Atwater working on fiscal crisis

Mayor says deficit's depth was no surprise

mnorth@mercedsunstar.comNovember 28, 2012 

— Officials are making moves to correct the financial crisis that hit the city this year.

Frank Pietro, interim city manager and police chief, developed a plan shortly after the city realized the extent of its financial crisis and is now working on a budget with some outside help.

His plan included eight layoffs, large pay concessions from employees and budget reductions not related to personnel. The action is estimated to provide nearly $3 million in savings.

But a report by Municipal Resource Group, which the city hired in August to provide a financial assessment, shows the city's finances are slightly worse than originally projected.

Early estimates said the city's general fund deficit ranged from $3.3 million to $3.7 million, but representatives from the Municipal Resource Group said that number is actually $4.2 million or more.

With a more accurate financial picture available, Pietro is meeting with the Municipal Resource Group today to work on the budget for this fiscal year. The goal is to have it done by January.

Mayor Joan Faul said she's still confident that Pietro's plan will go a long way to helping the city, but noted that more reductions could be necessary, including possible layoffs.

Faul, like other city officials, wasn't surprised by the numbers given in the report by the Municipal Resource Group. She said she was pleased with its thoroughness.

"They gave us 25 areas to work on, so we're all working very hard to try and solve the different financial problems," Faul said. "We are very fortunate that our community and our staff have supported us."

The city is taking steps to correct other upside-down city funds.

Its sanitation fund, which covers garbage pickup, had a negative $3.7 million fund balance at the end of the 2011-12 fiscal year, according to the report to council. The fund owes that money to other city funds it borrowed from.

The Municipal Resource Group reported that Atwater will have to increase rates to eliminate the deficit and repay the borrowed funds. Atwater's sanitation rates haven't been raised in a decade, but the council is negotiating a new contract.

Another struggling fund -- water -- had a negative balance of about $1.1 million at the end of the 2011-12 fiscal year. The deficit has been covered by borrowing from other funds.

The city is in the process of raising water rates.

Glen Carrington, Atwater's finance director, said that for now, the city is primarily working with the Municipal Resource Group to develop a balanced budget for this fiscal year. The city will then look at tackling the deficit in the general fund.

The city still needs to close the books for the 2011- 12 fiscal year, Carrington noted.

Atwater's plan to improve its financial standing includes a special election for a half-cent sales tax aimed at supporting public safety.

That election is set for March 5, but Mike Oliver, managing consultant for Municipal Resource Group, cautioned that the city needs to develop a contingency plan in case the measure doesn't pass.

Reporter Mike North can be reached at (209) 385-2453 or mnorth@mercedsunstar.com.

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