Merced leaders forecast continued growth

Merced’s finance director gave a forecast this week for the next five years of city spending in which he recommended new funds be established to prepare for unforeseen expenses.

Brad Grant, the city’s chief financial officer, said Merced is projected to see gains in revenue during the next five years. He noted that the projected general fund balance of $10 million is higher than was foreseen during the adoption of this fiscal year’s budget.

But the general fund of $36.8 million this year is still short of the 2007 level, which was $39.3 million.

“Yes, we’re doing a little better, but we’re still working on getting back to where we were,” Grant said.

The city expects to see reserves from discretionary funds at the end of each fiscal year.

Grant advised the council to begin to funnel a large portion of that discretionary money into two funds. One would be used to pay for unforeseen economic opportunities, and the other would be used in the case of economic downturn. He set the goals for those funds at $5 million and $20 million, respectively.

As revenues are expected to go up, so are costs. Salaries, benefits, workers’ compensation and retirement spending are set to increase 2.25 percent to 9.5 percent.

David Gonzalves, the director of development services, said he is projecting conservative growth in multifamily and single-family homes, which would pay into the fund for public safety and park maintenance.

In the past year, the City Council has approved a handful of massive apartment complexes. Each building would house hundreds of people and many are aimed at college students, developers have said. Gonzalves said banks have been reluctant to loan money, so those projects are slow-moving.

Despite UC Merced’s plans to expand from its current 6,600 students to 10,000 and add hundreds of staff jobs by 2020, he said building projections should remain conservative. He noted that there were five straight years in which his department handed out zero building permits for housing while the university continued to grow to what it is.

Measure C, a half-cent sales tax approved by voters in 2005 aimed at helping pay for police, firefighters and roads, is set to expire in 2026. City Manager John Bramble has recommended the city try to pass an extension in 2020.

Monday also marked Bramble’s final City Council meeting as the full-time top administrator. He may serve in an interim role while the city looks to hire and bring on its next city manager, officials said.

This story was originally published November 17, 2015 at 7:02 PM with the headline "Merced leaders forecast continued growth."