CONCORD — Although the city’s financial situation continues to improve, Concord could face a $13 million deficit by the end of the next decade due to rising pension costs.
The City Council recently approved a $200 million two-year budget that continues to rely on Measure Q sales tax dollars to close the gap between revenues and expenditures in both years. But the additional half-cent tax is set to expire in March 2025.
“Over the next eight years, the city will need to pursue multipronged and sustained efforts to ensure that the organization is fiscally sustainable and can cover its operating costs without reliance on Measure Q,” City Manager Valerie Barone wrote in a staff report.
The council has allocated funds to hire a consultant to develop strategies to boost revenue, cut costs and address the city’s financial challenges. The city staff expects the fiscal stability plan to be complete by early 2018.
Over the next two fiscal years, the city will focus on five priority areas — economic development and long-term fiscal stability; the Concord Naval Weapons Station reuse project; public safety; infrastructure maintenance; and organizational health and employee success.
A few highlights of the budget:
- Unemployment in Concord is down to 4.5 percent and the median single-family home price in the first quarter of 2017 was $530,000, up $42,000 from the previous year.
- The budget projects total revenues of $97.4 million in fiscal year 2017-2018 and $103 million in fiscal year 2018-2019.
- Both budget years include a 3 percent increase in salaries for full-time employees. Salaries and benefits make up about 70 percent of expenditures.
- Although the city staff expecst sales and property tax revenue to increase, the budget relies on $7.5 million in Measure Q sales tax dollars to cover shortfalls in both years.
- In the 2018-2019 fiscal year, the city also uses $2.2 million in one-time funds to balance the budget.
- As the city reduces its reliance on Measure Q funds over time (the additional half-cent sales tax sunsets in March 2025), the 10-year budget forecast shows a growing gap between revenue and expenditures that culminates in a $13 million deficit in 2026, assuming the city maintains a 30 percent reserve.
- The city projects a $1.9 million increase in pension costs in fiscal year 2018-19 due to CalPERS investment losses.
- The city expects the Veranda shopping center, which will include an IMAX movie theater and 365 by Whole Foods Market, will generate at least $665,000 in sales tax dollars in fiscal year 2018-2019. The development is under construction on the 30-acre former Chevron campus on Diamond Boulevard.
- The budget includes funds for a new senior civil engineer and housing analyst; converts two existing part-time positions in the police department into a full-time community services officer; adds a fourth school resource officer to work at Olympic High School (the city splits the cost for the officers with the Mt. Diablo Unified School District); and swaps a vacant forensic specialist position in the police department into a code enforcement officer.
