Mount Shasta receives unaudited budget report showing projected deficit; council flags possible sales‑tax measure

Mount Shasta's finance staff presented unaudited year‑end numbers and a revised projection for FY 2025‑26 that show the city faces a structural shortfall unless revenues improve.

Finance presenter Melissa said the general fund receives about $6.2 million in revenue annually but must pay roughly $1.06 million early in the fiscal year for fixed obligations including insurance, PERS (retirement) liabilities and debt service. Closing a garbage enterprise fund in the prior year produced one‑time revenue that masked an underlying operating deficit; without that one‑time amount the city would have shown a materially larger shortfall. Melissa projected an approximate $295,000 deficit and a fund balance near $1.2 million, stressing the figures are unaudited and subject to change.

Sales tax collections were reported as down for the first two months of the fiscal year; transient occupancy tax (TOT) receipts are now collected monthly and currently appear on track. Melissa warned that the city runs a cash‑flow timing risk because large obligations post early in the fiscal year and that lingering accounts receivable (including Prop 64 distributions) depress available cash.

Councilmembers described the structural implications. Councilmember Collins (referred to in discussion) and others said sustained shortfalls would require staff reductions and service cutbacks. Councilmember Jeffrey said the city could need to pursue a revenue measure — staff and council discussed a possible one‑percent sales‑tax measure next year as an example of a structural remedy, and council asked staff to continue monitoring and provide timely options.

A public commenter suggested a vacancy tax on homes vacant six months or more as a revenue idea; council asked staff to keep revenue options on future agendas. Melissa said a PERS actuarial report and a required annual review of adopted PERS policy will come before the council soon.