Petaluma's fiscal situation has improved, with more money in reserves for the first time over the last four years. But spending has also increased, forcing the city to make further cuts to the budget or figure out how to increase revenue, according to a recent report by Petaluma Finance Director Bill Mushallo.
Mushallo will discuss the city’s financial situation at a special meeting Monday, which will include asking the council to vote on changes in order to balance the 2012-13 budget.
The city’s general fund reserves are estimated to be $1.4 million by the end of June, or 4 percent of the total budget, much lower than the 15 percent typically recommended.
“An unexpected revenue shortfall or expenditure increase could deplete (the) fund balance,” Mushallo writes in his report. “All budgets, especially salaries and benefits, remain very tight.”
But there is also good news.
Revenues from property taxes also increased by $212,000 following the dissolution of redevelopment agencies and sales tax revenues are up by 4 percent. Revenue from city licenses, permits and fines have also increased by $233,000.
Transit occupancy tax, which hotel guests pay, has also increased over the past two years and is expected to bring in an additional $200,000 next year.
However, expenses will also increase with an additional $300,000 being spent on police overtime and comp time (although half the amount will be reimbursed by asset seizure funds.)
In addition, the police department’s equipment budget is also increasing by $84,000 to pay for updated parking enforcement software, while the fire department will get an additional $22,000 for battalion chief overtime.
Salaries make up 80 percent of the city’s expenses.
Monday’s meeting starts at 6pm at City Hall.