S. Lake Tahoe’s midyear budget shows promise
Unfunded health care liabilities are not unique to South Lake Tahoe. Graphic/California Common Sense
By Kathryn Reed
Two budgets in one year. That is essentially what South Lake Tahoe will have.
While the City Council will go over the midyear budget a week from today, the reality is that what will be presented by staff is more like a brand new budget. This is because timing of events did not allow inclusion of the employee contracts when the 2014-15 budget was adopted last fall.
The contracts with the six employee groups include a complete overhaul of health care benefits and raises.
Those changes along with adjustments to the expense and revenue columns have created a midyear surplus of approximately $890,000. The council on April 21 will be tasked with allocating that pot of cash.
Staff is recommending $600,000 be set aside for year three of the employee contracts to pay for the raises. About $50,000 will be used for the city’s 50th birthday bash. The remainder is expected to be set aside to see how the fiscal year ends. This in part has to do with the drought and not knowing if projected revenues will be forthcoming if tourists don’t make Tahoe their vacation spot of choice.
However, hotel taxes through January, the last numbers available, are up 5 percent for the fiscal year.
“Last year the drought brought people up (here),” City Manager Nancy Kerry said. “This year could be different. It may be hard to get a boat in the water.”
Another concern of the city is property values because they are declining. Property taxes, along with transient occupancy tax and sales tax are the three main revenue sources for South Lake Tahoe.
The county tax collector has advised the city to expect $1 million less in property taxes from the redevelopment area, Kerry said. This is because values have been adjusted. Numbers for the rest of town remain unknown. The city will cover that shortfall with money that has been set aside in the TOT trust fund for redevelopment.
Refinancing redevelopment bonds is a way the city is cutting its expenses. That should occur later this spring.
A sign the economy is doing better is the robust number of building permits being issued; with revenues up $250,000 beyond what was forecasted.
With three key changes, Kerry practically revolutionized how the budget is done and the council’s role. One change is to only put in the budget what the true needs are, second is to bring more one-time expenses to the council, and the biggest change was to tackle the unfunded health care liability. One-time expenses include buying defibrillators for most public buildings, additional containers for marijuana evidence, and money to invest in economic development. When Kerry took the helm less than three years ago, the employee unfunded liability expense in the city was about $45 million. Had changes not taken place last fall, that number would now be $53 million. An actuarial last month found that the liability has been reduced by 73 percent and that in 11 years the liability will be nearly non-existent.
By changing the health care plan, eliminating retiree health benefits for employees not yet retired, and modifying coverage the city will see a cost savings of $1.5 million a year for three fiscal years starting with the current one.
“Now resources will be able to be spent on residents’ needs,” Kerry told Lake Tahoe News.
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Notes:
• South Lake Tahoe City Council meets April 21 at 9am at Lake Tahoe Airport.
Thank you Nancy for your vision and hard work. We are grateful to you. You saved us from an impending disaster yet you refuse the salary increase that the City Council wants to pay you.
We at Ski Run Marina will do our part for the economy. Our mouth of the harbor is dredged and nearly seventy boats are available for rental.
Thankfully water level is fine for boating and fishing this year. We hope for the best for next year. Much snow and night time rains!
We do need let the visitors know that the Lake is open. Treat it with respect.
I think that it was a wonderful thing for Nancy Kerry to not take a raise in her salary. after all, she only makes just $15,000+ Benefits a month and it was a Sacrifice to not take the raise. Thank you Nancy.
Interesting graph. What really drives home the point of just how much is owed is the “Per Resident” and “Per Student” designations for these unfunded liabilities.
So California is experiencing a horrendous drought with no end in sight, has $150 billion in unfunded retiree healthcare debt (and let’s not forget CalPers and that retiree obligation), and the State’s leadership wants to build a high speed railway system. Well, I suppose a really fast train could be the answer to all our problems. (Sarcasm intended.)
Nancy Kerry is doing a great job with our city. Seriously I’m impressed on how she’s changing the longterm and short term out look for the city.
Elie, you’ve done great work with the marina! Keep it up, you help attract tourists with your beautiful Marina and we all appreciate it.
Does anyone know if Randy Lane is being paid monthly by the city as a consultant? If so how much and why?
This to previous comment by RETIRED COP. Get your facts straight. You state “this city has always been self-insured”. Not true. I know this because of having been the “unpaid insurance consultant” to the city from DAY ONE. Others wrote the insurance and collected the commissions. I was there on DAY ONE AND HAD WORKED TO BRING IT ABOUT. I advised all the City Managers from John Williams forward and did not get involved in the actual writing of city insurance until the then Finance Director asked me to come in and submit a bid for the Medical Insurance since they were in trouble with proposed increase. At that time I introduced the SELF INSURED CONCEPT to the city (the first self insured program in the basin) I made the promise at that time if they would go self insured under the my proposed program I would guarantee a first year savings of $100,000. One particular counsel member said he would like to see back in one and se if I had the “guts” to stand in front of him. Said glad to, and did, the savings that year was in excess of $125,000. I continued to work with the city for many years, told each and every city manager(until I left SLT) that they were digging a hole they would never get out of unless they faced up the fact that they were making promises that future counsels could not keep. Would love to come back and address any and all as to the complete history of the medical program. As a personal aside Hal Cole “Yes I still remember telling you in High School to keep you shirt tail tucked in your pants. signed Farkworth aka. Bob Heng
Nancy, thank you for a job well done! Elie, a hearty thanks for making the Ski Run Marina a better place!
Let’s not forget it was the previous City Manager that made the tough cuts. Nobody liked Tony but he was able to cut expenditures and this CM is getting credit?!? Why is the city holding on to so many building permits? I’m told they are being held for multi family in the Tahoe Valley Community Plan Area. The reality is nobody is planning a project! If they did it would take several years to get through the planning and approval proces. Release the building permits, allow our local economy the ability to thrive.
How good Kerry is at her job is all a tempest in a teapot in my opinion.
She is obviously knowledgeable and persuasive, and clearly understands what must be done to control the City’s finances in a continuingly changing set of conditions.
But she cannot do any of the things on her plate without the City Council voting for it.
Do not forget that Ms. Kerry works for the Council, they hired her, they can fire her pursuant to her contract. The difference here is that the council has for once decided to listen to a painful list of options to get out of trouble over a period of time, and to avoid drifting into a worse situation.
The entire mess has been caused by Council actions, or non-actions over many years. End of Story.
It is certainly too bad that benefits promised years ago have to be retracted, however they should not have been given in the first place.
This is what happens when all projections are based on assuming a continuing plus or minus 3 percent growth, year after year forever and it doesn’t happen, but in a head-in-sand disbelief, no changes are made in the assumptions.
The entire global economy is in the same fix because of unreasonable assumptions and greed.
You cannot have constant growth with finite resources without coming eventually to a stall.
We are only seeing the beginning of it.
The limits on growth in the Tahoe Basin due to TRPA and myriad other agencies and forces trying to keep change at bay, even rolling change back to sometime in earlier history makes running a city here even more difficult.
SLT’s City Councils have been generally too self serving and clearly not up to the difficult task they are charged with. They have been aimed at being popular (for re-election purposes) and feathering their own nests with public dollars.
It is wonderful that the Council has FINALLY listened to a Manager who is proposing and implementing difficult fixes instead of firing her and looking for another who would be more tractable and not make waves.
It is not too late to avoid a bankruptcy if these actions are pursued.
The city budget is in better shape, perhaps.
But the health of a community is the budgets and opportunities for the people in the community. That should be the focus of government; the health of the citizens they serve.
From what I have heard and researched the South Lake Tahoe community is in very bad shape.