By Noah Biesiada - Voice of OC
Fullerton city staff laid out a hard truth for the city council last week— even if a proposed tax increase is approved by voters in November, major decisions will need to be made regarding the city’s financial health and focus in the next year.
The answer from city council members so far is to kick tough choices to after the November election.
City Council members voted back in July to place a 1.25% sales tax measure called Measure S on the November ballot. If approved by the voters, it could bring in a projected $25 million a year into city coffers.
If the measure fails, staff publicly said the city would have to cut $5 million a year out of it’s spending budget, warning that the city could still run out of savings by 2025.
That doesn’t mean the city will go bankrupt according to Ellis Chang, Director of Administrative Services, but she said the city could run into “liquidity issues.”
A chart prepared by city staff shows a projection that the city could be $20 million in the red for their general fund without the tax measure by 2027.
Even if the new taxes are approved, City Manager Ken Domer laid out major shifts that would need to be made in the city’s budgeting, including a recommendation to move $6 million towards infrastructure repair every year, and a boost to the city’s savings.
Currently, that fund hovers at around 8-10% of the city’s annual budget. just over one month of coverage. Domer said that the recommended level is closer to 17%, or roughly enough to cover the city for two months.
When publicly asked by Councilman Ahmad Zahra at the Sept. 15 council meeting why their savings weren’t higher, Domer’s answer was short.
“We never had the money.” Read More