Upland approves balanced budget

June 11--UPLAND -- City Finance Director Christa Buhagiar offered a cautionary tale for the City Council as she outlined the details of its balanced budget for the 2014-2015 fiscal year, which also sets aside $4 million in its reserves.

With revenues just covering the city's costs, the general fund in the $39.9 million operating budget approved by the council Monday fails to generate a steady cash flow to maintain or grow Upland's coffers.

"The general fund still owes $7 million to other funds," she added.

Revenues for the General Fund are projected to be $40.7 million, while the city's operating costs are projected to be $39.9 million. Add to that another $716,600 in transfers to other funds leaving the General Fund with only $2,341 in the surplus.

A financial cushion will be a $4 million settlement the city received from its insurance carrier, which had refused to pay for the city's legal defense against San Bernardino County in a Colonies lawsuit.

"Even though we have a balanced budget it doesn't solve the problem. What it does is maintain our current service level, provide some vehicle replacements, and stop the deficit from going into the self-funded insurance fund," she said.

It also covers the first year of software upgrades throughout the city, Buhagiar said.

"What it doesn't do is eliminate our cash problems," she said.

Buhagiar also warned the council about the other challenges it faces on the horizon. Labor contracts will expire in June 30, 2015, and the fiscal impacts of that are unknown, she said.

In addition, the city has been deferring various maintenance, equipment and infrastructure needs throughout the city.

A turnaround will be dependent on an improving economy and the implementation of the recommendations made by the Upland Fiscal Response Task Force such as a possible tax measure and outsourcing management of various departments.

To date, the council has only approved three of the 22 provisions recommended by the 10-member panel, providing Upland an annual savings of $500,000, said Stephen Dunn, who will resign as city manager June 30.

The Inland Empire's economic outlook continues to improve at a steady rate, she said. A growth in property tax and sales tax revenues, charges for services, has resulted in a 6.1 percent increase in the General Fund operating revenues. The projected total of $40.7 million revenues in the general fund is an increase of $2.3 million from the previous year.

At Monday's meeting, the council also approved a series of rate hikes and fee revisions for its water, sewer, and solid waste. The move, Buhagiar said, will help the city.

Additionally, the city is only looking at the possibility of filling three vacant positions in the police department but not adding new positions.

Ultimately, the city's goal, Buhagiar said, is to bring the reserve balance up to 25 percent of Upland's operating expenses.

"It doesn't solve our revenue problem, and we will have to continue to work on that. It's nice to get a balanced budget," said Councilman Brendan Brandt.

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