Petaluma leaders focus on fiscal health

More than a decade after the financial crisis that crippled the city’s budget, Petaluma leaders Monday indicated they’re ready to turn the corner after years of austerity, unveiling a new financial planning process at a city council meeting.

The discussion marks the first time the city has presented a comprehensive financial overhaul plan, both recognizing the impacts of years of belt-tightening and the need to invest in areas that have been sidelined.

“During the recession, we had to address the crisis in the 2008 to 2012 time period, a lot of cuts were made,” Assistant City Manager Brian Cochran said. “In the last five years or so we’ve been in what we’re calling survival mode.”

The city has struggled to maintain a balanced General Fund budget, cut dozens of staff positions, eliminated and contracted out services and consolidated departments. Except for the past two fiscal years, city employees have gone approximately eight years without any wage increases.

In order to create a yearly balanced budget, the city had to defer facility and infrastructure maintenance, refinance debt, negotiate employee concessions and refrain from spending General Fund money on capital improvements, according to a staff report.

From 2008 to 2012, the city cut General Fund services by 33% and depleted the General Fund Reserve. Ninety people lost jobs, a third of all personnel, and the remaining employees weathered reductions in benefits and pay. Following those four years of significant cuts and downsizing, the city has been operating on a year-to-year financial plan, only capable of balancing each fiscal year without robust planning for the future.

“What we’re trying to watch now is our long-term sustainability for 2020 and beyond,” Cochran told city council members.

Staff points to several ongoing service impacts from the past decade of austerity and budget cuts that need to be addressed, including road conditions and maintenance shortfalls in 46 parks and more than 40 city-maintained buildings. Public safety has also suffered, demonstrated by a response time one minute longer than industry standard, along with “dilapidated and inadequate” fire and police stations.

The staff presentation referred to the city’s current finances in a graphic as the red zone, as the expenses outweigh revenues at the tune of a $5 million budget gap.

“The yellow zone will be where we look at all these things and try to juggle what’s the right mix for Petaluma,” Cochran said, suggesting an increase in taxes or fees is a possibility, among other options.

The fiscal planning process will kick off next week during the first workshop Dec. 9 at 6:30 p.m., the first in a series of meetings meant to create an open dialogue between staff, council and citizens.

Tentative work session dates extend from early December through June or August of next year. Council members including Mayor Teresa Barrett expressed an eagerness to accelerate the timeline by a month or two if possible, in order to create a draft fiscal sustainability plan by late spring or early summer.

Cochran said work sessions will provide options to present to the public, inviting feedback and citizen engagement on the financial plan. Specifically, staff is working on creating an online interactive poll loosely modeled off of California’s “budget challenge” website that allows users to create their own balanced government budget.

Councilman Mike Healy cautioned staff that the public’s attention may be focused more squarely on national politics as the 2020 presidential election ramps up, regardless of the game-like budget simulator. He also expressed concern that voters may not be in the mood for a tax increase measure.

“Next year is going to be very crowded on revenue measures, and we need to make sure that whatever we put forward is as solid as it can possibly be,” Healy said.

Should the city decide to put forward a sales tax measure as part of its financial sustainability plan, it would join a proposed half-cent sales tax for fire services, a SMART tax measure, a continuation of the countywide Measure M for transportation projects and a potential county initiative to fund mental health, among others.

(Contact Kathryn Palmer at kathryn.palmer@arguscourier.com. On Twitter @KathrynPlmr.)