City of Richmond: Balancing the FY17 Budget

Report National Resource Network Richmond, California April 26, 2016 Finance + Operation

In 2015, the City of Richmond, California, partnered with the National Resource Network to develop a long-range financial plan that would help the city avoid continued budget deficits. Over the previous six years, the City had spent down its accumulated reserves by $45 million Among other challenges, the city was dealing with high revenue volatility, exposure to variable rate debt risk, prior general fund advances to poorly performing cost-recovery funds, depletion of the City’s cash position, and ongoing significant infrastructure funding needs.

In December 2015, the Network presented on its initial work, which included a five year budget model, and proposed several strategies to help the city address an anticipated $22.7 million minimum negative fund balance by FY21. That report is available here.

The Network continued its partnership with the city in 2016, working specifically to help Richmond balance its FY2017 budget and update the long-range model to take into account the realities of the new fiscal year.

Because the City had implemented many of the recommendations in the FY15 report, the FY16 budget gap was closed for the FY16 and FY17 budget years and the FY21 deficit had dropped to $10.6 million. This was due in large part to personnel related cost concessions, but also Included acceleration of expected vacancy savings in salaries and benefits. Overall the City was positioning itself to close the budget gap, but needed to continue looking for expense savings or revenue increases over the next several years to avoid an ongoing structural deficit.

As with Phase I of the Richmond engagement, National Resource Network consortium member PFM led this portion of the project.

City of Richmond: Balancing the FY17 Budget