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October 19, 2006
Is Chico Going Broke?
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| The City Staff mailer ($15,000 by the way)
is mailing out today. In it, it describes the $1.5 million dollar shortfall
in net income for the budget year 2006-2007. The projected budget shortfall is $40 million-$50 million over the next decade. My understanding is that this is the projected cumulative shortfall for operating the City on a day-to-day basis. Or an average shortfall of $4-$5 million annually. On the "big" projects front the redevelopment agency (RDA) is a major source of funding for large projects in Chico. Earlier this year the RDA estimated that it could spend $45 million to $65 million of its remaining bond. A safe bet would be $45 million since the City of Chico hasn't even performed a publicly accessible cash-flow analysis of the income source to the RDA bond. If you add the proposed Police Station to the existing RDA expenditures the total RDA money needed is about $80 million. $15 million short of the highest estimate of what money would be available. The general funds and RDA are two different buckets of money. Typically they are used for two very different needs. Regardless of which bucket you peer into it looks like Chico is going broke. |
| Here are the revenue and expenses pie charts
from the soon to be mailed Staff mailer. |
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Posted by Lon at October 19, 2006 01:58 PM
Comments
A high rolling friend of mine once told me, " When you're thousands of dollars in debt and you can't pay it off, you're in big trouble. When you're millions of dollars in debt and you can't pay it off, the bank is in big trouble."
In this deal, who is the bank?
Posted by: Gregg Payne at October 19, 2006 08:54 PM
Gregg,
I can't believe they're charging transients a $1.8 million tax for occupancy.
No wonder a homeless campground is in the works.
Maybe they should call that the hotel tax.
Lon
Posted by: Lon at October 20, 2006 06:54 AM
Gregg sent me this chart showing the amount of Public Art Funding that comes from TOT (hotel tax) funds.
It's pretty small. In addition 1% of RDA money goes towards public art. I think that covers the cost of the larger projects (at least portions of them).
In addition to "in addition", I believe some developments are now including public art components, which would be paid for by the homeowner as part of their purchase price. Oh...I mean the developer pays for it.
http://www.norcalblogs.com/commission/images/TOT%20Graph.jpg
Posted by: Lon at October 20, 2006 10:49 AM
The 9% of TOT funds goes to support local arts organizations.
These include the performance arts groups as well as visual arts.
This percentage should be increased.
Especially since the City staff takes about $30 K off the top of this 9% to administrate and manage it above their salaries.
These groups probably generate far more TOT funds, by attracting more tourism, than they cost.
For every ten dollars that a visitor spends at a hotel, they contribute about a dollar to build our TOT Funds.
9 cents of this dollar goes to arts groups.
(less than 7 cents actually makes it to them after the staff skims off the top, and very little of the money that goes to the arts groups trickles down to individual artists.)
31 cents goes to economic development.
(CEPCO, The Chamber, DCBA etc.)
60 cents goes into the General Funds.
(This adds up to be about 1 million dollars to contribute to the big 46 million dollar pot.)
Dang, this makes my brain hurt...
Posted by: Gregg Payne at October 21, 2006 10:34 AM