A candid discussion over the stretched finances arose during a workshop with city staff and council members on Jan. 20.
There was no direct mention either of layoffs or specific services being cut, but there were allusions to tough decisions ahead as the city gets through the rest of this current fiscal year and begins to craft its budget for the next.
Council members and the city's interim city manager, Kevin Burke, discussed trade-offs, shortfalls and crafting a realistic budget.
"The budget is our best guess," said Burke. "It's a road map. It's never reality."
If there is overspending in one area, then the effort has to be made to make cuts in others, he said. There has to be some flexibility within reason when managing the city's finances.
Councilman Jim Irwin said the city's expenses so far look to be in line with what was budgeted. However, he added, "We were spending too much six months ago when we approved the budget."
Irwin said the city needs to make changes to get its spending under control as it moves forward.
Burke said city administration is concerned about revenues, particularly sales tax, which is why they worked out a plan to furlough employees, which saves both money and jobs. As part of that program, city hall was closed for two weeks during the Christmas and New Year's holidays.
Revenue reports weren't available for the council to review on Jan. 20. Burke said they would be ready for a meeting next month.
Irwin asked if Burke had any idea about the current state of the city's revenues. Burke said no, however, with a reduction in property values due to the market and reassessments, "We expect a downward trend in property taxes."
The city's property tax predictions were very conservative for this year, he added.
Irwin said he wanted the city to close a $400,000 gap between revenues and expenditures, which the city has a line of credit to fill if necessary. "I think we need to take action on that immediately."
Mayor Ron Bertsch said they not only have the $400,000 gap but overspending in some budget areas as well.
Burke said he thinks an early retirement plan the city has approved could help realize about a 10-percent savings.
He suggested that not spending on some planned city projects has kept the city going.
Irwin, however, said if the projects aren't going to be done, they shouldn't be included in the budget.
Burke said the best thing for the city to do is turn in a structurally balanced budget.
"I can't say enough about how this is a small rural community, and we don't have enough staff," he said, noting that every city employee is "fairly burdened" with their workload.
Burke said he plans to bring a budget proposal to the council that will address its issues with spending.
"I take the role that the council has placed me in very seriously," he said. "We're going to work hard to deliver to this council a budget that will be balanced."
That will require trade-offs and setting of priorities, but Burke said he plans to offers the council some options in what he called "a tough, tough economic climate."
"What we do this year is not going to be what we do in a normal year," he said.
Burke said he doesn't believe the city will need to reach into that $400,000 credit line, but that could mean that certain capital improvements that are important to the council aren't done.
Irwin said he doesn't want to see the city use Measure I sales tax funds – meant to assist with roads and other large projects – to balance the budget again in the coming year.
"You have my vote," said Councilman Roy Parmentier.
Bertsch said the city's No. 1 expense is its 60 employees. He estimated that the city's employee-to-resident ratio is 1 to 52.
"This is a definite a crossroads for the city of Lakeport, there's no doubt about it," said Burke.
When anticipating cuts, they're talking about decisions affecting the city's basic services, Burke said.
"Measure I is what's been keeping this city afloat," he said.
The city has deferred maintenance on its infrastructure, and needs to replace some of its equipment. Burke said when it comes time for the council to decide where to spend its money, "I think it's going to be really hard."
He said it's going to be roads versus employees, roads versus police, roads versus aging equipment and infrastructure.
But Burke suggested if the city takes the leash off of redevelopment, it can generate projects that can bring revenue into the city.
He said Redevelopment Manager Richard Knoll has made a believer out of him regarding what the agency can be and what it can do.
With employees being placed on furloughs and not receiving annual cost of living increases, Burke suggested that Measure I is not so sacred a cow that it shouldn't contribute, in an amount determined by the council, to keep the city going.
The council questioned the fact that one cost of living increase was being given to city employees, which Burke said was included in their contract. But the furlough agreement essentially wiped it out. "We're giving with one hand and taking away with the other."
"I hope you'll keep an open mind" and be receptive to hearing different points of view, Burke told the council.
Irwin said he'll be willing to listen, but they've not managed to reduce their spending below their income over the last two years. As a result, the money from the Vista Point Shopping Center sale – which gained the city more than $1 million but has since been the focus of a lawsuit in which the city was named – were eaten up.
He said he couldn't see going into a third year with spending unchanged. "It's just time to face up," Irwin said.
Burke pointed out that it isn't just the city having struggles, and said the choices that will be made about the city's budget hopefully will reflect the choices community members themselves would make.
Irwin said if they don't change their spending and begin to work on infrastructure improvements, the city will never catch up.
"Infrastructure is aging, our streets need significant work," Burke agreed.
Bertsch suggested that the situation is going to get worse in the next few years.
In preparation for the February budget review, he asked fellow council members to come up with ideas about where they would make budget cuts.
E-mail Elizabeth Larson at
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