What is the General Fund?

The General Fund is the City’s unrestricted source of revenues and expenditures; it is its largest government-type fund at almost $9 million. The General Fund supports all departments and more than 50% of the City’s total personnel costs. Elected and appointed officials, Community Services, Library Services, Planning and Community Preservation, and the Police and Fire Departments are all dependent on the General Fund for their operations.

In addition to the General Fund, the City has restricted funds. Any services that cannot be funded with restricted funds must be funded with General Funds. Restricted funds, as the term implies, may only be used for specific, restricted purposes. Restricted funds are not available to be used for any purpose the City Council desires. Examples of restricted funds include: gas tax, Proposition A, Proposition C, water revenue, sewer revenue, and grant funding that cannot be used to fund anything other than what the grantor designates. Some restricted fund uses are designated by the voters (gas tax, proposition money); while other restricted funds can only be used for the purpose for which they are collected (water or sewer funds). For example, water funds, collected on residents’ bi-monthly water bills, cannot be utilized to fund the purchase of a fire engine or funding of police services; these funds can only be used for water utility related purposes. 

General Funds can be used for any municipal purpose. General Funds can be used for the general operations of the City and to fund basic City services such as police, library, fire, and recreational services. The City Council has the most discretion regarding how these funds are used because the funds can be used for any municipal purpose the City Council designates. Examples of revenue sources for General Funds include: property taxes, UUT, sales taxes, fees, and business licenses. Sierra Madre is dependent upon property taxes and UUT for more than 83% of its General Fund revenues, unlike other cities that receive more revenues from sales taxes. Sierra Madre only receives 4% of General Fund revenues from sales taxes. 

The largest General Fund revenue source is property taxes. Property taxes are collected by the County of Los Angeles, who sends the City its portion throughout the year.

The City receives about 22 cents of each dollar paid in property taxes. If $2,500 are paid in property taxes, the City receives approximately $550 for general services including police, fire, paramedics, and library services.

The UUT and the General Fund

The UUT currently makes up 22% of the General Fund's revenues. From July 2009 - June 2015 the City's UUT was 10%. Per the voter approved initiative approved in 2008, the UUT declined to 8% on July 1, 2015 and will decline to 6% on July 1, 2016. 

At the current 8% UUT, the City is relying on its reserves to balance the current year’s budget. The current year’s deficit is $530,000 and is expected to increase to $994,000 in the next fiscal year. Continually using reserves to balance the budget is not sustainable.

On April 12, 2016 voters will consider Measure UUT, a ballot measure to increase the User Utility Tax (UUT) to 10%. If Measure UUT fails, the UUT will decrease to 6% on July 1, 2016. To balance the budget, Sierra Madre City Council would need to reduce General Fund expenditures by $1 million (11% of this year’s General Fund budget). This amount is in addition to the $2 million in cuts already made to general services.

Cutting Costs

Despite the actions of City Council to reduce costs to balance the General Fund budget each year, inflationary growth of expenditures has continued to outpace the growth in City revenues.

Council recognizes that the citizens of Sierra Madre demand the most value for their tax dollars and have implemented cost-cutting initiatives since 2010; cutting approximately $2 million in General Fund expenditures. These reductions include:

• Contracting park & landscaping maintenance services;
• Outsourcing the youth activity center operations; 
• Outsourcing the aquatics center operations; 
• Reductions in police overtime and specialized assignments; 
• Reductions in supplies; 
• Reduced staff in community services, library, police, and public works departments; and 
• Reduced employee benefits.