Poway finances: Bad news, good news

By Steve Dreyer

Poway City Council members were officially told Tuesday night what they’ve known for months: that the 2011-12 fiscal year ended in the red.

But, in light of the financial uncertainties brought on by the Feb. 1 elimination by the state of the local redevelopment program, closing out the year with a $228,104 general fund deficit wasn’t so bad, Deputy Mayor John Mullin said Tuesday night.

“The theme of the budget year has been turmoil,” Mullin said.

City Manager Penny Riley said prior to the meeting the deficit will be easily covered by the city’s ample reserve funds and predicted that the 2012-13 budget will be balanced. That is a change from her prediction last summer that the general fund would be $500,000 out of balance. However, the city’s recent successful refinancing of bonds used to build City Hall will help balance the 2012-13 general fund, she said.

Scott Edwards, the city’s administrative services director, added Tuesday night that the city budget should also be bolstered by a modest increase in sales taxes, by the repayment by the county to the city of some redevelopment property taxes and by the placement in the account of unspent stormwater rebate money.

While the general fund has run in deficit mode in several prior years, this marks the first time the fact has been publicly disclosed. Riley said that she released the information this year “for the sake of transparency.”

In past years, when a general fund ran in the red, capital improvement projects such as street work and water and sewer system upgrades were simply deferred for a year, easing the budget crunch. That is not the case this year, she said.

The budget deficit was subsidized through the allocation of reserve funds. The general fund had a June 30 ending balance of $18.1 million. In addition, the city has a $3.1 million Economic Uncertainly Fund, which the city built up during a succession of strong fiscal years. It also has $4.48 million in a Street Maintenance Fund and $2.4 million in a Pension Stabilization Fund, according to Scott Edwards, director of administrative services.

Governor Jerry Brown and the Legislature abolished hundreds of local redevelopment agencies on Feb. 1. Since Poway had no employees assigned full time to redevelopment tasks, portions of their municipal salaries were financed though the general fund with redevelopment property taxes. Also, the state prohibited the former redevelopment agency from repaying loans it made from the general fund.

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Posted by Steve Dreyer on Dec 6 2012. Filed under Local News, Poway. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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