The Williams City Council on June 21 approved a preliminary operating budget to fund police and fire protection, city administration, and other public services for two years.
Williams is expected to spend about $11.7 million this year, of which $6 million is in general fund expenditures for 2023/24 and $6.2 million general fund for 2024/25.
The city has budgeted $2.7 million for police protection this year, up from $2.5 in 2022, officials said. The cost for police services will increase to $2.9 million by 2025, according to the preliminary budget.
While salaries and pension costs across the board continue to rise, Williams Administrator Frank Kennedy said the city anticipates a 44.1% increase in general fund revenue in 2024, largely due to the increase in sales taxes generated on the sale of gasoline.
“We have sales tax on gasoline and it’s not based on the gallon but the dollar amount of the gas,” Kennedy said. “(The more) you spend on gas, the more sales tax is generated.”
In addition to sales taxes, general fund revenue is composed of property taxes, motor vehicle in lieu tax, licenses and fees, franchise fees, rent and sale of property, interest, and transient occupancy taxes.
In addition to general fund revenues, Kennedy said the city has been fortunate to receive a number of grants, including $20 million for the E Street rehabilitation project, and funding from the Community Development Block Grant program, although such funding is restricted to specific uses, such as purchasing and renovating the old bowling alley.
“We can’t just take that willy-nilly and spend it as we see fit,” Kennedy said.
Although Finance Director Rex Greenbaum was not at the June 21 meeting, he noted in his staff report to City Council that the preliminary budget shows a $2,560 general fund surplus for 2024, and a $169,616 deficit in 2025, as expenditures continue to outpace revenue growth.
Greenbaun recommended the city rein in expenses rather than dip into the city’s reserves, as revenues are expected to come in higher than actually budgeted.
While the city provided employees with cost of living adjustments of 7% and 4.9% in 2023 and 2024, respectively, Greenbaun noted it would probably be prudent to limit future increases.
While the general fund budget will be balanced by final adoption, city officials have allocated little for street repairs, beyond the $2 million match for E Street.
In addition to police services, the city has budgeted $632,885 for the city’s share of fire protection services for 2023/24 and $675,078 for the following year.
Other larger ticket items include $409,650 for building and grounds and $586,418 for public works, which will increase to $422.354 and $613,926, respectively, in 2024/2025.
The city continues to budget unfunded pension liability contributions, which are dependent on the rate of returns on CalPers investments.
City officials said they do anticipate a shortfall between revenue and expenditures will continue to grow in the sewer enterprise fund, due to a structural deficit in rates that do not keep pace with inflation.
Kennedy said the shortfall has been growing since December 2020 when rate increases were tied to the Consumer Price Index or 2%, whichever is lower.
“Unless we fix how the increase to rates are calculated, this problem will persist and compound over the years,” he said. ■