Stockton’s newly-approved budget will move the city out of bankruptcy into a period of “strategic growth.”
The City Council unanimously adopted the city’s near $900 million 2022-2023 budget at a hearing Tuesday. It will go into effect at the beginning of the fiscal year on July 1. (Councilmember Paul Canepa was absent from the hearing.)
Stockton is a city in transition, Chief Financial Officer Kimberly Trammel told the Council during a final budget presentation. She said that, after years of “status-quo” budgets following the city’s bankruptcy filing in 2012, Stockton now has the capacity for some growth.
“We’ve been doing a post-bankruptcy budget for many years,” Trammel said. “What we’re looking at now is really moving towards a more normalized city government budget.”
Following bankruptcy, Stockton rose to be one of the most fiscally healthy cities nationally, though its standing did slip from the fourth spot to the 16th in 2022.
There have been conversations with the City Council and other city departments regarding goal setting and identifying top priorities moving forward into this new financial era for Stockton, Trammel said.
“We’re looking at everything from the perspective of our long-range financial plan to make sure that any decisions that we’re entering into are going to be affordable in the long term,” Trammel said. “We’re looking at what kind of positions and service restoration might make the most sense for our citizens and, as the population grows, how we need to expand to those.”
Despite Less Money, Reserves Expected to Grow
According to the budget presentation and city documents, the 2022-2023 budget decreased by about $93 million compared to the previous year. This occurred because of a payment of short-term project bond notes in the 2021-2022 fiscal year. Still, the city’s reserves are estimated to grow by more than $2.5 million by next year.
This is in sharp contrast to a report last week showing that Stockton Unified School District faces a $30 million budget deficitin the next few years.
Some of what has been described as “budget highlights” include the reopening of Stockton Fire Station 1, which shut down in 2011, and opening the city’s new Northeast Library and Recreation Center. Trammel also noted the recent addition of 33 city-wide positions, including 22 that are directly included in the new budget.
In the 2008-2009 fiscal year, Trammel said the city had its highest number of authorized positions (1,886). Within two years, 400 of those were gone. The new budget proposes a total of 1,769 authorized positions, Trammel said, which is about 120 shy of pre-bankruptcy levels.
National Issues, Local Trends Affect Budget
Trammel also explained the “influences and issues” affecting the budget. These include national issues and local trends. Nationally, high inflation, interest rate hikes, Russia-Ukraine crisis supply chain problems, labor shortages, and potential COVID-19 resurgences cause budget uncertainty. Locally, the unpredictability of revenues during the last few years and challenges in recruiting and retaining employees affects the budget.
Many of these factors increase the cost of providing services and are reflected in the budget, Trammel said.
“The one bright spot we have overall is the one-time grant funding that the city’s received over the last couple of years primarily for COVID response,” Trammel said. “That is something that’s not reflected in our annual budget, but it’s definitely making a difference in our community.”