Merced leaders tout city budget as best in years, cautiously optimistic about future
When the Merced City Council passed last year’s budget in June, the region was heading toward one of its worst COVID-19 surges and facing stringent business shutdowns mandated by the state to curb the virus.
Longtime City Councilmember Kevin Blake at the time called the 2020-21 budget the “worst budget” he’d ever been a part of passing.
During the early months of the pandemic, daunting unknowns and limitations due to health risks put a chilling effect on the economy’s future. It was estimated the city would see a $5.4 million in revenue loss, with sales tax reductions accounting for a $3.2 million. Several city positions were unfunded, deleted or kept vacant.
Fast forward to this week’s City Council meeting. During preliminary discussions over the proposed $320.1 million 2021-22 budget on Monday, Blake completely changed his tune from nearly a year ago.
“This is my eighth budget, and probably the best one I’ve seen in eight years,” he said.
Proposed budget is balanced, unfunded positions brought back
The proposed budget is an increase in the order of $55 million compared to the prior fiscal year.
Optimism over the next fiscal year’s budget rang around the Council Chambers on Monday — a marked contrast to last year. Driving city officials’ positive outlook are signs that anticipated fiscal impacts caused by COVID-19 were not as dramatic as projected.
For example, the significant expected loss in sales and property tax revenue have not come to fruition. Jobs frozen during last year’s budget are being restored. Plus, seven additional positions among various departments are being added.
Also among the welcome news is that Merced’s upcoming budget is not just balanced — but has a surplus.
The general fund, which helps pay for essential city services, is estimated at a $51.3 million budget with revenues projected to outweigh expenses by $380,000, according to City Finance Officer Venus Rodriguez. More often, general fund revenues exceed expenses at a much smaller scale, she said.
“We have not seen a good number like this in several years,” Rodriguez said. “So this actually looks very good.”
What Merced is investing in this year
Among the city’s various financial priorities this fiscal year, a commitment to investing in affordable housing construction was of interest to several residents who called into the meeting to voice their support.
Methods to increase affordable housing have been a topic of discussion at other recent City Council meetings, with city officials noting that no new projects have been completed for seven years.
The city manager’s budget message also outlines bolstering public safety, parks and recreation, economic development and city beautification.
Measure Y — a local tax on cannabis — is slated to fund a reserve police officer program, upgrade police and fire equipment, expand parks and recreation programs and improve city park playgrounds, swimming pools and restrooms.
The proposed 2021-22 budget is preliminary at this point and will not be finalized by City Council until mid-year. City officials noted on Monday that while the long-term impacts of COVID-19 are still uncertain, Merced’s economic outlook is strong.
“We are cautiously optimistic about Merced’s future,” City Manager Stephanie Dietz said.
This story was originally published May 21, 2021 at 5:00 AM.
