Modesto’s finances facing midyear review

Modesto officials will get a midyear review of the city’s $113.9 million general fund budget, which pays for public safety and other basics. They also will hear from the city’s staff about a proposal to start a whistleblower hotline through which employees can leave anonymous tips about suspected wrongdoing at City Hall.

The review will take place Monday at the City Council’s Effective Government Committee meeting.

Modesto’s budget year is July 1 to June 30. A city report states that at midyear for the 2015-16 general fund budget, Modesto officials see encouraging trends in property tax revenue, the transient occupancy tax (which is paid by hotel and motel guests) and other revenue sources. Sales taxes are behind what the city received for the same time period last year and what it projects for this budget year because of falling gas prices and online shopping, according to a city report.

“We are not seeing anything huge,” Modesto Budget Manager Steve Christensen said. “Sales tax is down because of fuel (prices). ... Overall, it’s a good picture. We are up in a lot of other areas.”

For instance, the report states that property tax revenue is trending higher than the last budget year, and officials are recommending that the projection for property taxes be increased $300,000, from $27.6 million to $27.9 million. The report also recommends the projection for the transient occupancy tax be increased $175,000, from roughly $1.87 million to roughly $2.04 million.

Overall, the report recommends that general fund revenues be increased $659,000. It also recommends that revenue for commercial construction permits be reduced $250,000, from roughly $2.04 million to roughly $1.8 million. “(S)ome projects have not materialized as quickly as were initially anticipated,” Christensen said in an email.

Sales taxes are budgeted at $30 million for the general fund, and officials are not recommending any adjustments now. Christensen said Modesto will have a better idea of how sales tax revenue is trending when it receives its December sales tax payment from the state. The report states that Modesto eventually expects to receive more sales tax revenue as consumers gain confidence and start to spend the money they are saving on gas.

Officials will ask committee members to forward the general fund budget recommendations to the City Council for adoption.

Whistleblower call-in line

The committee also will hear about a proposal to hire Pennsylvania-based Lighthouse Services Inc. to set up a whistleblower hotline at an annual cost of $1,256.50. The tips would be investigated by Moss-Adams, the consulting firm the city hired as its auditor, under its contract with the city and at no additional cost, according to a city report.

A study by Moss-Adams recommended the city set up a hotline for employees and members of the public who suspect wrongdoing but do not want to report it through traditional channels, such as an employee talking to his supervisor or human resources, according to the report. The City Council would have to approve this proposal for it to take effect.

This is not the only meeting that will discuss city finances. The City Council’s Audit Committee meets Tuesday to discuss the comprehensive annual financial report for the city’s 2014-15 budget. That discussion will include the $2.1 million surplus or “carryover” from the 2014-15 general fund.

The Effective Government Committee will meet at 5 p.m. Monday in room 2005 on the second floor of Tenth Street Place, 1010 10th St. The Audit Committee will meet Tuesday at 11 a.m. in room 2005.

This story was originally published February 20, 2016 at 4:42 PM with the headline "Modesto’s finances facing midyear review."