Merced City Manager Stephanie R. Dietz, along with department heads, revealed a proposed spending plan for the upcoming fiscal year 2023-24 on Monday night at City Hall.
The total proposed budget comes in at $405.7 million, an increase of $21.1 million over last year’s final budget. The city’s General Fund is projected to account for an overall $59.8 million in the plan, an increase of nearly $3 million from 2022-23.
The plan included “no net increases” to positions on the staffing level, and instead detailed eight separate job description “exchanges” within departments “to better meet needs.” The city’s finance officer noted that there is cost savings in the staffing shifts.
City Manager Dietz alerted leaders on the City Council that her team this year was taking a more prudent approach to safeguard against economic uncertainties.
“Merced’s local economy is experiencing a shift in several key areas that have a direct impact on your local revenue,” Dietz pointed out. “Local unemployment rates have been steadily increasing and have nearly doubled, from 5.9 percent in September of 2022 to our current unemployment rate of 11.2 percent.
“Single family housing starts have declined over 30 percent from last year and nearly 70 percent from the high in 2020-21. Although multi-family unit production is strong, up more than 30 percent over the last year. Several of these projects are funded by state and federal grants and do not reflect independent investment in our community.
“A continued increase in inflation and CPI rates along with increases in interest rates have also had negative impacts on private investment in Merced. In addition, sales tax increases from previous years are leveling off, and we are anticipating only a two percent increase built into your revenue projections this year. And other revenues including Gas Tax and Measure Y (cannabis tax) are seeing significant decreases. With the looming sunset of Measure C in 2026, it’s safe to say that our revenues are very volatile.”
Measure Y revenues are projected to be around $1.8 million, compared to more than $3 million in 2020-21.
At the direction of the City Council, and according to Dietz, the budget prioritizes the following areas: Downtown and Economic Development, Housing and Homelessness, Merced Unity Project, Natural Disaster and Flood Response, Parks & Recreation, Public Safety, Public Works and City Beautification, South Merced Study and Improvements, and Quality of Life in Merced.
Among the highlights:
• $1.75 million of allocated ARPA funding is supporting downtown enhancement projects, including redesigns of Bob Hart Square and Main Street traffic lanes.
• $50,000 to examine future industrial and technology park areas in South Merced, and $10,000 toward small business grant funding.
• Through multiple grants, the city is supporting a $2.5 million for a first-time homebuyer down payment assistance and owner-occupied rehabilitation program, a $1.3 million, 67-unit affordable housing project, a $24 million, 95-unit motel conversion project, and a $4.2 million, 21-unit permanent supportive container housing project.
• ARPA funding is also supporting a variety of programs that assist with utility bills, youth job training, violence prevention, community nonprofit funding, development of the CP 42 regional park, and the remodeling of restrooms at Applegate Park.
• $1 million in addition funding to continue installation of new LED streetlights, $600,000 to purchase ambulances and refurbish a fire truck for the Fire Department, and $10,000 to be allocated to support a female fire academy program.
• More than $2.3 million in funding from Measure V and SB1 for new street rehabilitation projects and quiet zone enhancements.
• $200,000 to support tree pruning and replacement.
• An additional $100,000 for public art projects.
• And some $350,000 in one-time funding to support an outreach program and new improvement projects for the South Merced area.
City leaders, including Mayor Matthew Serratto were mostly supportive of the budget proposal details.
On Monday night, members of the City Council did have to weigh in on a $511,000 shortfall in the Parks & Community Services’ revenue vs. expenditures.
Instead of cuts to programs — which would have threatened youth staff positions, summer pool availability and summer camp opportunities — leaders chose to utilize most of the city’s Measure Y funding earmarked for “discretionary” use, or $373,293, along with a $1.4 million general fund transfer, and $110,000 in program fee increases.
Parks and Rec. officials revealed they had not adjusted fees for community programs since 2009, and they have been operating in line or below similar agencies in nearby places such as Atwater, Los Banos, Gustine, Turlock and Manteca, among others.
Two more Budget hearings at City Hall are expected in June, with the final one to involve a final decision by the Council. Leaders have yet to hash out details of discretionary funding for community groups, and modifications made to the budget proposal.
For those who would like to view or study the proposed budget, go to the the city’s website at: cityofmerced.org, and click on the “City Budget” link on the homepage, under the header “Popular Links.”