News from the City Manager

This is the first in a series of newsletters to highlight important city issues and noteworthy city programs. These newsletters will be brief, and focus on one or two topics of interest each month. You are receiving this newsletter because you have signed up to receive City communications. If you do not wish to receive this newsletter in the future, please unsubscribe at the bottom. Or, feel free to forward it to friends and colleagues you think might be interested.

The July newsletter begins with a high level overview of Petaluma's budget. The City Council approved our annual budget on June 6th, and it is the basis of our work for the fiscal year that starts July 1, 2016. In future issues I will focus attention on specific areas of the Budget. Also included this month is an article about our Business Retention Program - a program aimed at building and maintaining relationships with local business.

John C. Brown

City Budget Update

Each year the City Council decides how to spend the money entrusted to the City by the Public, by approving the annual budget. Because the City cannot spend more than it takes in, the budget must balance the money we receive with the money we spend. Revenues for City operations come from several sources, the major sources are taxes, fees charged for services, utility rates, and grants from other agencies. Construction projects also receive funding from these sources, but are heavily funded from the impact fees charged to new development. In addition to paying for operations and projects, the City needs to set aside money for emergencies, not unlike what we try to do as individuals and families. The City's sets savings aside in its reserves.

The Big Picture

This year's budget totals $184.6 million. Of that amount, $141 million is collected for specific uses. Money collected for specific uses comes with spending restrictions. For instance, we receive gas taxes to pay for road work and cannot spend them on police cars. Several of these specific uses are: our Water, Wastewater Utilities; the Airport, the Marina, the Transit system, and Building Services Enterprises; Housing programs, Streets Maintenance, Landscape Assessment Districts, and Grants Special Revenue Funds; Information Technology, Risk Management, Vehicle and Equipment Replacement Internal Service Funds; Capital Projects; the Successor Agency to the former Redevelopment Agency fund, and the General Fund.

The General Fund - How We Pay for City Services

When you hear us talk about the General Fund, that's the unrestricted portion of the City budget which can be spent as the City Council deems necessary. This year, the General Fund budget is about $43.7 million. Although, in concept, this money can be spent at the City Council's discretion, in practice nearly all of that money is already spoken for. It's used to pay for core City services such as police and fire protection, which require a constant if not growing level of funding. Four fifths of General Fund expenditures pay for the costs of employee salaries and benefits which, again, are constant if not growing each year. The City expects to collect $42.2 million for its General Fund in 2016/17. The difference of $1.5 million, between revenues and expenses is covered by savings.

General Fund Income & Expenses Broken Down

General Fund Income

General Fund Expenses

The single largest funding source in the General Fund is sales tax, from which we expect to receive $12.5 million this year. Property taxes will provide $9.2 million in 2016/17. Other funding sources are smaller, but still important, and include Business license taxes, the franchise fees charged to the power and garbage companies for their use of the City's streets, fees charged for certain city services, and revenues generated from traffic and parking fines.

As you can see from the accompanying graphic, nearly 70% of the General Fund pays for Police and Fire services including rapid emergency response. The remaining funds are split between Public Works, Recreation, Planning, and Administration. Administration includes all the support services these functions require: human resources, payroll, accounts payable and receivable, legal services, record keeping, and general management.

How You Contribute

You may be surprised to find the City receives about 12 cents of every property tax dollar that is collected. The rest goes to local schools, the County of Sonoma, and other agencies. For every dollar you spend locally on taxable items, the City receives one cent of it in the form of sales tax. The State of California and County agencies gets the rest. Most people are not aware the City receives such small shares of these important revenues. In the same vein, the City only receives 15 cents or less for every dollar collected from traffic and parking fines.

On average, each Petaluma resident pays $37 per month in taxes (including sales and property taxes) to the City. This is less than most people's cell phone bill, but pays for 24 hour emergency response from police and fire, maintaining 350 acres of playing fields and parks, land use protections, and organizational support these activities require to operate.

What the Future Holds

During the recession, General Fund revenues fell by about $16 million, which required cut-backs and employee layoffs. One fifth of the City workforce was reduced, and salary levels were frozen. Equipment purchases and maintenance on City structures were deferred, and investment in City infrastructure was interrupted, This could not help but impact the amount and quality of service the City has been able to provide - although through it all we have continued to provide core services.

Moving forward, we've kept staffing levels lean and just this year granted the first modest salary adjustments since 2008. Moreover, we now have an active and effective economic development program that serves existing business, and attracts new ones, to improve our financial future. Even so, while we've made great gains towards a stable budget, the General Fund budget is still $5 million less than in 2008. Petaluma still has a lot of catching up to do, and will need to find new revenue sources if we're going to do so.

Next Month - Special Revenue Funds and the Streets Fund

Link to the 2017 Budget Document


	City Manager John Brown (left) and Griffo Distillery owner Mike Griffo (right) discussing business challenges and opportunities.

Business Retention Program Supports Local Economy

There are many approaches to building and maintaining a successful economy. One way is to attract business to your community through a marketing strategy or by providing incentives. Another way is to help entrepreneurs get start ups off the ground.

The most effective way is to support the local companies that will create 85% of all new jobs. Supporting those companies offers a far greater return on investment than the first two strategies combined.

Our Business Retention program aims to develop relationships with local businesses. Often this is accomplished by meeting with companies proactively, before they face issues. That way, we've already established a working relationship if and when issues arise.

For example, I recently met with the owner and founder of Griffo Distillery, Mike Griffo. I was able to see firsthand how his business operates, what his pain points are and how the City could support his business. Mike was interested in opening a tasting room where his customers could come try his award-winning gin. Our staff is currently working with him to get the needed permits for a tasting room.

Our Economic Development Manager meets with local companies regularly. This year, I've tagged along and met with Alvarado Street Bakery, Scott Labs, Griffo Distillery, Whole Spice and Clover. I was amazed by what I saw behind the walls of our industrial buildings. Great products and hard working business owners were visible in each instance.

Check out more business stories

Announcements

Council Meetings

Open Counter

Drought News

The City Council meets on the first and third Monday of each month. Committees meet throughout the month as needed. Learn about upcoming topics that may interest you.

Meeting Agendas

We've heard from business that understanding our permit requirements is a challenge. Our new interactive tool can help. Find out what zoning and building rules and fees may apply to your project.

Open Counter Link

The City Council repealed the water shortage emergency declaration. This means that there are no longer restrictions on residential landscaping. The Council still urges residents to conserve.

Learn how to save H20