City faces $231,000 deficit (January 10, 2011)
A finance report presented to the City Council last week revealed that Petaluma is facing a $231,000 deficit this financial year, and the shortfall could reach $17.5 million by 2015 if costs continue to outpace revenues.
Outgoing finance director Marc Puckett told the council that steps must be taken soon to cut costs or increase revenues in order to manage the deficit. Expenditures are estimated to increase by 17 percent over the next five years, while revenues are projected to grow by only 7 percent in the same period.
The city earlier this year used about $1 million from its reserve fund to cover the budget shortfall, leaving $5,000 in the fund typically set aside for unexpected uses, such as a police investigation, big fire or special election.
Puckett announced last week that the reserve fund has increased to $245,000, but said that it is still much lower than it should be. A safe reserve amount is considered to be about 15 percent of the General Fund, setting the optimal level at about $5 million for this year.
While Puckett urged action, he added that Petaluma’s financial problems are not much worse than other cities.
Source: Argus-Courier Staff, Argus-Courier (Petaluma, CA)