City Reviews Proposed Budget, Approves Grant Consultant

CITRUS HEIGHTS, CA (MPG) - At the May 11 meeting, the Citrus Heights City Council heard an overview of the proposed two-year budget for fiscal years 2023/2024 and 2024/2025.

The projected General Fund revenue for the new budget is 18% property taxes, 34% sales tax, 3% charges for services, 24% intergovernmental revenue (from the motor vehicle license fee), and 21% from other taxes and fees.

For the first 25 years after incorporation, Citrus Heights’ share of property taxes went to Sacramento County in the Revenue Neutrality Agreement. That agreement has finally expired, so those property tax funds can now be counted as revenue rather than an expenditure. For each dollar of property tax collected, the City’s share is 8.4 cents. Sacramento County receives 32 cents, and the rest is allocated to other service agencies, such as San Juan Unified School District (26.7 cents), Sac Metro Fire (18.7 cents), Sunrise Recreation and Park District (4.4 cents), and Los Rios Community College District (5.4 cents).

Sales tax is the largest revenue source for the General Fund. For every taxable dollar spent in Citrus Heights, 7.75 cents are collected in sales tax—and the City receives one cent.  “We’re projected to get around $14 million, so that’s a lot of pennies,” said Finance Manager Tammy Nossardi. The state receives the largest share of sales tax, at 5.97 cents. The Measure A Transportation Tax gets half a cent, and Sacramento County gets a quarter of one cent.

The proposed two-year budget estimates revenues from property taxes at $7.4 million for 2023/24 and $7.7 million for 2024/25, and sales and use taxes at $14.4 million in 2023/24 and $14.7 million in 2024/25. Total revenues are estimated at $43.1 million for 2023/24, and $44.6 million in 2024/25.

Total expenditures are projected to be $39.8 million in 2023/24, and almost $41.3 million for 2024/25. That’s up 4.74% over the current budget for the first year, and then up 3.76% for the second year. City Manager Ashley Feeney said that typical budget models estimate about 4.5% in annual inflation increases, but he is hoping to keep that cost down and increase expenditures by less than 4% going forward. Feeney said the City departments have also undergone some reorganization and shifting of staff positions to make the best use of the funds available.

And new in the proposed budget for the first time are funds allocated for street maintenance and repairs, which has been a long-time goal for the City that was always out of reach due to lack of funding. The two-year budget sets aside $2 million in 2023/24 and $4 million in 2024/25 for future road repair projects.  

City Manager Feeney said, “We’re projecting to end this fiscal year with an ending reserve balance of $19.6 million.” So, he said the City will begin the next budget cycle with a healthy reserve balance. And that reserve balance is projected to increase with each fiscal year: “We’re projecting to have an ending reserve balance in 23/24 of about $19.8 million, and then that would cycle back up to the following fiscal year.” Feeney said the City is meeting and exceeding the minimum reserve balance throughout the 10-year financial forecast: “From a budgetary standpoint, the City’s in good shape.”

Councilmember Porsche Middleton said the report was “very well done. You’ve managed to streamline the process here. We’re able to meet all the goals that we’ve set.”

Vice Mayor Bret Daniels said, “It just keeps getting better and better.” … “We went from doom and gloom, and, ‘Oh my God, we need to raise sales tax. And we need more money. And what are we going to do?’ to these numbers that you see today, which are just absolutely incredible. And also, they include funding, for the first time ever from the General Fund, to work on our streets too.”  

The proposed 2023/24 and 2024/25 budget will come back to Council at the May 25 meeting for final adoption.

The Council then considered whether to approve $60,000 for Townsend Public Affairs to work as a consultant on the creation of a comprehensive grants strategy and implementation support for a one-year term—allowing the City to focus on high-volume grant pursuit.

Meghan Huber, economic development and community engagement director, explained that the City works hard to effectively use every penny of revenue, and this project would assist staff in “finding more pennies.”

The consultant will design a system that helps the City apply for even more grant funding. The scope of work includes inventory and prioritization of existing and planned City projects, the creation of a living document of grants that match the City’s priority projects, and the development of a grant tracking tool. Staff identified Townsend Public Affairs as the best match for this project. They offer all-inclusive service with monthly updates, pre- and post-submission funding advocacy, and post-application review.

The benefits of this project, said Huber, is that the City can pursue more grants, with comprehensive tracking and reporting, while maximizing and leveraging local funding. This will help the City to “find those additional pennies to be able to make stuff happen,” said Huber. “As we’re looking to stretch our dollars more and more, supplemental funding does become even more important to be able to meet our community goals and priorities.”

Townsend Vice President Casey Elliott explained that their team can be “on the ground in Washington DC working with granting agencies, here in Sacramento locally, and then leverage all of those relationships with funding agencies, leverage your legislators, leverage your congressional delegation” to give Citrus Heights’ projects an “extra boost” and make sure “there’s no stone left unturned.” He said their goal is to ensure that the City “is able to put forth the best quality projects that match what the needs are of the community.”

Councilmember Jayna Karpinski-Costa asked, with all the cities Townsend represents, how do they prevent a conflict of interest of “having two cities applying for the same pot of money?”

Elliott said, “There’s always more demand than there are dollars. … We work with all our clients to put their projects in the best position.” Townsend looks at the projects already in development to see how they can be adjusted to be more competitive, and identifies which projects aren’t going to be good candidates for winning particular grants. With their focus and expertise, they ensure “that every project is put in the best light and given the best chance to succeed,” said Elliott.

Councilmember MariJane Lopez-Taff commented on the return on investment the City will see with this project: “I think by the time we win our first grant through this relationship, it will more than pay for this particular contract.”

Vice Mayor Daniels said, “This is spending money to make money.”

Councilmember Karpinski-Costa said that grant writing is a complex task, and the City wants to take their grant pursuit to the next level, which would require a full-time staff member to achieve in-house. She said it’s “much more cost effective” to hire a consultant.

The Council voted unanimously to approve the cost for Townsend Public Affairs to begin work on the project.