Facing increasing debt service that will skyrocket in 2023 before coming back down to earth and a dire inflation forecast, the City of Tracy on Monday presented the Tracy City Council with some daunting news.
Just months after approving a 7% levy hike, the council is staring into the headlights of a potential 13% levy increase for 2023.
In a presentation to the council at a special budget study session, City of Tracy Finance Director Krista Listul and City Administrator Erik Hansen painted a bleak picture for Tracy residents — a future that assumes higher inflation, and rising medical and employee costs compared to 2022. According to the City’s projections, anything less than a 13% levy increase in 2023 will require use of the fund balance for operations moving forward.
“If we continue to have 7% to 8% inflation year after year after year, we’re in a lot bigger trouble … Hansen said. “We think that it’s going to get a little better, but we still think 2023 has a lot of potential to be bad.”
Similar to 2021, the City broke down different scenarios that could play out under varying increases. Keeping the levy at 7% would result in $229,884 in money for capital projects in 2023 — $712,727 over a five-year period. Those figures assume that the fund balance of $275,376.92 from the 2016B Bond gets put into the capital fund. A 7% tax levy increase would leave the City $86,897 in the red.
The City would get back into the black in 2024, and as the City’s debt starts to drop off, the City’s bottom line would improve dramatically over the following three years.
See this week’s Headlight Herald for more on this article.