Fresno is facing a $20 million budget shortfall, city officials said in a mid-year budget report to the city council on Thursday. (GV Wire Composite/Paul Marshall)

- City Council President Karbassi says Fresno is bleeding revenue to Madera County.
- Revenue projections are down $5 million as city's share of cannabis taxes misses projections.
- Employees may not get raises, and only essential positions are being filled.
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Fresno is facing a $20 million budget shortfall, city officials said in a mid-year budget report to the city council on Thursday. And, it could get worse.
There is no more federal rescue dollars to help with the budget anymore, City Manager Georgeanne White said.
“Unless the federal government comes to our rescue again … we’ve had those crutches for us and unfortunately those are gone,” said White.
Fresno City Council President Mike Karbassi said the city has a revenue problem, especially with Valley Children’s Hospital starting to develop its land for retail space in Madera County.
“That’s a real threat to our ability to provide services. They are a hospital, we’re a city. We have to provide municipal services and that is being threatened,” Karbassi said.
Developers are “leapfrogging” Fresno, Karbassi said. That means people receive services and work in Fresno, but pay property taxes — a key revenue driver — in Madera County.
Karbassi didn’t mention the “T” word — taxes — preferring “revenue enhancer.” He balked at asking the public to raise taxes while noting that Clovis voters recently implemented a 1-cent sales tax for public safety and city services.
He blasted litigation from groups “that get out-of-town money, don’t create one job or build one house.”
The city has faced several lawsuits from environmental justice groups, increasing the difficulty of building.
Revenue Is Short of Projections
Revenue projections are down for the fiscal year, about $5 million less than estimated.
Sales tax ($4.5 million under projections) and cannabis revenues ($4.9 million) are dragging down the estimate, made as of Feb. 4. Several items are above projections, but none greater than $1 million. Franchise fees leads the way at $900,000.
Current economic conditions are a factor in the sales tax decline, city budget director Henry Fierro told the council. The cannabis discrepancy is the lack of pot stores open. The city predicted 19; only 13 are open.
And, revenue projections for the stores that are open are missing the mark.
“They are just not making that revenue by significant numbers,” White said, up to 65%. The reasons, she surmised, were an oversaturation and competition from the illicit market.
Some figures are optimistic. Property tax revenue growth (5.83%) is ahead of projections (5.55%).
Despite the dire budget numbers, several councilmember said they want to preserve the Eviction Protection Program, providing taxpayer-funded attorneys to city residents facing “illegal” evictions. The current budget is $2 million, but that won’t get the program to the end of the fiscal year in June.
City Attorney Andrew Janz said his office needs another $500,000 to keep the program solvent.
The negative budget news is also affecting the city’s staffing.
There is no official hiring freeze, White said, but a hiring slowdown. Only positions “absolutely necessary” will be filled, she said. There is nothing in the budget for raises.
Councilmember Nick Richardson told department heads it’s “belt-tightening” time.
Other Notes
Richardson offered $10,000 of his own salary to help pay for 100 follow-up swim lessons for slow learners. The motion passed 6-0, with the council officially removing charges for extra lessons.
Without discussion, the city council voted 6-0 on the consent calendar to disband the Immigrant and Resident Affairs Committee, to transition to a less formal city-county Immigrant Affairs Working Group.
Related Story: Can a Joint Fresno Committee Allay Immigration Fears? These Leaders Want to Try
The council is apparently rotating who gets the honor to lead in the Pledge of Allegiance. So far this year, Annalisa Perea and Miguel Arias have led the Pledge. For the past few years, Garry Bredefeld — the only veteran on the council at the time — led. Richardson, who succeeded Bredefeld, is the council’s only veteran.
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