los Angeles is looking at a $400 million deficit, San Francisco is projected for a $200 million deficit, and Oakland and San Diego are facing $180 million and 167 million deficits, respectively. Sacramento is also looking at a $58.6 deficit.
What we’re watching: Dyer said the city is meeting with the retirement board, labor groups, department directors and each council member individually through April to kickoff the budget process.
- Dyer has asked each of the department directors to present a three percent reduction plan to help offset the deficit by $15 million.
What they’re saying: Councilman Mike Karbassi said the baseline for him is to retain the current service level the city provides and not cut any positions.
- Additionally, Karbassi said the council will now finally focus on economic development to propel the city through the deficit.
- “We’re finally forced to really focus on the departments that generate revenue and the activities in the city that generate revenue. I just felt for the first time as a councilmember a fundamental shift – market rate development, commercial and more jobs,” Karbassi said.
- “We had the Scannell project that just went through. That’s going to generate a lot of jobs and revenue – good job there. Finally – and we don’t have to put all our eggs in one basket – we finally have to talk about market rate housing for the middle income families, working families in this community. So I’m glad to see we are now forced to embrace that.”
