With Economy Up, SBC Municipal Deficit Spending Again In Vogue

This upcoming year, running from July 1, 2023 until June 30, 2024, a number of San Bernardino County’s cities will be throwing caution to the wind by moving away from the fiscally conservative practice of operating on balanced budgets.
Exuberant confidence with regard to the expanding economy was a hallmark of the late 1990s and first couple of years of the Third Millennium, as investors and public officials alike believed that a booming economy based upon a well-established financial system would last forever, or at least the duration of their lifetimes.
But the bursting of the so-called dotcom bubble followed a few years later by the economic downturn of 2007 that proceeded from the real estate collapse which had its roots in predatory lending practices reinstilled a sense of discipline in the public sector and county and local governments, as they were forced to contract their operations and either lay off employees or seek givebacks from the unions representing those employees with regard to salaries and benefits that had been promised in employment contracts derived during collective bargaining sessions prior to the downturn.
The economy remained sluggish for six years, and municipal governments, particularly in California, resolved to set conservative yearly budgets that were balanced in terms of revenue equaling or exceeding expenditures. With improvements in the economy in recent years, at least some city officials in San Bernardino County are letting the financial discipline they have cultivated lapse.
The City of Chino will run a $6.9 million deficit in 2023-24, based upon city officials’ best estimates.
In Barstow, city operations are to run at a deficit in 2023-24. Revenue into all funds is projected at $61,732,048 while expenditures of $64,536,466 are anticipated.
In Barstow’s general fund, prior to taking the income from the one-cent-per-dollar sales tax enhancement of Measure Q, passed by the voters in 2018, into consideration, there is a disparity between income and outgo, but it is much closer to being balanced. Regular general fund revenues are project to reach $22,553,840 and regular general fund expenditures will total $22,593,496. Measure Q revenue, however, is projected to come in at $9,600,000, in which case some $7,797,768 in spending commitments for that money must be met on the expenditure side. Taken together with another $500,000 in sub-fund revenue and $50,000 in sub-fund spending commitments, Barstow’s general fund will actually, if all projections hold true, be in the black with $32,653,840 in revenue and $30,442,114 in expenditures.
In Big Bear Lake, officials project a relative whopping $6,081,913 in deficit spending, with $20,979,800 in revenue and $27,061,713 in expenditures.
Across all of Big Bear Lakes’ funds, including its general fund, transportation fund, assessment district fund, capital project fund, growth management fund and miscellaneous funds, the city is predicted to take in $53,819,926 while spending $62,854,727.
At Colton City Hall, officials there are prepared to lay out more than they take in as part of the city’s own operations and serving as a full-service city or nearly full-service city, which provides not just basic services such as road, sidewalk, park provision and maintenance but key utilities such as water, sewer and electrical service. Colton is one of only three San Bernardino County cities which has its own electrical utility.
Colton’s internal service funds, which are used to cover facility and equipment maintenance, the city’s automotive shop, the information services department budget, and service the insurances fund, as of today, June 30, 2023, have a total estimated balance of $3,138,967. One year from today it is projected to be down to $2,913,593. Over the next 12 months, the fund is project to have $11,683,985 in revenue coming in and $11,909,359 in disbursements.
In Colton’s wastewater division operation, where it is starting tomorrow with $1,743,010 in reserves, it is anticipated that it will have $10, 861,838 in revenue and make $11,452,798 in expenditures. Thus, the division’s reserves will drop off by $590,960 to 1,152,050.
Still, 2023-24 looks like it will be a lot less profligate of a year in Colton in terms of its sewer operations than the one concluding today. The city started 2022-23 on June 1, 2022 with $6,109,998 in its wastewater reserve fund. Over the 12 months concluding at midnight, it will have spent $15,873,383 against revenue of $11,506,395, having thus engaged in deficit spending this year of $4,366,988.
Similarly, Colton’s water utility is in the midst of a spending spree involving substantially more money than it is taking in. One year ago, the water utility’s reserves stood at an impressive $21,775,996. In the 2022-23 fiscal year ending today, it took in $16,659,736 while expending $28,905,799, a deficit of $12,246,063. As of midnight tonight, the water fund will have reserves of $9,529,933. Beginning tomorrow, Colton city officials project that over the course of the next year the water department will require $17,983,798 to function while bringing in $15,603,437 from the city’s residents/customers.
The deficit spending Colton is to experience with its electrical utility will be slightly less pronounced than in its water operations. At present, the electrical utility has roughly $10,593,545 in reserves. Officials project that between tomorrow and June 30, 2024, operational costs with the electrical utility will run to $93,682,511, with customers providing $92,466,129 in payments, representing deficit spending in the electrical utility of 1,216,382.
While the City of Chino Hills’ general fund budget is a balanced one with identical $55,315,046 projections in revenue and expenditures, that balance is not maintained across the city’s other endeavors, which include enterprise funds, including those for its two utilities, the water utility and sewer utility funds. The City of Chino Hills’ total fiscal year 2023-24 budget consists of a $148,843,889 revenue projection and an expenditure budget of $151,212,043.
The City of Rancho Cucamonga boasts projected income in all of its municipal funds for fiscal 2023-24, the 12 months running from July 1, 2023 until June 30, 2024, of $326,021,390. During the same time, Rancho Cucamonga is scheduled to engage in total expenditures of $354,026,700, a deficit of $28,005,310.
In Victorville, through all of its municipal funds, the city will have $328,695,053.21 in revenue and $345,055,841.82 in expenses.
That means the city will engage in $16,360,788.61 in deficit spending over the next twelve months.
-Mark Gutglueck

Leave a Reply