Reedley stresses fiscal responsibility amid budget review

Reedley begins 2024-25 budgeting process with city council presentation focusing on maintaining service levels, prioritizing fiscal stability

Reedley City Council members addressing concerns from the public regarding the Bio Lab discovered in the city at its Aug. 8 meeting. (Kenny Goodman)
Serena Bettis
Published May 21, 2024  • 
9:00 am

REEDLEY – To understand how the city of Reedley operates and plans out its budgets, residents must remember Reedley’s history, look back to the position the city was in 13 years ago — when it was facing bankruptcy and high unemployment — and really grasp how far it has come, City Manager Nicole Zieba said. 

As cities across California prepare their fiscal year 2024-25 budgets and face state funding cutbacks, utility rate increases and tax revenue drops, Zieba reminded the Reedley City Council that while the city is preparing for economic instability, it still has much to celebrate and take pride in. In a pre-recorded message to the council at its May 14 meeting, Zieba introduced the 2024-25 city budget and put into context the numbers that city staff will be working with beginning on July 1. 

“Reedley is not alone in facing economic challenges, but if we face this head on and if we plan strategically and if we hold the line — fiscal prudence — we’ll make it through this economic strom,” Zieba said.

With Zieba unable to attend the council meeting, Assistant City Manager Paul Melikian provided an overview of the proposed expenses and revenues broken down between departments and funding sources. Although the city is being cautious with how it manages its money, no reductions in services or programs are being proposed for the next year. 

Across all funds, the city’s proposed 2024-25 budget includes just under $50.8 million in total expenses, divided between approximately $21.1 million in personnel and benefit costs, $23.4 million in maintenance and operation costs and $6.3 million in capital improvement project costs. 

In the general fund, which is the city’s main operating fund that supports all departments and the services they provide to residents, Reedley is estimating just under $20.2 million in expenses and nearly $17.9 million in revenues. City staff estimate that at the end of fiscal year 2023-24, the general fund will have a balance of about $2.3 million; at the end of fiscal year 2024-25, the fund will have a balance of $41,000.

“It’s here on paper that the budget is balanced in accordance with our balanced budget policy that was approved by the council several years ago,” Melikian said. “That means not not rolling out a budget with a deficit, a known deficit and not relying upon too much one-time revenue to balance that budget.”

Some of the most significant changes to the city’s expenses include increases to insurance premiums, contributions to the California Public Employees’ Retirement System (CalPERS) and rising electricity costs. Further, the city’s vendors — such as contractors and suppliers — are raising their prices to meet inflation, which is a cost that gets passed onto the city and, eventually, its residents. 

Melikian said property insurance premiums have increased by 88% because the city had its properties re-appraised this year, and medical premiums for most full-time staff increased by 11%. The city is also facing the same Pacific Gas and Electric Company (PG&E) utility rate increases that residents are feeling; in the last two years, PG&E electric costs for the city increased by 45%, Zieba said. 

City revenue is much more difficult to predict because much of it is made up of sales and use tax revenue that can change significantly based on economic conditions. Reedley’s primary revenue sources include property tax and local sales tax allocations, as well as various special taxes and fees. The city also receives grants, state budget earmarks and interest on investments.

Over the last few years, Melikian said the city has seen “tremendous increases” in sales tax, but they are now seeing a leveling off; they do not anticipate that sales tax revenue will completely fall, but its growth is flattening, “so we have to sort of work within our funds that we have.” Melikian said interest earnings over the last year provided budgetary relief of more than $1.5 million.

Department goals, accomplishments

In addition to a broad overview of the budget, department heads shared their accomplishments from the last year and their priorities for the upcoming fiscal year. Melikian presented on both the administration department and the administrative services department, which he oversees. 

Administration includes the city council’s budget and the city manager, city clerk and city attorney and its budget is just 2% of the city’s total budget at approximately $790,000. The administrative services department conducts utility billing, provides information services, handles financial reporting and more; its budget of $8.4 million makes up 17% of the city’s total budget. 

Community Development Director Rodney Horton talked through his department’s mission, organizational structure, the year’s accomplishments and ongoing work. He highlighted a few different projects, including the completion of the 2023-2031 Housing Element, the city’s zoning code update and various commercial developments throughout the city. 

Horton’s department is made up of planning and building divisions and also focuses on economic development. In line with economic development, the proposed budget includes a $75,000 contract with the Greater Reedley Chamber of Commerce, which was increased from $50,000 in 2023. The department’s total budget of $1.2 million is 2% of the city’s proposed expenses.

Community Services Director Sarah Reid spoke about how her department met certain performance measures over the last year, including a goal to send out recreation program information once a month, to increase social media followers and to increase community participation in programs. 

With a $5.8 million budget, the Community Services Department makes up a significant portion of the overall city budget at 11%. Specific budget requests this year include multiple building maintenance projects, such as fixing up restrooms at the Reedley Community Center and remodeling the snack bar at Camacho Park to be in compliance with the health code. 

The Reedley City Council must adopt the fiscal year 2024-25 budget by the end of June. City staff plan to present the rest of the budget at a special meeting at 6 p.m. on May 28, and aim to bring the budget to the council for adoption at the June 11 regular council meeting. The budget is available for the public to view on the city website.

Serena Bettis
General Assignment Reporter