ANTIOCH — The city’s top finance official is warning that unless Antioch reins in spending and renews a half-cent sales tax or finds another source of some serious money, it will be facing bankruptcy in the next few years.
Finance Director Dawn Merchant recently raised the red flag at the first of half a dozen budget discussions that have been scheduled before the council adopts its two-year spending plan in late June.
“We’re in a good financial situation (right now); however, the fact that Measure C will be ending in 2021 — that’s very serious.” she said.
Approved in November 2013, the sales tax currently is generating more than $6 million annually for police and code enforcement — $6.68 million this fiscal year alone — but it is set to expire in four years and will require a city-wide vote to extend.
Merchant is predicting trouble even before Measure C sunsets. Although the city expects to end this fiscal year with reserves in its general fund that are just over four times what policy dictates is the acceptable minimum, that safety net is expected to start dwindling rapidly in 2017-18. The year after that, expenses are projected to outstrip revenue significantly.
Although the city temporarily can dip into its savings to make up the difference, six years from now there won’t have anything left if it doesn’t have Measure C or a comparable source of revenue, Merchant said.
“I don’t think no matter what happens that we’re going to get an additional $7 million,” she said of the annual amount the tax will be producing at the point it expires. “I don’t believe our property and sales taxes will generate enough to make up for the loss.”
Merchant cites rising labor costs and increases in the city’s contributions to employee pensions as the main reason for the somber forecast.
The City Council in November approved $9.2 million over five years in raises for workers, including pay increases for most police officers and all non-sworn personnel ranging from 2.5 percent to 4.5 percent.
In addition, the annual increase in the city’s pension obligations takes effect July 1, at which point it will be contributing amounts equaling 12.7 percent to 46.4 percent of employees’ paychecks toward their retirement.
The future of Measure C isn’t the only wild card: The $2.2 million that Antioch is expecting to collect over the next two fiscal years from a business license tax on each residential rental property is based on the assumption that the city will track down 1,646 property owners who might be landlords but are not yet paying the levy.
One aspect of the budget that does not affect the city’s day-to-day operations, however, is the $141.9 million it has accumulated in unfunded liabilities — the amount it currently needs to pay employees a pension for the rest of their lives once they retire.
Although Merchant acknowledges that it’s a significant sum, she said the city is paying what California Public Employees’ Retirement System considers an adequate amount toward its current pension obligations as well as paying down the balance.
Among the decisions that council members will have to make over the next couple of months is whether to earmark even more money for police — the tentative budget for 2017-19 already includes funding for 103 officers — as well as whether and how to spend the projected surplus.
