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FRESNO, Calif. – When asked about their department budgets, most directors would likely respond with, “the budget drives the work.”

After months of preparing a balanced budget, Mayor Jerry Dyer presented his proposed 2024-25 fiscal year budget Thursday to the City Council. This budget, which was introduced at the State of the City address, outlines detailed plans to manage the city’s finances and address a significant budget deficit.

Mayor Dyer’s proposal details a nearly $2 billion budget for the upcoming fiscal year, with an emphasis on bridging a $47 million deficit.

The General Fund budget is estimated to be $482.9 million—an increase of $21.3 million from FY24.  Elected officials can then decide how it should be spent while funding key services/departments and programs–housing, public safety, capital projects, and addressing homelessness to name a few.

About 80% of the projected General Fund revenue comes from property tax ($189.8M), sales tax ($147.7M), business licenses (23.2M), cannabis ($7.1M), and transient occupancy tax ($15.7M). The remainder, about $97 million, is accounted for through other revenues and charges.

As mentioned during the State of the City, property taxes continue to trend upward—helping offset the decline in sales tax revenue.

Due to a recent agreement with Airbnb, Mayor Dyer’s proposal anticipates a $2 million boost in revenue from the transient occupancy tax. This increase comes from motels, hotels, and other short-term rental properties.

After an extensive approval process, 13 out of the 19 cannabis businesses permitted in the city have been approved and will be of major help to the General Fund.

Despite these significant gains, the $47 million deficit remains driven by several key factors. According to Dyer, Fresno previously received millions in one-time state funding to support the economy during the pandemic, but that support has stopped. Other major contributors to the deficit include inflation, employee contracts, service agreements, and increasing utility costs.

The mayor, after calling out PG&E, stated the utility company accounts for $4.8 million city-wide, of which $400,000 comes from the General Fund.

The Safer Grant helped the city hire 42 firefighters, which was a great help. However, the grant is ending, and now the city will have to cover the nearly $5 million cost.

Various expenses, including workers’ compensation, liability insurance, pensions, health and welfare, annual salaries, technology and software, and overtime premium pay, all play a part in contributing to the looming deficit.

Bridging the Budget Gap

To lift Fresno out of the deficit and towards financial stability, the budget proposal incorporated several strategies to balance the budget.

Dyer emphasized that ensuring public safety has been his top priority. He advocated for the full bonding of both Fire Station 12 and the police communication center, which could potentially free up around $30 million from the General Fund.

Additionally, the implementation of a master lease could facilitate the acquisition of a long-overdue helicopter and the installation of a new communication tower for the Fresno Police Department.

During Thursday’s council meeting, the mayor highlighted the significant increase in public safety personnel over the past three years. This expansion includes 88 new police officers, 18 dispatchers, 25 community service officers, 4 technicians, and 20 park rangers added to the city’s roster.

While the upcoming budget doesn’t accommodate the hiring of more officers, it does factor in the replacement of 15 patrol cars and necessary equipment.

Currently, the Fresno Police Department has 926 sworn officers, and the Fresno Fire Department includes 375 firefighters—the highest numbers in Fresno’s history.

A valuable asset to the fire department has been the addition of four medical squads. These squads responded to 7,000 out of the 50,000 calls received by the department. The General Fund will continue to support this program, allowing fire personnel to address other demands.

Adjustments to property taxes, leasing instead of purchasing city vehicles, attrition, and departmental cuts beyond attrition are all part of balancing the budget. Department directors were asked to reduce their expenditures by 3%, and according to Mayor Dyer, many were able to cut even more than requested.

Despite the fire department reaching its highest staffing levels, Stations 2, 16, and 17 were asked to reduce their personnel based on call volume. Councilmember Mike Karbassi quickly opposed the reduction of Station 2, stating he fought long and hard to staff that station fully and would not allow that station to be impacted by these cuts.

Beautifying Fresno

The FY24-25 proposed budget also allocates funds for beautification efforts, such as graffiti removal, freeway cleanups, addressing illegal dumping, repaving streets, and eliminating potholes.

Dyer discussed the $250 million, along with an additional $43 million in state grants designated for infrastructure updates. Fresno has received $50 million of the largest grant and is expected to receive the smaller grant in the next couple of months. Unfortunately, the remaining $200 million has been deferred for at least two years.

While that is put on hold, the proposed budget does include $1 million in façade business improvements, $500,000 in business incentives, and $1 million in infill stimulants–possibly reduced fees, and waivers.

Approximately $2.8 million from the General Fund is earmarked for council infrastructure, with a carryover of $4.5 million from the previous budget. It’s worth noting that the council, not the administration, decides how this money is spent in each of the districts they represent.

According to Mayor Dyer, 25 major capital projects are set to kick off in the upcoming fiscal year.  Among them is the Fresno Convention Center, which will see about $350,000 allocated for building upgrades to further bolster economic development.

Looking Ahead

“We recognize that the budget challenges we currently face in FY24 and 25, could possibly grow worse in FY26, based on all indications. Therefore, it is imperative that we maintain, in my opinion, a strong reserve and look for innovative budgeting solutions that will further reduce expenses and increase revenues in FY26,” said Dyer.

In a significant achievement for the administration’s long-term financial stability efforts, the current fiscal year will conclude with a fully funded reserve. Over $46 million has been secured for a “rainy day.”

Following last week’s budget proposal, the city council will have a few weeks to review and negotiate based on their priorities. The deadline to adopt a balanced budget is June 30, with it taking effect on July 1.

To view the full budget presentation, click here. To view the in depth budget proposal, click here.