I am pleased to report our City Council has adopted the Fiscal Year 2018-2019 city budget
, and along with it, the confidence we can accomplish great things for the City of Modesto. Our city is making great economic improvements, though we proceed with caution due to the fiscal challenges we face this next year and in the years to come.
Our local economy is improving, and we continue to see an increase in revenue from property, business license and sales taxes, which account for 59.2% of General Fund revenues. During FY17/18, the city was able to increase its General Fund emergency reserves by $2.5 million to $18.3 million while containing costs. This action also brings the city to within approximately $600,000 of the Government Finance Officers Association recommended level. This is a great accomplishment, and the council should be commended for their foresight of fiscal sustainability.
While overall revenue is increasing, our initial projections show significant increases in CalPERS contributions for this upcoming fiscal year, and the increases will continue in subsequent years. In short, pension costs are outpacing the growth in revenue. Also, some of our revenue streams continue to be vulnerable to change. Specifically, our Sales Tax revenues continue to be negatively impacted by consumer shifts toward online retail sales. We’ll be keeping a close eye on whether or not a recent Supreme Court ruling on this issue alleviates our revenue concern.
A few consistent themes you will notice in the upcoming fiscal year:
- Public safety will remain our priority.
- We want to be known as an organization focused on the customer experience.
- We will align resources to be an innovative and solutions-oriented organization.
- The city will embark on a refreshed Strategic Plan to guide staff on priorities of the City Council.
- Staff will actively manage vacancies, as they occur, to ensure resources are available to meet future budget challenges.
- We will work toward an aggressive pro-business approach to expand existing businesses and attract new businesses.
- We will invest in collaborative partnerships with other jurisdictions, our neighborhood groups and faith organizations.
- We will strive for an open transparent government and will make decisions based on data and evidence.
Also new for the 18/19 fiscal year, are two valuable members of my Senior Executive Team: the Director of Parks, Recreation, & Neighborhoods
and the Director of Community & Economic Development.
With a careful eye toward the budget, both positions have been left vacant for some time, though we’ve counted on two capable and talented department managers, Ashley Weaver and Patrick Kelly, respectively, for their leadership. I would like to thank them for the immense time they spent leading these groups, and for their continued support of the organization.
I’m excited to announce Laurie Smith has been promoted to the director position in Parks, Recreation, & Neighborhoods. Laurie has been with the city for nearly 23 years and has most recently served as the Business Manager in the Community & Economic Development department. She brings a wealth of expertise and will bring a fresh perspective to the Parks, Recreation, & Neighborhoods department.
After an extensive nationwide search for the city’s new Director of Community & Economic Development, we’re in the final stages of making an appointment for a proven leader I'm confident will take the city’s economic programs to a new level. I look forward to making that announcement soon.
I am honored to serve our great city – as the newly appointed City Manager – under the leadership of an engaged Council, and alongside caring and compassionate people who want to make Modesto better. Working together, I am confident that we can find the tools to make Modesto a vibrant economic center. We have a journey ahead of us in solving the city’s fiscal challenges, but if we remain diligent this coming year, and continually look at enhancing our organizational structure for efficiencies, I'm confident we will have an effective and sustainable local government.