Dear Citrus Heights Residents,

Citrus Heights City staff presented a mid-cycle budget update to City Council last night. As part of our commitment to government transparency, staff provides regular updates during our newly adopted two-year budget cycle to Council. The presentation detailed the City’s lean operating budget, stark projections related to the economic effects of COVID-19, and the immediate actions staff have taken to mitigate certain impacts, consistent with our tradition of fiscal prudence.

City staff started the presentation by taking a step back to look at budget projections prior to COVID-19. The previously approved budget for Fiscal Year 2019/2020 estimated the City’s General Fund would have a shortfall of $1.4 million. This anticipated deficit has been consistently reported by staff and is primarily due to the property tax agreement required by the County to allow our City to incorporate and initiate local control in Citrus Heights. Since incorporation, the City has known about this crossover period. The 2019/2020 shortfall required a plan to draw from the City’s existing line of credit, in order to balance the budget while continuing to provide essential services. Knowing this, our staff were already devoted to saving as much as possible and, prior to COVID-19, reduced expenses for Fiscal Year 2019/2020 by $1 million. This achievement has greatly reduced the amount needed from the City’s line of credit, and has eliminated the need to tap General Fund reserves. Because all departments are so committed to fiscal responsibility, we entered COVID-19 on an already extremely lean City budget.

Budget projections for Fiscal Year 2020/2021 (which begins on July 1) were also updated to reflect serious impacts on both the City’s revenues and expenditures. After analyzing losses from COVID-19 related decreased sales tax revenue ($1.4 million), and increased expenditures for risk management (about $450,000), the new projected shortfall to the City’s General Fund for Fiscal Year 2020/2021 is $3.4 million. While this is not as large a deficit as other cities are facing, it is extremely serious to a community like ours, which prioritizes financial prudence. The amount is double the initially projected shortfall for 2020/2021.

Despite this newly calculated deficit, City staff are not proposing an increase to the draw on the City’s line of credit. We took immediate action to mitigate the impacts of this major budget shortfall - wherever and whenever possible - and we are committed to not increasing the amount the City had already planned on withdrawing. I am proud of how diligent City leaders have been in evaluating expenditures - deferring services that can be delayed, while prioritizing those that are essential. While other California municipalities have announced larger deficits and associated funding cuts, our City runs on a much leaner budget and does not have peripheral programming to cut. In addition, cities our size have been left out of all three COVID-19 related stimulus packages passed at the Federal level and the State of California has announced a $54 billion deficit. Citrus Heights cannot count on State or Federal funding to adequately address our significant recovery efforts.

At the outset of the economic shutdown, I directed staff to not fill vacant positions, a majority of which are in public safety. Personnel decisions are one of the only mechanisms to save money as a City, but this is not a sustainable, long-term solution. Holding key positions vacant, and cutting expenditures wherever possible has major impacts to the crucial quality-of-life services we know our residents deserve, like public safety, road maintenance, economic development services, and more. City officials and staff recognize the need to balance those important concerns with our local recovery efforts. We are focused on prioritizing services that need to continue, and making strategic decisions to ensure we have as much access as possible to outside funding, grants, and resources, including potential options for enhancing local revenue.

I am committed to keeping our community informed of our budget and financial planning. City Hall remains dedicated to our City’s core values of fiscal responsibility and government transparency, while maintaining the services that make Citrus Heights a safe place to live, play, and do business. Our community has come together time and time again to take charge of its own future and I have no doubt we will continue to do so. I am grateful for the opportunity to work for you and alongside you, to continue our shared vision for Citrus Heights: a city of choice for residents and businesses to prosper and thrive, and a model of neighborhood engagement.

Sincerely,

 

Chris Boyd
City Manager