The one-time emergency use of reserves underscores years of cumulative deficits. Photo by Nikiko via Pixabay

BIGGS, CA (MPG) - The City of Biggs is confronting an increasingly urgent financial crisis within its electric utility, which prompted a $1 million emergency transfer from the city’s General Fund reserves to offset historic losses. 

The bold measure is what officials said was necessary when the City Council adopted Biggs’ operating budget in a special meeting on June 30, which reflects the city's urgent response to years of persistent operating losses within its municipal utility. 

“The Electric Fund has experienced a continuing structural deficit over the last several years,” previous Interim City Administrator Cliff Wagner noted in a staff report for his last day on the job. “Expenses have exceeded revenues even after cost reductions. The Electric Fund has lost over $1 million in recent years and is on a financially unsustainable path without reform.”

City administration plans to work with Michigan-based Utility Financial Solutions to evaluate the fund's financial trajectory and to recommend comprehensive reforms, which may include increasing customer rates to offset costs of services. 

The one-time emergency use of reserves underscores years of cumulative deficits, with staff confirming persistent losses despite some short-term stabilization reflected in the 2024 audited financials. 

Prior annual budgets flagged the Electric Fund as structurally unsound, with operating expenses, including wholesale power purchases, system maintenance, and customer services consistently exceeding revenues. Contributing factors include legacy rate structures that no longer align with the city's energy cost realities, lack of automated metering infrastructure, and insufficient in-city electric generation capacity, the staff report noted.

Most notable increases in cost for the utility were fire services, infrastructure maintenance, and power procurement. In past budget cycles, city leaders opted for temporary adjustments and deferred capital investments to shield ratepayers from steep hikes. 

Although reform efforts began, such as exploring in-city generation and rate restructuring, significant changes were not enacted in time to reverse fiscal year 2024 losses.

Going into the 2025/26 budget cycle, the Biggs City Council now insists on structural reforms. Utility Financial Solutions is a consulting firm used nationwide that typically deploy strategies such as assessing the financial trajectory of electric systems, recommending new rate restructuring, and modernization initiatives, including in-city energy generation to reduce dependence on outside sources. 

Aside from the electric utility crisis, the City of Biggs entered the new fiscal year with a stable General Fund outlook, supported by consistent revenue streams such as property taxes, franchise fees, and business licensing.  

Operational departments, including law enforcement, fire protection, public works, and administrative services, will continue delivering core municipal functions with moderate cost increases - offset by prudent fiscal planning and state grant allocations, officials said. 

Public Safety experienced contrasting trends, with fire service funding rising by 42.2%, from $312,006 in 2024/25 to $443,743, while police services saw a 16% reduction, from $530,559 to $505,143, for the same time period, under the Gridley Police Department contract. Street and infrastructure improvements received a boost, with public works funding rising from roughly $465,000 to more than $700,000, leveraging gas tax revenues and regional grants. Parks and Recreation received a modest lift from $136,748 to $142,496, and City Administration increased from $215,170 to $228,442, due to expanded legal and professional service needs. Finance and utility billing operations also saw a moderate rise, moving from $168,923 to $176,115 to support system enhancements and staffing.

Personnel costs in the City of Biggs remain consistent at approximately $1.1 million, reflecting just 13.6% of total spending, a lean model made possible through extensive use of contracted services, officials said. 

Beyond the General Fund, the City of Biggs’ total $8.0 million budget package includes enterprise funds, such as Electric, Water, Wastewater, and Solid Waste, along with restricted funds like Capital Projects, Gas Tax, Greenhouse Gas Reduction, and Community Development Block Grants, although timely use is required to avoid reversion of funds to the state, officials said. 

The Water Tank Fund remains on hold due to a $437,979 shortfall pending external grant approvals. Solid Waste and several other deficit funds will be resolved through authorized internal transfers. Community development programming includes $34,000 in new allocations from CDBG reserves, which currently exceed $150,000.

While the City Council’s adopted 2025/26 budget is largely stable across most municipal operations, city officials said the Electric Fund’s financial instability remains the city’s most pressing financial risk, demanding swift and strategic action to safeguard long-term viability.

New Interim City Administrator Rodney Harr replaces Wagner, whose budget recommendation marked his last official duty to the city.

Wagner became Interim City Administrator for the City of Biggs in early November 2024, following the administrative leave and eventual termination of Josh Cook.