Strong reserves helping city weather pandemic
May 14, 2020 | View PDF
The Shafter City Council held a special meeting that served as a strategic budgetary workshop in which they were shown a presentation on how the city performed this fiscal year compared to the budget estimates.
They also discussed the revisions in the estimate with the current pandemic affecting the city’s services and public accessibility. For the past two meetings of the council, the public was able to view the meeting activities on YouTube, but are were not able to join the meeting and participate unless they pre-registered to get the login instructions.
City Manager Gabriel Gonzales and his staff, with assistance from Bill Strader, a consultant specializing in municipal governments and their finances, gave a presentation that showed the city’s strong financial position, and is still enjoying in large part to its strategic planning.
Strader said that the city had the foresight to plan ahead for situations that may result in a downturn in the economy and had reserves strong enough to weather the storms, while the majority of cities in the state are struggling and having to do whatever they can to stay afloat.
“There are cities that have a strong financial pedigree, such as Beverly Hills and Santa Monica, that are now struggling because they didn’t have the strong reserves that Shafter has to handle our current situation,” Strader said.
One reason for the strong position is that city met its goal of having at least 50% of the city’s operating expenditures in its general fund. In the review, it was stated that the actual number was at 59%.
Strader commented that another unique position the city is in is the decrease in sales tax revenue that all cities are facing. With the closure of nonessential businesses, and the special state program that allows small businesses to defer up to $50,000 in sales revenue and giving them up to 12 months to pay the taxes on that revenue, dramatic cuts in this revenue source are expected. “Most cities are facing drastic losses when it comes to sales tax revenue. Shafter is not immune to this challenge, but with the businesses that are open, coupled with the strong performance of the online sales from retailer Williams Sonoma, the decrease in sales tax revenue was much less than other cities,” Strater said.
Williams Sonoma, with its call center at Minter Field, supplies 60% of the city’s sales tax revenue, according to Bob Meadows, the city’s business development director.
Strader stressed that the main goal of a budget is to identify community needs and organize programs required to provide for those needs. You also set goals and put programs in place to meet those goals, he said. Strader commented that it is beneficial to have goal status reports and a midyear budget review in which the council reviews the city’s fiscal condition.
The next step in the budget process comes on June 1 when the council will review a preliminary budget.