Petaluma's economy is soaring, with an unemployment rate well below the county and state, rising sales tax revenues and rising home sale prices - all of which helped brighten the city's mid-year financial forecast. However, with city spending keeping pace with growing revenues, more funds are needed to tackle issues important to residents, such as street repairs.
The forecast was presented to the Petaluma City Council on Monday evening, although City Manager John Brown showcased some highlights of the report during his "State of the City" address at a Petaluma Area Chamber of Commerce luncheon last Friday.
The report, created by city Finance Director William Mushallo, shows that Petaluma's job market has rebounded, from an unemployment rate of 10 percent in 2010, to just 5.5 percent today - a rate lower than the county at 6 percent and the state at 8.3 percent.
Brown said job growth contributed to the city's rising home prices. Median west side home prices rose 19 percent in 2013 to $525,000, according to the report; while the east side saw housing prices rise 23 percent to a median price of $410,000.
"The overall takeaway from the report is that (the local economy) is a very rosy picture, things are moving in the right direction, there's been a lot of uptick in growth," said Ingrid Alverde, the city's economic development director.
Rising sales tax revenues are expected to be $557,000 ahead of budget projections, thanks largely to the new Target shopping center. Brown said he expects to see sales tax revenue continue to rise with the pending opening of the Deer Creek Village shopping center on North McDowell Boulevard.
"Those two projects are going to be a real shot in the arm for our sales tax," Brown said of the shopping centers. "We're seeing more development than we have in recent years, and that's certainly helping the bottom line."
But while revenue is up, expenditures have also increased at a similar pace, largely because the city has filled positions that were left vacant during the recession, accounting for an expected $575,089 in salary spending over budget. All in all, while revenue is forecasted to rise about $2 million over budget predictions, spending is expected to increase $1.8 million during the current fiscal year.
Brown and Alverde agreed that the city's financial picture appears more positive than recent years, it is still recovering from the loss of redevelopment funds, which the state withdrew in 2012 to balance its own budget, collapsing one of the city's multi-million dollar funding stream. Officials must also find a way to fund city employee pension costs, which continue to escalate.
Brown, who dedicated a portion of his chamber presentation to promoting the sales tax measure the city hopes to put on the November ballot, said while other cities have had success cutting back pension costs by asking employees to pay more for benefits, Petaluma has cut as much as it can.
"I know there's some talk about pension reform and people have said until there is pension reform, there shouldn't be any (sales) tax increase," Brown said. "There isn't anywhere else to (cut), we can't be more frugal."
The Petaluma City Council has yet to decide whether it will pursue a sales tax increase, but Brown contends that it is necessary to fund projects that are important to residents, such as street repairs.
"We cannot go from where we are as a community today to where we need to be as a community without putting more into the city's coffers," he said.
(Contact Emily Charrier at emily.charrier@arguscourier.com)
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