Saturday, February 24, 2018

Scary budgeting

There is no margin of error in the projected budget for '18/'19. That's kind of scary. I don't purport to know a whole bunch about government accounting but to have a .41% surplus doesn't leave much wiggle room. The inter-fund loans and transfers are voodoo economics to me. It seems like money floats in and out of different funds where it lands I certainly can't say. I know council has borrowed heavily from the sewer fund. How do they pay that back? 


Other Significant Costs-Pensions On December 21, 2016, CalPERS lowered their discount rate from 7.5% to 7.0% over the three subsequent years. As a result of this policy change by CalPERS, we estimate that the City will incur addition pension expenses of approximately $700K to $800K annually for the next four to five years.  In addition, this growth in expenditures is expected to continue, albeit at a lower rate until FY 2031/2032.  We have incorporated the estimated General Fund impact into this long term forecasts

Revenues - Expenses = Pacifica’s Financial Future The product of matching the revenue forecast with the likely expenditure projections is shown in the attached Long Term Financial Plan 2018-23 (Attachment 1).

Based on the assumptions described above, the LTFP projects that our expenditures have   outpace revenues continuing through 2022-23.  Regardless, City staff will bring forward balanced budgets for Council consideration every year.

This report has gone into some detail about what is included in the projections but of equal importance is what is not included. Of particular note are the following:

 All 9 employee union contracts will expire during the 2017-18 and 2018-19 fiscal years. Again, for these projections, we have assumed no change in salary & benefits beyond the expiration dates.

 These projections also do not address repayment of the outstanding interfund loans that are outside of the General Fund.

 The forecast does not factor in the economic impact of any future recreational cannabis sales or the impact of SB 1 funds.

Because of the variety of uncertainties that affect the City’s finances, these projections are updated each year to reflect the most accurate and current information available to us at the time.

Submitted by Jim Wagner


Jim Wagner said...

A note on my post. Right below the link where it starts the paragraph with "Where", that is copy and pasted from the report. It should have had Quotation and noted. No sinister omission was intended.

Bean Counter Bart said...

Well, transparency at it's finest! So the state tweaks their CALPERS numbers and the city gets an additional $800,000 dollar bill they won't pay and just kick down the road. Housing is the #1 revenue generator in this town, contrary to the no-growthers. And, expenditures outpace revenues forever, but city staff will bring forward balanced budgets to council. Now figure that one out, Peabody.

Anonymous said...

You make it sound like being a bankrupt city is a bad thing!

Diddy Diddy

Figuring Fred said...

This report is loaded with tidbits of our council's, and previous councils, finagling numbers and funds. There is a file that shows our total amount of payments to maturity is $69,000,000 and change. How would you like to owe that on your home?

Anonymous said...

It's truly amazing that they manage to balance the budget each year. I mean, I realize it's a million accounting gimmicks all the way down, but still...impressive. When you look at any graph from the past 10 years, growth of expenditures outpaces growth of revenue. Full stop.

I don't care how many shell games the city plays, those two lines will cross in short order and I'd normally say we're colossally F'd once they do, but luckily our city council has been busy preparing for that day and green-lighting revenue generating proj-- wait...what???!!!