City of Sonoma Budget $1 Million in the red

Budget figures just released by the City of Sonoma reveal that its General Fund is projected to be over $1 million in the red for the 2023-24 budget year. This is a sharp contrast to projections made in a previous budget hearing last year, when the City Council was told Sonoma’s budget was balanced and revenue forecasts continued to be positive.

On the heels of that prior budget hearing and approval, the City Council approved a variety of new expenses, including adding two new positions in City Hall and approving salary increases for both union-represented and unrepresented employees.

In his report, new City Manager David Guhin noted that “Based on projected revenues and the FY 2023-24 budget, the General Fund is expected to end the budget year with a deficit. Fortunately, the City had pursued a healthy reserve policy that allows it to weather the projected deficit. At June 30, 2023, the General Fund reserve level is $11.7 million, of which $1.1 million will be used to support budgeted expenses in FY 2023-24.”

The end of Federal funding related to the pandemic also contributed to the deficit. “A major portion of the overall drop in revenues is attributed to the loss of funding from the American Rescue Plan Act (ARPA) that provided two years’ worth of funding to governments to combat the effects of the COVID pandemic,” Guhin reported. “Finally, Other Revenues are expected to drop by a little over $450,000, primarily due to a grant that was budgeted in the previous fiscal year that may have been a one-time increase.”

How the Council and City Manager will respond to this new budget problem will be discussed at a special meeting of the City Council on Tuesday, May 30, in the Emergency Operations Center at 175 First Street West, in Sonoma, beginning at 12 p.m.

The full report and agenda can be viewed here.