Dinuba keeps steady hand through budget proposal

Dinuba City Council progresses through budget discussions, reviews balances of special revenue funds

Dinuba City Councilmember Linda Launer asks a question during the council meeting Feb. 13, 2024. (Serena Bettis)
Serena Bettis
Published May 16, 2024  • 
10:00 am

DINUBA – Dinuba is on pace to have next year’s budget approved by mid-June after hearing the second of three preliminary presentations on the proposed budget at the most recent city council meeting. 

Finance Director Karina Solis reviewed the revenues and expenses of three types of funds during the Dinuba City Council meeting on May 14, adding on to the overall picture of what the city’s fiscal year 2024-25 budget will look like. With the city anticipating a significant reduction in sales tax revenue over the next few years, city staff are taking a methodical and conservative approach to this year’s budget and have received positive feedback from the council so far.

“I like that it’s a nice balancing act,” Councilmember Kuldip Thusu said. “It includes nothing shaky; a good, balanced approach.”

City budgets are built around a variety of funds, or accounts, that help organize and track where money is coming and going. The largest and most talked about fund, the general fund, is where the majority of the city’s revenues from taxes and fees are collected and is what the city uses to pay for its departments and their general operations, such as parks maintenance, administrative services and so on. 

In addition to the general fund, Dinuba operates special revenue, debt service, internal service, enterprise and capital improvement project funds; grouped within these categories are funds used for specific, designated purposes. Solis previously presented on the general fund at the April 23 council meeting and spent the May 14 meeting going over the special revenue, debt service and internal service funds. 

Overall, the city is not expecting to make any major changes to expenses that come from these funds, though it is estimating that revenue going into certain funds may decrease. Revenue estimates are more challenging for the city to predict than expenses because they often vary based on the local economy. 

Special revenue funds are funds that the city must use for a specific purpose and in a specific way, such as funds that manage grant money, special taxes and special districts. For example, the city has a fund for Measure F, the public safety sales tax, that can only be used to support police and fire services. 

Solis said the Measure F fund is projected to end the 2023-24 fiscal year with higher revenues than initially estimated and slightly increase next year as well. The 2023-24 budget estimated the tax would generate $3.2 million and the projected year-end total is estimated to be about $78,000 higher; the estimate for next year’s revenue is $3.3 million.

Another special revenue fund is the development impact fee fund, which holds money collected from new residential and commercial developments that is then used to help fund infrastructure improvements in the areas the development is taking place. 

Solis said these funds tend to fluctuate year to year based on development activity, and she is proposing a significant revenue decrease for next year. The 2023-24 year-end projected revenue from development impact fees is approximately $1.5 million and the proposed revenue for next year is just more than $300,000, “but that is our proposal, it doesn’t mean that that’s where it’s going to end up; it may end up being higher,” Solis said. 

Internal service funds are used to manage operations within the city, like employee health insurance and facility maintenance. They typically do not get their revenues from outside sources and instead are funded through allocations from other city funds. 

“For the most part, it’s money in and money out, so there isn’t much to it,” Solis said. 

Solis highlighted the health insurance fund, which is the city’s largest internal service fund, and spoke about how health care plan expenses can be difficult to predict because health insurance claims may vary greatly between years depending on injuries and major health issues that employees may experience. 

In order to mitigate major fluctuations in the fund, Solis said that the city began purposefully building up the health insurance fund’s reserves so that it can “work through those peaks that come every now and then.” She is projecting that expenses will exceed revenues by about $350,000 at the end of the 2023-24 fiscal year and by about $132,000 for fiscal year 2024-25. 

“Going forward, as I mentioned, we’ll be evaluating the fund and making sure that we are transferring over what is necessary and leaving some in-fund balance in the event of these peak years,” Solis said. “It seems to be kind of cyclical, so we’re anticipating that it’ll come back down a little bit. 

The city’s debt service funds are used to pay back city obligations that typically come from bonds. Along with a general debt fund, Dinuba has water, sewer and financing authority debt funds; the city is also used as the “pass through” agency to pay off the successor agency’s debt, but those payments do not come from city revenues. 

Dinuba makes annual debt payments of approximately $6.9 million, with successor agency debt making up $3.2 million of that. In total, about $28-29 million in debt belongs to the city, and City Manager Luis Patlan said that by sometime around 2032, a “big chunk” of that debt should be paid off. 

“There might be some room in the future, should the city want to look at planning for capital improvements, whether it be facilities or projects, there will be some flexibility in the next six to eight years,” Patlan said.

Solis will round off the preliminary budget workshops with a presentation on the enterprise and capital improvement project funds at the next Dinuba City Council meeting on May 28. The city plans to bring forward the entire fiscal year 2024-25 budget to the council for adoption at the June 11 meeting.

Serena Bettis
General Assignment Reporter