Antioch Finance Director Sounds Alarm on Potential Deficit Spending

On Thursday, the Antioch city council received a reality check on their future budget while discussing possibly seeking funding for a HomeKey Application to assist the estimated 475 homeless residents in the city.

In the end, the council was split on moving forward to taking action to further assist the homeless in the City of Antioch with temporary and permanent housing which would have required the city to commit between $6.9 million and $12.4 million annually for up to 15-years.

The Antioch City Council has tasks itself over the past few years with seeking solutions on the homeless residents, however, the preliminary budget gave members of the council pause on how to move forward with four options provided Thursday night.

City Finance Director Dawn Merchant presented the preliminary budget which she said was still in draft form. They were still working to close the gap.

In the current year, to just balance the budget, they already moved over $9 million from the budget stabilization fund which is why the city is not showing deficit spending this year. She noted that in the budget projects in the next two years, she has not shown any budget stabilization funds being yet transferred over (2023/204 & 2024/25).

“I wanted to highlight in red what the deficit currently stands,” said Merchant. “I do want to point out that the personnel numbers do include current funded approved staffing, it does not include any new staffing requests and still drilling down for part-time and overtime to see where we can make some adjustments.”

She stated with more work to be done to drill down the budget, the numbers will change during the budget study sessions in March.  She was confident they could further reduce the deficit numbers but if you look

“If you look at the numbers now, its $8.3 million in 2023/24 and $9.8 million in 24/25, even with some pencil scratching and digging we are not going to get anywhere near what we need to close this gap to $0 so there will still be deficit spending in each of those years,” said Merchant. “I wouldn’t be surprised if it’s a half-a-million dollars or $5 million each year, I am not sure how much we can get down to the root.”

Merchant stated she wanted to make the council aware as they are looking forward because the only funds they have available are the general fund—no other funds in the city they could use for matching funds for the purposes tonight.

She said the current budget stabilization fund stands at $25 million and if they stayed at the $8.3 and $9.8 million deficit spending it would eat up the budget stabilization fund.

“Then we would be dipping into the regular general fund and reserves,” said Merchant who again stated she wanted to make the council aware of funding available as they make their decision on money to be spend on HomeKey commitments.

Antioch budget provided in the staff report

Councilmember Mike Barbanica asked Merchant about the budget and if they could afford HomeKey and homeless spending.

“In looking at the numbers that were proposed, is it your opinion that we cannot afford to do this,” asked Barbanica.

“Based on the numbers that I am seeing on the screen and financial commitments annually even if its spread out over 15 year and say its $5-$6 million a year, based on this current budget I don’t know where the $5-$6 million would come from unless we get other grants or cut other services,” explained Merchant.

Barbanica said his big concern was “deficit spending” that they continue to deficit spend.

Mayor Lamar Thorpe said it was their budget and what their priorities are and they could cut in some areas and spend in others. He explained they set the priorities and then adjust.

He then turned to Barbanica with his comments.

“We have not been deficit spending. I just want to make that clear,” stated Thorpe. “ I don’t’ want anyone to think we are deficit spending because we have not. We have had a balanced budget and in fact we have had surpluses.”

He further explained he believed as staff continued to work on the budget the projections would be that they would not be deficit spending.

Barbanica responded, “I hope not. And Hope that is correct.”

“Our track record since I have been here the last six years is we have not deficit spent,” said Thorpe. “Councilwoman Monica Wilson has been here much longer than all of us put together on the city council and we have not been deficit spending and so I want to be clear that for the public to understand we have had balanced budgets for the last 11-years. I don’t want anyone left with the impression we are deficit spending because we have not been deficit spending.”

With the discussion over HomeKey, Wilson admitted she liked the idea but didn’t know if they could afford it and says the city might have dragged their feet to long. She also said they need to involve their regional partners more.

Councilwoman Lori Ogorchock addressed the deficit spending.

“We have not been deficit spending; we have been blessed we haven’t had to do that but I don’t want to go in that route and I believe what Director Merchant said if we pursued this avenue we would be deficit spending to the tune of $8.3 and $9.8 million. I don’t see the grant application process getting us anywhere close and there is no guarantee on the grants or county participation,” said Ogorchock who suggested they go back to the county and partner with them. “At this point, I am not willing to move forward on this due to the amount we would be spending.”

Thorpe explained they adopted the budget 2-years ago and it hasn’t changed while committing $2 million which didn’t obligate them to anything. He stated there was a financial commitment up front followed by ongoing costs for support services and operations.

Thorpe stated he didn’t believe they had consensus, but doesn’t seem to be support for anything moving forward.

“There was a comment that stated the city has failed and I saw people shake their heads and that is fair enough about what the city is doing right or not right, whatever it may be. I want to remind the public cities are not normally tasked with these types of social services,” said Thorpe. “We are here today out of frustration with the county.”

Thorpe explained he sat down with the county (Lavonna Martin) in 2016 about a CARE Center and six-years later they are still waiting on their CARE center after the city provided a piece of property for $1.

“Nothing happened,” said Thorpe. “We are still waiting on our CARE center and shelter for people in Eastern Contra Costa County.”

Ogorchock noted while at CALCITIES they are figuring out a way for the state to transfer money away from the counties to the cities to help with homelessness solutions should more funds be released.

Thorpe continued by stating this isn’t an issue going away and that homelessness is going up which dates back to 1980’s.

“We are going to continue to have discussions, I was just hoping we would be able to give direction to staff today,” said Thorpe who hoped they would pick something and with no consensus this would come back a standing committee on homelessness.

No Action on Proposed Liquor Store Ban

The Antioch City Council was split 2-2 in whether or not to move forward with a liquor store ban on new liquor stores as well as pushing through an urgency ordinance. Thorpe and Wilson were in favor, Barbanica and Ogorchock were not.

On Tuesday, Wilson held a press conference stating she wanted it placed on the agenda — more information.

Editors note:
Councilwoman Lori Ogorchock was out of town for CALCities and participated remotely. Councilwoman Tamisha Torres-Walker was absent. City Manager Con Johnson also absent.