Merced passes its budget — but just barely. What issue divided the city’s leaders?
With a split vote that followed several failed proposals, Merced leaders narrowly passed the city’s final 2022-23 budget Tuesday night.
The City Council’s 4-3 divide largely came down to a long-brewing debate over how to mitigate the scarcity and high prices of local housing.
Councilmembers Bertha Perez, Fernando Echevarria and Jesse Ornelas each voted “no” on account of the budget’s allocation of $500,000 in general fund dollars for an affordable housing trust fund — an amount they said should be much higher.
Dozens of Merced residents voiced similar concerns during Tuesday’s meeting.
“I ran on the platform of matching our city spending with the values and needs of the community. So I have a hard time supporting a budget that isn’t that,” Ornelas said Tuesday. He advocated for raising the trust fund to $1 million, at the least.
Mayor Matt Serratto along with council members Delray Shelton, Kevin Blake and Sarah Boyle comprised the narrow majority who supported approving the budget as presented.
Even then, not every “yes” vote signified a show of enthusiastic support.
Blake, who’s voiced the strongest criticism over allocating any city general funds toward affordable housing, proposed approving the budget without the $500,000 trust fund. That proposal dissolved when no other council members voiced support for the motion, however.
A second failed motion followed, with Perez’s suggestion of doubling the affordable housing trust fund to $1 million. Despite the support of Echevarria and Ornelas, the idea failed to garner majority support.
Ultimately, the approved 2022-23 budget split the difference between Blake and Perez’s motions, leaving the trust fund at the $500,000 mark.
“It’s not a perfect budget. There’s no perfect budget. But it advances a lot of goals, it does a lot of good things,” Serratto said.
The total city budget came to $384.6 million, with $53.5 million of that going toward the general fund. Last fiscal year’s total budget came to $320.1 million and a $51.3 million general fund.
Locals advocate for affordable housing trust fund
The push for an affordable housing trust fund has been one of the most rallied-behind causes by advocates during the last year. Affordable homes have costs fixed so that lower-income occupants spend no more than 30% of their income on housing.
“To say this council hasn’t done anything on housing, I think the facts really contradict that,” the mayor said Tuesday, also noting the hundreds of affordable and market rate units approved by electeds over the last year.
Upwards of $30 million in grants are being used to build more housing in Merced, along with $6.5 million in American Rescue Plan Act funds for affordable units.
But trust fund proponents say local dollars should be leveraged to build more affordable homes, rather than relying on state and federal funding that has proven insufficient.
Community members renewed calls for an affordable housing trust fund when city budget talks kicked off in May.
Advocates asked for $5 million in general fund dollars for the trust fund. The general fund covers essential municipal services like public safety and public works.
The ask for $5 million wasn’t met, but the City Council was swayed during the first budget discussion to set aside $500,000 from the general fund surplus for an affordable housing trust fund. Only Blake voted against the boost.
Dozens of advocates, including many local youth, made a final push Tuesday with pleas to raise the $500,000 to $5 million. Many stated that the monies allocated amounted to only a small drop in the colossal bucket that is Merced’s housing issues.
“Five-hundred-thousand is a start. It is only the beginning,” resident Jen Ramos Eisen said while addressing the City Council.
Proponents likened committing local funds to affordable housing with the city investing in public safety, stating that better access to housing would go a long way in ameliorating homelessness, crime and other public safety issues.
Others cited worries that U.S. economic conditions could worsen housing difficulties for low-income residents.
Resident and UC Merced student advocate Jeremy Veramendi raised concerns over rising interest and mortgage rates slowing affordable housing production and pricing first time homeowners and renters out of the market.
“Investing in affordable housing equals empowering the consumer,” Veramendi said while advocating for a $5 million trust fund. “Today’s your last chance to prove to your constituents that local funding can boost housing supply.”
Many proponents voiced frustration about having repeated requests for more funds go unanswered by elected officials. Some City Council members echoed that frustration.
“I think we really need to acknowledge their voice and really listen to what they’re saying,” Echevarria said.
Although trust fund advocates’ requests remained unmet, many stated they would continue their advocacy even after this budget cycle ends.
More on the budget
City leaders were also divided on whether to green light an exploration by city staff into potentially adopting a biennial budget in the future. A biennial budget would serve as the city’s spending plan for two years rather than one.
The council voted 4-3 to move forward with exploring the benefits and disadvantages of how a biennial process would look in Merced. The “yes” and “no” votes were cast along the same lines as the vote for the final budget.
City staff will return to the City Council with a biennial budget report during a future meeting.
Despite ascending gas prices, inflated costs of necessities and weakening consumer confidence shaking up U.S. residents’ faith in the economy, Merced officials said Tuesday that the city’s economic outlook is strong.
Sales and property tax receipts are outperforming current year projections and total general fund revenues are budgeted to include a projected 8% increase based on mid-year revised estimates, according to city documents.
The 2022-23 budget plan added 13 staff positions, totaling 521 full-time jobs. Six positions were deleted.
Besides the addition of the $500,000 affordable housing trust fund, the final budget also gained $100,000 for art projects, $50,000 for community projects funding and $26,000 for a bicycle race, among other projects.
Much of the final budget remained unchanged from when it was first presented last month. Full budget details can be found on the city’s website.
