While the numbers are still preliminary, the City of Commerce is projecting a budget surplus for the first time in years.
Current projections do not include revenues generated from Measure AA, a voter-approved half-cent sales tax increase that took effect on April 1. City staff will update the budget in upcoming months.
At Tuesday’s city council meeting, however, Commerce Finance Director Vilko Domic advised caution regarding the $300,000 surplus in the city’s $52 million budget, reminding the city council that it may not be the right time to expand services.
During the last four years, the city was faced with deficits which forced $6 million in cuts to operations as well as labor concessions that included a two years early retirement program, a 2% wage reduction for full-time employees, and cuts to the number of hours worked by part-time employees.
The Measure AA sales tax increase was conceived as a way to bring in revenue to pay for infrastructure improvements and facility maintenance. It is projected to bring in $4 – $5 million each year.
The city will begin work to consider whether the sales-tax funds will be directed to the General Fund or be managed in a parallel track. Workshops later this month will set parameters for the advisory panel’s role and for spending the Measure AA revenues, Domic said.
“It is my hope that the City Council will adopt criteria that will allocate a majority of the funds towards one-time, capital improvement type projects as opposed to the enhancement of current programs and/or services,” Domic stated in the April 2 Agenda Report.
At this time last year, the council was asked to cut $4 million from the budget, in the four years prior they were aske to make $6 million in operational cuts, Domic explained. Loss of revenues due to the dissolution of redevelopment agency had put a strain on the city’s finances.
This is the first time in years that the city’s projected expenditures are slightly less than the projected costs.
The surplus is credited to a slight increase in sales tax, hotel tax, casino revenues, and other revenue sources.
However, anticipated revenues sources in several areas may be updated depending on actual receipts, like those projected for property taxes and sales tax revenue. Domic also said he needs to look into the possible growth from the Citadel Outlets expansion later this year.
Labor negotiations will also begin this month and could affect the budget. During closed session, the council approved selection of a labor negotiator.
During the meeting, the council also approved a resolution accepting a real estate donation from BNSF Railway Company. The property is a lot behind the City Hall North Annex that will be used to link the North Annex parking lot to the City Hall west parking lot.
According to the Agenda Report, the city would only pay a $2,000 processing fee and closing costs. Environmental assessments have been conducted on the lot and there don’t appear to be any obvious contamination issues, the report states.
The final 2013-2014 budget is expected to be approved in June, according to Domic.
The council meeting also put into effect the March 19 reorganization of the City Council. Joe Aguilar is now mayor, while former Mayor Lilia Leon is now Mayor Pro Tem.
The meeting was adjourned in memory of Alfredo Vela, a 35-year IT city employee, who recently passed away unexpectedly.