Finance director warns of revenue slowdown; council shown $32.5M in unassigned reserves

The city's finance director presented a sobering near-term budget outlook to the council and public on March 8, saying multiple revenue sources are expected to produce less income in the coming year even as capital and operating needs continue.

"I cannot find anything positive related to next year's fiscal outlook," Finance Director Tomo told the meeting. He listed a slowdown in assessed property-value growth (from about an 8% average to roughly 3.8% this year and an expected ~3% next year), a $2.5 million shortfall in property-tax-related components, a projected $740,000 decline in sales-tax revenue, and a $1.5 million reallocation of Measure L/JJ revenue to housing purposes.

Tomo said the city still has substantial resources on hand: after subtracting committed and restricted funds, the general fund shows an unassigned balance of about $32,500,000 and a contingency reserve of roughly $10,000,000. He cautioned, however, that those reserves are not being replenished at prior rates: "That doesn't include the contingency reserve, which is about $10,000,000," Tomo said, noting some funds are restricted to program uses such as housing or capital projects.

Council members asked staff to clarify which reserves are available for reallocation and which are restricted; staff said committed and restricted reserves (for IT, lighting, CIP, housing programs and other earmarks) limit flexibility. The mayor and several council members urged staff to present an updated chart showing restrictions and committed uses so the public can understand which funds are available for new projects and which are legally constrained.

The finance briefing frames the budgeting constraint the council will use when the body and public prioritize projects in April and June.