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City leaders review draft of upcoming fiscal budget

Council overturns vote by planning commission

Members of the Merced City Council on Monday night received their first look at a preliminary budget plan for the 2024-25 fiscal year — one that totals $422.5 million.
“You are going to see a budget that is balanced, and it also takes into consideration some deferred issues that need to be addressed,” City Manager Scott McBride told the council members. “It ties back to some high priorities that you have. And also this year, as we look at this budget, we need to continue progress on things we’ve been working toward, and try not to slow down.”

The General Fund (discretionary) portion of the budget totaled $62.6 million, and the largest share was taken up by “Enterprise Funds” (water, sewer, refuse funds; facility operations) at $186.6 million. Special revenue funds (Measure C, community facilities districts, maintenance districts) weighed in at $124.4 million.

Funds for maintenance, supplies and services across all departments were held to a 2 percent increase as opposed to higher annual increases of up to 4 percent experienced in recent years. The budget also took aim at bringing funding “sustainability” to the Parks and Community Services department.

One of the biggest increases year over year in the city budget is related to CalPERS, the employee retirement system. The unfunded liability is scheduled to increase about $1.5 million in 2024-25, or a 12.7 percent increase in total costs.

Among the largest citywide cost drivers, health insurance has risen 12 percent in the last year, and within the last five to six years, it has gone up 38 percent. The city has $12.4 million budgeted in this category for next fiscal year. “General Liability” (property insurance) has also surged, increasing about 35 percent in one year, and 277 percent over the past five to six years.

With regard to Enterprise funds, or more specifically wastewater and water services, budget data show a slight increase of operating expenses over revenue. Finance Officer Venus Rodriquez, who presented the budget, hinted that the city will be reviewing rate studies for those two areas. City leaders have not raised rates in these areas for the past couple of years, initially due to the covid pandemic.

The city will begin the new fiscal year with about $7 million in available dollars in the General Fund, and that’s after adding $3 million contingency to a reserve set-aside which now stands tall at about $21 million. The new “affordable housing fund” has increased to $1 million.

The budget recommends a net increase of seven employees, bringing the staffing level from 551 last year to 558. Four of those positions are currently unfunded in the proposed budget. Four positions are being added to the Police Department, including a community service officer, a crime analyst, an administrative assistant, and a management analyst. A police records supervisor position will be deleted.

Measure C funding in the budget will support the purchase of 89 Taser devices and 10 patrol cars, two code enforcement cars, and three community service vehicles. The Fire Department will receive funding for significant renovations to Station 53, as well as consideration of ordering two to four new fire trucks and engines to meet service demands.
Measure Y cannabis tax revenue for the new year is estimated to be around $1.8 million, about the same as last year, and way lower than the more than $3 million received in 2020. The funding for 2024-25 will help a Reserve Police Officer Program, a couple temporary police positions, HVAC replacements for both Police and Fire, cameras and drones, a police dog, fleet repairs and other renovations.

About $750,000 of Measure Y funding will also support eight top Parks and Recreation programs such as Junior Giants, pickleball, Movies in the Park, the Block Party Trailer, and activities at the Zoo. The funding will also be directed to discretionary projects such as bike path maintenance, tree trimming, the Ada Givens Pool Restoration, and various park playground improvements.

Parks and Community Services will also receive a total of $1.6 million in General Fund transfers as a new “base” to support the department where annual expenses add up to $3.2 million. The department does benefit from program fees and state grants.

The American Rescue Plan Act funded downtown projects — Bob Hart Square expansion and the Main St. one-way redesign — continue to be “in the works” representing funding levels of $800,000 and $750,000, respectively.

Park Reserve funding will pay for a new parking lot for the Fahrens Park Disc. Golf Course ($100k); a Joe Herb Sports Field Renovation ($300k); and an Applegate Park Basketball Court Renovation ($50k). Impact fees are expected to fund construction at the new General Vang/Aletha June Park Construction ($450k) and Phase 2 of Community Park 42 ($200k).

More preliminary budget details can be found on the city’s website:

City leaders are expected to consider and finalize the 2024-25 fiscal budget during the next two meetings in June.


Commercial storage facility gets go-ahead from Council

Monday night’s City Council meeting was attended by five of the seven council members, with Councilmen Fue Xiong and Ronnie DeAnda absent.

Nevertheless, the remaining leaders on the dais were diligent and methodical in working through a long list of consent items and hearings.

The Council voted 4-1 to approve a zone change and allow the establishment of a self-storage and long-term parking facility on a 3.5 acre site fronted at 470 E. Olive Ave, between the Christian Life Center and Burbank Park. Councilwoman Berth Perez voted NO.

The property is in proximity to Burbank Elementary School. The conditional use permit allows for a live/work unit for an onsite manager. The development request was initiated by United Security Company, on behalf of property owner Nicolas Mary Lee.

The Council approval comes after the developer appealed a city Planning Commission denial of the project in April. The commissioners cited concerns about the loss of land available for future housing, traffic congestion (especially with the storage of boats and recreational vehicles coming in and out of the site), and neighborhood compatibility.
However, on Monday night, Councilman Shane Smith successfully argued for the council to support new business development and amenities in town.

“No. 1, this is a parcel that has sat undeveloped since 1979,” Smith pointed out. “Staff has concluded that the traffic impact will actually be less than if it was a housing development.”

Smith said that there were a lot of “ifs” on whether or not the neighborhood would support a “high-density” housing project, or whether or not a developer would come forward with a building plan that would meet city approval. He pointed to due diligence on the part of the investor and money already spent on the project.

The councilman, who represents District 4 where the site is located, said he was struck by the fact that no one person reached out to him with concerns about the project, “one way or the other.”

Smith concluded: “Maybe it’s not sexy but RV parking and climate-controlled storage units are things residents really need.”

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