City Council Reviews City’s Long-Term Financial Outlook

Staff Reports 

Norco – At a public Study Session on April 4, 2018, the Norco City Council received a presentation from staff regarding the long-term financial outlook of the City’s General Fund and various Capital Project Funds used for the construction, replacement and maintenance of City streets, trails, buildings, parks and parking lots. The video recording of the Study Session can be viewed here (https://bit.ly/2v13n2l). 

The presentation included a 10-year projection of revenues and expenditures for the City’s General Fund. The General Fund is the City’s primary operating fund and is the source of monies used to pay for public safety services, including police and fire, as well as park operations and maintenance, building maintenance, planning, building safety inspections, animal control, senior programs, general City administration and other expenditures of the City with no dedicated revenue source. In addition to the financial forecast for the General Fund, staff provided a 20-year infrastructure funding needs projection for streets, trails, buildings, parks and parking lots. A copy of the presentation can be viewed on the City’s website here (https://bit.ly/2HckXFI). 

While the City’s General Fund “rainy day” reserve amount currently stands at over $10 million, the financial forecast estimates that this amount will be depleted by fiscal year 2021-2022 if appropriate actions are not taken to eliminate the projected “structural operating budget deficit” in the General Fund. The anticipated deficit is due to expenditures, especially public safety costs, growing at a faster rate than the rate of growth for tax and other revenue receipts. The presentation outlined various previous actions taken by the City Council to reduce expenditures and enhance existing revenues. These previous expenditure reduction actions included contracting fire and emergency medical services, increasing pension and medical cost contributions by employees, and eliminating the motorcycle traffic enforcement program. The presentation also highlighted previous actions to improve revenue receipts through aggressive economic development. These efforts have resulted in the development of new retail establishments, Silver Lakes, hotels and other projects. 

While these efforts will continue in the future, Mayor Hoffman remarked that these measures will not be sufficient to generate the revenues needed to maintain current service levels and fund the replacement of City infrastructure. The 20-year forecast for infrastructure estimates that the City will need over $5 million in new revenues annually to protect investments in infrastructure and maintain the equestrian lifestyle that is cherished by Norco residents. Subsequently, in the coming weeks, the documents necessary to place a revenue measure on the November 2018 ballot for voters’ consideration will be presented to the City Council for action. Additional information will be posted on the City’s website as it becomes available. 

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