Call it the cost of doing business. The City of Corcoran routinely takes money from its enterprise funds to help pay for other parts of the city budget.
It’s nothing new and it takes place in most, if not all, city budgeting processes. The “take” is known as “administrative overhead allocation.” The overhead is shifted from the enterprise funds—those are the areas individuals pay each month on their local utility bills—to other parts of the local budget.
On average, according to City Manager Kindon Meik, the overhead figure averages between nine to 12 percent of the enterprise fund individual budgets. He has focused on keeping the figure fairly flat in the last couple of years and has discussed the issue with public works directors and city managers from around the area.
Corcoran currently sits on the high end of the overhead allocation, at about 12 percent. The money comes from the water, sewer, garbage and storm drain funds and is disbursed to several other city budget areas, including the following:
–The city council budget of $62,750;
–The city manager department $184,000;
–The city attorney budget of $150,000;
–The finance department’s budget of $431,500;
–The building inspection budget gets $10,000.
Most of those funds that receive overhead money also complete their department budget with money from the general fund. Finance receives the highest percentage from the enterprise funds, accounting for just $34,000 from the general fund for its total, and taking $397,500 from the enterprise funds.
Finance Director Soledad Ruiz-Nunez noted that the finance department provides support for the enterprise funds, along with taking care of all the billing for those funds. Her department also takes care
of billing residents for their utility costs.
Once the overhead money is released to the departments, it can be spent at the judgment of the director of that department. Training, equipment, even salaries can benefit from the enterprise money.
Overhead costs have gone up substantially over the past several years. Less than 10 years ago, the city pulled approximately $600,000 from the enterprise funds to help fund other departments; this year, it is expected the enterprise funds will donate almost $1.2 million towards the overall budget. Here’s that breakdown:
–Refuse (garbage), $260,000;
–Wastewater (sewer), $200,000;
–Storm drain, $147,000; and
Transit is also an enterprise fund, but it does not appear on the utility bill. Instead, transit receives its funding from the state in the form of gas tax allocation and local transportation funds. Like the other enterprise funds, it is self-supporting. Transit funds cover the Corcoran Area Transit (CAT) transportation system, as well as proving subsidized tickets for the Amtrak train between Corcoran and Hanford and the Kings Area Rural Transit (KART) buses between Corcoran and Hanford.
The figures can get confusing at times. For example, the storm drain budget in the current fiscal year is $264,265. The overhead allocation from the storm drain fund is set at $147,000.which equals 62.82 percent of that total budget. Storm drain’s entire budget comes from utility billings. According to the city budget, a total of $341,765 is storm drain income (that’s the total for the year on the utility bill), with almost 63 percent of that utilized for overhead.
There appear to be two colliding factors in the continued increase of the overhead allocation: diminishing resources and increasing costs. While the city’s income, most notably in the general fund, continues to drop, costs for providing services do not.
“I think it’s a quality of life issue for the residents of Corcoran,” said Mayor Jerry Robertson. “Beyond making sure the water comes on when you turn the tap, we also want to provide a certain level of services to our residents, and that takes money.”
Meik said that while the city is trying to manage wisely, costs have to be faced. Everything from equipment to IT services to insurance has increased, while the general fund income has stalled and has shown less and less in reserves over the past six years. The city has made every attempt to keep general fund reserves from slipping to under $2 million, but in this year’s budget, it is estimated the reserve will only be $1.5 million.
The overhead income helps blunt the attack on the dwindling general fund. Less general fund money has to pay for the finance department, government building maintenance, the city manager department, the city attorney and parks. Instead, the general fund can support public safety, including the police and fire departments. Residents are probably right in thinking they are now paying more for less. However, it appears the only alternative is paying less…for a lot less.