MERCED — For the next month, City Council members will continue to scrutinize what local government officials are calling the first "sustainable" budget in years.
At an ongoing series of public meetings, local officials are hearing community feedback on the proposed $191.96 million spending plan.
Last week, area leaders heard from several groups asking bigger pieces of what has become a very carefully sliced pie.
While next fiscal year's budget includes no layoffs or cuts in service, area leaders have been circumspect in their optimism, saying there's little room for dramatic changes.
"I'm pretty happy with where we are right now," said Councilman Josh Pedrozo. "I think that this is the first budget that I've been part of that we haven't had cuts; we haven't had layoffs.
"I don't think we need to start spending (more) money on programs," he added. "I think we need to wait and ride this thing out. One year isn't a trend."
Much of the public pressure for changes has come from the nonprofit Building Healthy Communities. It is pushing for 3 percent of general fund discretionary spending to go for youth services.
The request is for a roughly $500,000 spending increase that officials said would require layoffs. However, council members expressed willingness to discuss partial restoration of spending cuts to parks and recreation budgets from previous years.
"I think we all want to give them more money," said Councilman Bill Blake. "It's just if we'll be in a position to do it. I'm mildly hopefully we will as the year goes on. I really think our revenues are going to be higher than anticipated. I hope we can do something to invest in our kids."
The spending plan anticipates an average revenue increase of 5.8 percent for sales tax, business-license fees and Measure C sales tax, which funds public safety. Revenue from property tax is expected to remain flat.
At the same time, the city continues to wait for about $400,000 in additional annual revenue as a result of the winding down of the city's redevelopment agency. It's not clear when that money will be available, but the city's budget has been set with the assumption that it won't be for at least another year.
For many if not all council members, the most troubling budget news was the staggering increase in retirement costs projected through the end of the decade.
Like all cities in the state, Merced must adjust to the California Public Employees Retirement System's recently released payment schedule, which was changed to address the retirement fund's economic troubles.
Under CalPERS' new payment schedule, the city's roughly $5 million annual retirement obligation will increase by $385,930 next year, and then continue increasing incrementally every year thereafter. By 2017, the city estimates its annual retirement payment could be more than $6.5 million.
"So next year we're going to have to come up with (almost) $400,000 more for this payment," said Mayor Stan Thurston. "And look where it goes from there. It's astronomical. This will put us out of business.
"This year is comfortable," he added. "But I'm going to start losing sleep over next year."
The City Council will hold two more budget review sessions on May 22 and May 29. The meetings are held at 6 p.m. in the City Council chambers at the Merced Civic Center, 678 W. 18th St.
The proposed budget is posted at www.cityofmerced.org. The "City Budget" link can be found on the right side of the website. The budget is scheduled to go before the council for adoption June 17.
Reporter Joshua Emerson Smith can be reached at (209) 385-2486 or firstname.lastname@example.org.
The city's proposed $191.96 million budget for fiscal year 2013-14 is being reviewed by the City Council and the public.
The proposed budget calls for about $32.39 million in general fund discretionary spending, a 4.2 percent increase over last year. Under the spending plan, nondiscretionary spending would come to $153.71 million, and Measure C funds from sales tax would pay for about $5.86 million in spending.
Under the state's new CalPERS payment schedule, employee retirement obligations will significantly increase every year, according to city officials. The city's roughly $5 million annual retirement payment will increase by $385,930 next year. By 2019, the city estimates its annual retirement obligation could be as high as $7.37 million.
Public safety represents 73 percent of general fund discretionary spending at $23.95 million. The city administration gets about $4.89 million. Recreation services and parks maintenance receive $2.24 million. Economic development, development services and special projects make up the bulk of the remaining $2.82 million.
The city's spending plan is based on projected revenue increases of 6 percent for sales taxes, 5.2 percent for business-license fees and 6.4 percent in sales-tax revenue for Measure C, which funds public safety. Revenue from property taxes is expected to remain flat.
The general fund reserve stands at a little more than $7.7 million and is projected to end the next fiscal year at about $6.3 million. The fund has decreased by about $7 million since 2007 and is not expected to return to that level by the end of the decade.