Turlock faces tough choices as spending exceeds revenue

Modesto Bee file
It’s become a familiar story over the past several months, but it has not lost its power to shock — Turlock is spending down its general fund budget reserves and is on pace to exhaust them in a couple of years, if not sooner.

The roughly $42 million general fund primarily pays for public safety, but also pays for parks and recreation as well as city administration. Reserves were $11 million in July 2017, dropped to $9.8 million in July 2018 and are expected to be $6 million by this July, according to a city report.

The bleeding will continue without a course correction. The City Council approved $3.8 million in additional general fund spending from March 2018 through January 2019, with $3 million of that for public safety, including hiring more police officers, dispatchers and firefighters as well as pay increases. The council also approved pay increases for other city employees.

Turlock is using its general fund reserves to pay for the $3.8 million in spending, and about $3.1 million of that is ongoing. And none of this takes into account the other pressures on the general fund, including expected increases from the California Public Employees’ Retirement System for city employees’ pensions.

The new City Council heard this story Tuesday during a midyear review of 2018-19 city budget, which started July 1, and the efforts underway to make a course correction. (The five member council has three new members since the November election.)

The story came with pain. “The city is facing difficult times and tough decisions that will be painful for everyone involved,” Administrative Services Director Kellie Jacobs-Hunter wrote in a report for the budget review.

City Manager Bob Lawton, who came to Turlock in July, said city staff is working on several proposals he expects to bring to council members this month to help them better understand the issues and to start the conversations on potential solutions.

“I want to make sure we, your staff, provide the council with the right tools to make good decisions that stand up to public scrutiny and put the city on the track to a structurally balanced, sustainable budget,” Lawton said. “We can do a lot of things to balance the budget in a given year, but it doesn’t mean anything if we can’t do that trick over and over and over again.“

The general fund — which relies primarily on sales and property taxes — emerged as a top issue during last year’s mayoral election in which longtime Councilwoman Amy Bublak defeated first-time Mayor Gary Soiseth in November.

Soiseth has said he and the council built up general fund reserves and then invested them in the city and its employees, though city documents do not support his characterization of the general fund. Bublak supported some of the spending decisions, but not those to hire additional public safety employees because she did not believe the city could afford it.

She made general fund spending and what she called a lack of transparency about the spending issues in her campaign. “We need to be totally honest,” Bublak said at Tuesday’s meeting. “The only way to get through this is to share the truth about this.”

She said the city will need to have discussions about pension and health care costs and the city needs to focus on the long-term solution of economic development. The council is expected to have a workshop this month on its revenue options.

Turlock finds itself in an unusual position with its general fund. For instance, reserves were $14.9 million during the city’s 2013-14 budget year.

“The City of Turlock is facing challenges that historically haven’t occurred as fiscal conservatism was paramount in all decision making and adequate reserves were kept for unanticipated emergencies regardless of statements made by individuals who lack an economic understanding of local government claiming that the City was ‘fine’ and ‘hoarding’ funds,” Jacobs-Hunter wrote in her report for the midyear budget review.

Soiseth said during last year’s campaign Turlock had been hoarding general fund reserves at the expensive of adequately funding public safety.

Jacobs-Hunter continued: “During the past twelve (12) months, regardless of warnings by staff of the fiscal implications of generous wages increases to public safety, this fiscal principle was disregarded ... and the City of Turlock no longer has a ‘safety net’ to fall back on.”

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Kevin Valine covers local government, homelessness and general assignment for The Modesto Bee. He is a graduate of San Jose State University and grew up in San Jose.