The City of Gustine’s proposed operating budget for the 2026-2027 fiscal year was presented and discussed during a city council meeting last Tuesday.
Gustine Finance Director Jenny Morrison provided a PowerPoint Presentation that included a breakdown of the city’s revenue, expenditures, capital improvement plan (CIP) and suggestions on where to allocate funding. Gustine is expected to have $13.17 million in operating revenue and spend more than $9 million in expenditures. The budget is in a surplus of $3.9 million before the CIP projects.
The PowerPoint Presentation also revealed a $702,824 general fund deficit. City Manager Correa said it’s “unsettling” for the general fund to have a deficit. She added that the budget presented was without any cuts to services.
“What that means for us is really looking into all of those contracted services, trying to make a change in vendors if we can realize the savings in doing so,” Correa said.
A resolution was not made as another workshop will happen on July 21. Correa stated in an email to the Westside Connect that two council members will be absent for the June 16 meeting. She also wrote that the City Council will likely consider the budget’s adoption on August 4.
General fund breakdown and expense increases
The 10 sources of revenue make up the general fund. The city’s sales tax and property tax generate the majority of funding at 28% and 25%, respectively. Following that were vehicle license fees and other “miscellaneous” revenues at 17% each.
Water and sewer funds comprised 39% and 38%, respectively, of the enterprise funds revenue. The revenue also consists of reuse and storm drain funds, which generate a combined 23%.
Other revenue sources include Congestion Mitigation and Air Quality Improvement Program (CMAQ) funding at $1.7 million and Measure V, Merced County’s half a cent transportation sales tax, brought in $638,540.
While the Gustine has brought in revenue, the city will spend more in expenses. Insurance and fuel costs are projected to see a combined 23% increase. Insurance costs are expected to cost $643,574, $97,988 more, and fuel is projected to cost $4,300 more at $90,300. Chemical deliveries are estimated to increase at a $400 bulk delivery charge, which could lead to a cost of $9,600 per month on two deliveries.
$2.47 million is estimated to go towards salaries, with $1.2 million from the general fund. Morrison said salaries and allocation were focused on last year’s budget.
She added the focus for this year will be equipment and department upgrades, evaluating vendor contracts, and operation costs.
The city could pay $4.6 million in projects and equipment costs next fiscal year. Some of the projects under CIP are renovations to Pioneer Park, changes to the Gustine Airport runway and fuel pump, and the downtown roundabout. Ventures that are a part of the CIP will use funding from CMAQ, Measure V, funding from Senate Bill 1 and the city’s gas tax.
The public works department is expected to spend $208,500 from the general fund for its projects. Some of those include tree trimming, stump removal and cameras at the city’s wastewater treatment plant.
Three recommendations presented to council members
Three recommendations were presented to the council members. The first will move a combined $61,844 from the User Utility Tax to the Al Goman Center, recreational services and the Gustine Pool. Morrison said it was best that funding requests, a combined $210,500, for several departments such the Gustine Police Department, public works department and the community pool at a later time.
The second recommendation was to show all three account deficits and decide what to do with the account next year, Morrison added. Funding requests will also be moved and revisited midway through the fiscal year. The final could either be what the council member would like to do or a combination of two recommendations.
Council members provide input on budget
With the deficit looming, Mayor Pat Nagy said it’s best to look more into some of the issues before choosing a recommendation.
“A lot of this information is new, but we’re now digesting it, and to try to come up with whether one or two is the best recommendation on the spur of the moment here,” Nagy said.
Council member Sherri Marsigli said she was concerned about how there is a general fund shortfall despite previously being told that there was enough money to hire more staff and purchase equipment.
Morrison, in response to Marsigli, said previous city managers made those decisions.
Council member Blake Giles suggested a plan that shows what cuts are made in a “worse case scenario.” From that point on, city officials can evaluate the situation and see which expenditures to keep, he added.
