Needles City commissioners unanimously approve Development Services budget amid revenue concerns
May 10, 2023 | Needles City, San Bernardino County, California
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Needles City commissioners voted unanimously to approve the Development Services Department budget for the fiscal year ending June 30, 2024, after staff outlined conservative revenue assumptions and large capital spending plans.
City staff told the commission the preliminary budget projects about $11.6 million in revenues against roughly $11.011 million in expenditures, leaving a shortfall the presentation characterized as roughly $500,000. Presenter S3 said the administration is taking a conservative approach to revenue forecasting because of economic uncertainty and industry-specific pressures.
The staff highlighted an expected decline in cannabis-related revenue of approximately $400,000 this year. According to the presentation, cannabis revenues are down about 20 percent to date with a possible additional 10 percent decline; staff attributed the fall primarily to a market glut and competition from unregulated operations.
Despite revenue concerns, the city has approximately $30 million in capital projects planned, including street repairs, the water treatment plant and park renovations. Many of those projects rely on grant reimbursements, which staff warned create cash-flow constraints because the city often pays costs up front and waits for state or federal reimbursement.
Commissioners pressed staff on operating costs tied to new capital investments. Staff gave the pool as an example: the city receives roughly $20,000 in annual fees but faces about $180,000 in operating costs. The presenter said most grants cover capital expenses only and do not fund ongoing maintenance.
Other items raised during the discussion included salary increases that were phased over a three-year classification study and a receivable backlog for code-violation fines. Staff said the city’s working-capital reserve target is 15 percent; current reserves were described in the presentation as between about 8 and 10 percent and the budget approach seeks to rebuild those levels conservatively.
After discussion, a motion to adopt the recommended budget was moved and seconded and passed by unanimous voice vote. The motion to forward the Development Services budget to the city council for final approval recorded as unanimous.
Next steps: staff will transmit the recommended budget to the city council and continue monthly permit-log reporting to the commission.
City staff told the commission the preliminary budget projects about $11.6 million in revenues against roughly $11.011 million in expenditures, leaving a shortfall the presentation characterized as roughly $500,000. Presenter S3 said the administration is taking a conservative approach to revenue forecasting because of economic uncertainty and industry-specific pressures.
The staff highlighted an expected decline in cannabis-related revenue of approximately $400,000 this year. According to the presentation, cannabis revenues are down about 20 percent to date with a possible additional 10 percent decline; staff attributed the fall primarily to a market glut and competition from unregulated operations.
Despite revenue concerns, the city has approximately $30 million in capital projects planned, including street repairs, the water treatment plant and park renovations. Many of those projects rely on grant reimbursements, which staff warned create cash-flow constraints because the city often pays costs up front and waits for state or federal reimbursement.
Commissioners pressed staff on operating costs tied to new capital investments. Staff gave the pool as an example: the city receives roughly $20,000 in annual fees but faces about $180,000 in operating costs. The presenter said most grants cover capital expenses only and do not fund ongoing maintenance.
Other items raised during the discussion included salary increases that were phased over a three-year classification study and a receivable backlog for code-violation fines. Staff said the city’s working-capital reserve target is 15 percent; current reserves were described in the presentation as between about 8 and 10 percent and the budget approach seeks to rebuild those levels conservatively.
After discussion, a motion to adopt the recommended budget was moved and seconded and passed by unanimous voice vote. The motion to forward the Development Services budget to the city council for final approval recorded as unanimous.
Next steps: staff will transmit the recommended budget to the city council and continue monthly permit-log reporting to the commission.
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