Chico City Council budget update reveals increased deficit

The city of Chico is facing further staff reductions after deficit numbers for the capital projects fund were revised from an expected $2.5 million to $3.2 million.

The fund accounts for capital projects are sourced from different elements of the city’s budget. Direct costs and indirect costs, or overhead, are accumulated and later allocated to the source fund for each project.

Accounting Manager Frank Fields presented a budget update at the Tuesday City Council meeting showing that while capital project expenditures decreased dramatically, overhead costs have actually increased.

The city spent $66 million on capital projects in 2009, and that amount dropped to $21 million by 2013. Despite the significant decrease in expenditures, the overhead actually increased from $2.6 million to $2.8 million.

Vice Mayor Mark Sorensen used a business analogy to describe the situation.

“Sales went down by two-thirds, but we allowed overhead costs to increase slightly,” Sorensen said.

City Manager Brian Nakamura said that the information provided to the City Council by staff for the fiscal year 2012-2013 budget was lacking important information. He said that the City Council’s policy decisions are “only as effective as what is recommended by the staff.”

Mayor Scott Gruendl voiced frustration and said that the council asked repeatedly for cost allocation plans.

These were not provided by city staff, he said, citing that a user fee study had to be completed.

“How do we get through almost five fiscal years of a trend and there is no reaction to it,” Gruendl said.

The council voted to send the situation to the finance committee for further review. Recommendations on how to close the financial gap will be sent to the council for approval.

At the meeting, the city council also acted on the following:

  • The council voted to stop funding the positions of city engineer and economic development manager, opting to explore outside contracts.

  • Work plans were approved unanimously for the Airport Commission, the Architectural Review and Historical Preservation Board, the Arts Commission, the Bidwell Park and Playground Commission and the Planning Commission.

Bill Hall can be reached at [email protected]m or @thebillhall on Twitter