Elk Grove Rolls The Dice With Reserves on Jobs Stimulus Plan

When The City of Elk Grove announced they landed 1,500 state jobs to be relocated with the consolidation of disparate offices of California Correctional Health Care Services(CCHCS), it was greeted with great enthusiasm. Now that the initial afterglow has worn off, reality has surfaced.

That reality comes in two forms - economic incentives, a stimulus package if you will, for the CCHCS to the tune of $1.9 million and $1.4 million for the developer, Pappas Investments.

It was announced late this afternoon that at tomorrow night's meeting the agenda has been amended to include council's consideration of both stimulus packages.

Stripping away the relative merits of using taxpayer dollars for the stimulus to fund a state agency and a privately owned enterprise should they be awarded, and they will be, there are some financial and political implications worth considering.

First of all from a financial point of view, according to a staff report the $3.3 million is not currently budgeted and therefore will have to come from the city's general fund reserves. With the use of reserve funds for this and other projects, it is projected by fiscal year 2013-14, the general reserve will fall to $3.8 million.

The city has a goal of maintaining its fund balance at 15 percent of annual appropriations. The report further says that the projected $3.8 million reserve in 2013-14 will only be 6.8 percent of that years projected annual appropriations.

The report also says that it believes the addition of 1,500 jobs in the city will positively affect revenue by $3 to $4 million.

Clearly if the city experiences some sort of hiccup or great unforeseen expense in the next few years, the cushion that city leaders have long touted, could quickly evaporate if in particular the projected revenue increases don't materialize as hoped.

If that happens, will city services be cut? And if they are cut, who will be holding the bag? Are deficits in the city's future?

From a political point of view it will be interesting to watch if there will be any political posturing on this matter. Mayor Steve Detrick and Councilman Gary Davis, who worked on attracting a state agency, will undoubtedly support the stimulus as well as fellow member Jim Cooper.

That leaves council member Pat Hume and Sophia Scherman. In the past Hume has gone on the record saying he is not comfortable with letting the general reserves fall below the goal of 15 percent.

But Hume is cognitive enough not to vote against a stimulus that promises 1,500 jobs. He will probably say he supports it but is concerned with the decreasing percent of reserves.

For Scherman, the vote will be an early test to see of she has the bona fides as she starts her run for the State Assembly. A Republican, Scherman will need to placate the ever-growing influence of the Tea Party in GOP party politics.  

Voting for the stimulus could paint her by Republican opponents as not being for smaller government and fiscal austerity that is paramount to her Tea Party compatriots. Should Scherman emerge from the Republican primary to run in the November general elections, a vote against can easily portray her as being "anti-job."

Either way, it could put Scherman in a no-win situation. It will be interesting to see if Mayor Detrick calls for Scherman's comments first once council goes into deliberation tomorrow night and whether or not she will even bother commenting.