Press Release: City of Benicia Controls Spending, Cuts Use of Reserves by Half

City of Benicia Controls Spending, Cuts Use of Reserves by Half 

The City of Benicia is projected to save nearly $1.9 million by reducing planned expenses in fiscal year July 1, 2023 to June 30, 2024. The reduction in expenses reduces the city's spending of reserve funds but does not balance the ongoing budget deficit. 
 
In early 2023, the City of Benicia identified a structural budget deficit of nearly 10 percent of the city’s budget, approximately $6.5 million, as a result of expenses continuing to outpace revenues for many years. In order to adopt a balanced 2023-2024 budget, staff expected and budgeted to use $3.9 million from the city’s reserves to address the gap between expenses and revenues.  

On March 19, 2024, finance staff will be presenting the 2023-2024 mid-year budget report which includes an update on forecasted revenues and expenses, highlighting that only $1.9 million will be required to be used from city reserves to balance the fiscal year budget. However, to achieve this reduction in spending, the city adopted a budget with short-term and unsustainable cost saving measures, such as reducing contributions to the worker’s compensation fund, suspension of vehicle replacement and equipment replacement fund contributions, among other cuts to essential city operations. During the first half of the fiscal year additional savings were created by not filling selected vacant positions and judiciously administering operating budgets. 

“City staff worked hard to reduce expenses,” said Benicia City Manager Mario Giuliani. “However, as expenses are continuing to outpace revenues, this was not enough to address Benicia’s ongoing deficit, which is why a sales tax and transient occupancy tax increase was passed by voters to protect the city’s current services.” 
 
The increase in transient occupancy tax and sales tax was passed by voters on the March 5, 2024, election with a combined annual revenue increase of approximately $5.6 million. The city will begin to receive this revenue in fall 2024.