Chico audit completed; general fund to be $7.66 million in hole

Mar 20, 2014 7:08 PM

The City of Chico's audit has been completed.

The city's $13 million dollar deficit must now be realized in the general fund, and that will mean more cuts to staff salaries and benefits.

Councilmember Randall Stone told Action News Now that puts the general fund $7.66 million in the hole. He said 80 percent of the general fund is used towards employee salaries and benefits, otherwise known as staffing.

“We’ve got a lot of work to do, and very little time in order to make that happen,” Stone said.

Stone said previous city auditors have allowed deficits in other funds, but this year is different.

“In my opinion there's some beauty to that,” Stone said. “We have to address our financial concerns, our fiscal constraints, immediately. Not in another year-right now.”

The general fund is used for primary spending on discretionary things, Stone said. And 80 percent of that is used towards employee salaries and benefits. Of that, Stone said 80 percent of that is police and fire salaries and benefits.

That’s why he was the sole councilmember who opposed accepting the SAFER grant for the fire department recently.

“It disturbs me that we know we're going into one of the most challenging fiscal environments that we've ever had,” Stone said. “And we're going to have to recognize this debt immediately. Why we're locking down 30% of our general fund budget is beyond me.”

Looking forward, Stone said the city needs to live well within its means.

And, as state law requires, it is not spend more than it makes.

All at the same time, it needs to build back its reserves, which have been eviscerated.

Though it all sounds like a pretty dire situation, Stone said this is not bankruptcy.

He said the city’s assets far exceed its liabilities.

“We are not in a bankruptcy situation. In fact, the reality is we would be laughed out of bankruptcy court.”

Cutting the assets won't be easy, but one thing is for sure, for a city that hasn't adjusted its salaries and benefits for decades, it’s entirely necessary.

Staff and council will review the audit at the next council meeting, this coming Tuesday evening.

Stone said the preliminary budget for next year will be released next month, and be decided on in June.


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