Accountant and Stockton fiscal hawk Ned Leiba sent a letter to Mayor Anthony Silva and Vice Mayor Christina Fugazi this week ahead of the budget hearings that were held Tuesday and Wednesday nights. You can read it here.
Leiba’s prime contention in his letter is that Stockton’s general-fund reserves are much greater than the $40 million the city is professing — more than $70 million, in fact. And he argues that the city has been under-spending for years out of its library budget, meaning Leiba came at the ongoing Fair Oaks Library issue from a different angle than that taken last night by literacy advocates Colleen Foster and Motecuzoma Sanchez.
Here’s what Leiba said at Wednesday night’s meeting:
“What staff is doing is they are going through these numbers and taking what they think is available funds and giving you a variety of breakdowns. What you need … is a general fund financial statement, budget vs. actual. You’re going to be blind doing your budgeting unless you have that report. You do not. You’ve run big surpluses every single year. In the general fund 2012, you had a surplus of $12 million, 2013 $16 million, 2014 $19.5 million, you’re going to have a $20- to $23- million surplus of your general fund this year. You’ve underspent every single year. People are talking about the library. Have you looked at what you haven’t spent that you budgeted for the library? Look at the report for the last three years: $567,000, $585,000, $365,000. You have $2 million that you budgeted that you didn’t spend. That’s been there for years and years and years.”
Twenty-four hours earlier, Chief Financial Officer Vanessa Burke disputed Leiba’s written contention that reserves are more than $70 million. She said:
“That is not a real number. What that is saying is that if you had the same level of vacancy savings going into your surplus year after year after year you would build up to that level. But we don’t. We won’t. Once we exit from bankruptcy and we move back into the Long-Range Financial Plan and we start filling these positions and shrinking our vacancy rate it’s not going to build up to a $70-million surplus. I’d love it if we did but I doubt that it will happen.”
Burke said the vacancy savings are one-time funds. City officials have a thing about one-time funds. They only want to spend them on one-time uses, not commit them to ongoing costs that might not be supportable if finances go sour down the road. Burke added that the city projects it will not have $70 million in reserves until 2036.
At the start of Tuesday’s budget hearing, city financial consultant Bob Leland of Management Partners said that if the city added an ongoing cost of $1 million a year — say, to reopen a shuttered library in a financially distressed part of town — it would have a significant long-term effect on the growing of Stockton’s financial reserves. The city says its reserves are roughly 20 percent of its proposed $199-million budget, but by the early 2030s those reserves could be closer to 5 percent, which is considered a “warning level,” if $1 million a year in spending were added.
On the other hand, as Sanchez and Fugazi pointed out, the language in the Measure A public-safety sales tax permit the use of the money for libraries, among other community services. Measure A money goes into the general fund, incidentally.
Fugazi said Wednesday:
“We need to be prudent and we need to save but we also need to provide our community, the people that live here, with something that’s tangible for them, that makes them feel that this is a city that has wonderful things to offer them. It’s a hard road that we have to follow. I’m hoping that in … ensuing weeks and years we’re able to get to that place where everybody can say, ‘Look at all the things I can do in this city and what a wonderful place it is to live and raise your family and work.’ ”