Modesto faces a $7.9 million general fund budget gap in the next fiscal year due to stagnant revenues and rising expenses.
Mayor Garrad Marsh's proposed 2012-13 city budget, released Thursday, would use balances carried over from this year to reduce the deficit to $2.7 million.
Closing the rest of the gap will require negotiations with labor groups and other cost-cutting, the mayor's overview says.
Residents can expect to see higher rates in the coming year to pay for debt on sewer facilities and a water rate increase could be placed before voters to complete the troubled expansion of the Modesto Regional Water Treatment Plant.
The city also is working to reduce the general fund subsidies for Modesto Centre Plaza and the three public golf courses, which are expected to lose upward of $700,000 and $450,000, respectively, this fiscal year, which ends June 30.
City Council members will discuss the $351 million budget plan in public workshops starting Monday.
The mayor's budget message says Modesto has seen the worst effects of the recession and begun a slow recovery.
"We are bouncing off the bottom and are getting close to where we can start improving services in our city instead of continuing to reduce them," Marsh said.
General fund revenues are projected at $102 million for the year starting July 1, about the same as this year, suggesting that a five-year decline in those revenues has flattened out. The city relies on the money from property tax, sales tax receipts and license fees to pay for public safety, recreation programs and administration.
The city work force faces far fewer job losses than in previous years. The plan includes cuts to 14 positions — eight of which are vacant. A financial analyst and a city clerk's office employee could lose their jobs; four others could have their hours cut.
Marsh said about $2.1 million of the remaining budget gap can be eliminated if employees agree to pick up a larger share of their pension cost. Other adjustments can cover the rest, he said.
"I do expect our employees will pitch in as they have done in the past," the mayor said.
Marsh could face a more difficult task asking residents to help pay for cost overruns on the water treatment plant expansion. If an agreement is negotiated with the Modesto Irrigation District, which owns the plant, a water rate hike could go before voters within the next seven months.
Proposition 218, a state constitutional initiative passed in November 1996, would give residents the ability to reject the increase by filing protests. Before the process is held, the City Council would have to approve Marsh's plan.
Lawsuits filed by the MID and the city are seeking about $30 million in damages from an engineering firm and construction company, which they believe are at fault for defective construction on the water plant at Modesto Reservoir.
The mayor's plan for fixing the mess calls for a rate increase to pay for completing the project, so that Modesto can benefit from the extra water. He said proceeds from legal settlements would go into the water fund to stabilize rates for five to six years.
With the additional 36 million gallons per day, Marsh said, the city could bolster efforts to bring large employers to Modesto.
The budget plan drew a strong reaction from one critic Thursday.
"Doesn't anybody in the city have guts to stand up to MID and tell them to fix their own problem?" said Dave Thomas, president of the Stanislaus Taxpayers Association. "We didn't build that plant. MID built that plant and it abrogated its responsibility to deliver a good plant."
The proposed budget would commit some funding to address problems and public service needs.
Almost $90,000 would pay for quicker response to remove graffiti. In addition, $116,000 would pay for efforts to stop copper wire theft and vandalism in parks, and $164,000 would fund three police officer positions threatened by the loss of traffic offender funding.
Marsh also wants to spend $50,000 to address the mistletoe epidemic in the urban forest. Crews should be able to cut mistletoe from more than 1,000 trees in addition to the normal maintenance cycle, he said.
Bee staff writer Ken Carlson can be reached at firstname.lastname@example.org or (209) 578-2321.
'We are bouncing off the bottom and are getting close to where we can start improving services in our city instead of continuing to reduce them' — Mayor Garrad Marsh
For a link to the budget as well as a copy of the mayor's message, go to this story at www.modbee.com/local.BUDGET WORKSHOPS
Modesto residents and others can comment on the proposed city budget at workshops set for next week in the basement chambers of Tenth Street Place, 1010 10th St. The meetings begin at 9 a.m. Monday and 10 a.m. Tuesday. If needed, workshops will continue at 9 a.m. Thursday and Friday.
Budget reports can be viewed at www.modestogov.com under Quick Links and "budget information."