Deficit. Layoffs. Cuts.
For the first time in recent years, those words weren't used when describing the city of Merced's financial outlook.
The City Council on Tuesday took a detailed look at the city's fiscal forecast for the next five years, taking into account state and national trends.
Brad Grant, Merced's finance director, said Tuesday's financial forecast is the "framework" with which the final budget will be crafted starting next month.
Although there are many challenges, Grant said the city's financial outlook is strong, and for the first time, there's no talk of cuts.
"There are some words I'm not going to use tonight," Grant said. "Deficit. Layoffs. Budget cuts. This is the first time in quite a while that we haven't had to do that."
The financial forecast tracked nine specific areas, including the city's general funds, development services, airport funds, street maintenance and parks and community services.
Using revenues from 2012-13 as a base, the report projects revenue increases for next year based on forecast assumptions. The same number was calculated for expenditures, by combining last year's expenditures with a forecasted assumption for next year.
The revenues then were compared with the expenditures for the next five years in each of the nine departments.
The report predicts that next year's revenues and expenditures in the city's general fund are neck-and-neck, staying steady at about $33 million. But in the 2014-15 fiscal year, the revenues begin to slightly exceed the expenditures, growing to a roughly $4 million increase in the year 2017-18.
The forecast assumes there'll be no salary increases for employees, only allowing for merit hikes over the next five years. Additionally, the revenue forecast takes into account a 4 percent sales tax increase and a 2 percent increase in property taxes.
The Parks and Community Services Department relies heavily on the general fund, but predicts slight revenue increases over the next five years. Likewise, the airport fund begins with about a $100,000 deficit, but evens out in the 2013-14 fiscal year. There's a small increase predicted over the next five years, while adding personnel.
Grant said the report looked at resources needed by each department to restore services and grow along with the city's increasing population.
For example, each department can restore jobs lost during budget cuts, and the forecast accounts for those additional resources.
Nationwide, about 8.8 million jobs were lost from 2007 to 2009, in addition to a $19.2 trillion loss in household wealth, which includes real estate and equity.
In California, Grant said the economic recovery is sluggish as the private sector is adding jobs but government is shedding jobs. The typical household income in California dropped by $8,300 from 2006 to 2011.
Grant said there's a lot of work to do, and the city will be forced to stretch every dollar further than ever.
"The challenge is trying to provide the same level of service with lower levels of revenue," Grant said. "This forecast gives us a road map and guidelines on the resources we will have to craft into the budget for the next five years."
Reporter Ramona Giwargis can be reached at (209) 385-2477 or firstname.lastname@example.org.