Logo courtesy of the City of Live Oak

LIVE OAK, CA (MPG) - At its Nov. 4 meeting, the Live Oak City Council considered a proposal from City Manager Ben Moody to install stop signs at the intersection of Allen and Linda streets.

Moody said the neighborhood intersection is near the city’s soccer field and that vehicles traveling at unsafe speeds or making unsafe turns have nearly struck, and in some cases struck, pedestrians.

City staff can install the stop signs. Thermoplastic road lettering would cost about $3,500, and Moody said the city’s streets fund has sufficient money for the project.

Vice Mayor Aaron Pamma asked whether crosswalks would also need to be painted, but Moody did not recommend them because the rest of the neighborhood does not have crosswalks.

Mayor Jeramy Chapdelaine said he has seen drivers rushing through the intersection and believes the project will improve safety.

The council voted unanimously to approve the stop signs.

The council also heard a cash analysis report from Finance Director Ethan Gutierrez. The city has faced a structural deficit for years, Gutierrez said, with expenditures increasing faster than revenues.

The city’s cash balance fell from about $13.9 million in fiscal year 2009-10 to $3.5 million in 2026-27. Gutierrez said the downward trend preceded the pandemic, which further affected the general fund. One-time federal American Rescue Plan Act funding helped cover operating costs despite insufficient revenue growth.

In fiscal year 2021-22, the Community Facilities District 2004-1 assessment was not approved, leaving the city unable to collect the $900,000 that typically supported police and fire contracts with Sutter County.

Those contract costs continued to rise. In 2022-23, the fire contract increased by $265,000 and the police contract by $300,000. The police contract rose another $190,000 in 2023-24. In 2024-25, the fire contract increased by $500,000 and the police contract by $800,000.

Public safety contract costs increased by a cumulative $2 million over several fiscal years. During the same period, discretionary revenues, including property and sales taxes, increased by only 15%, or $550,000, falling well short of the higher costs.

Turning to the water fund, Gutierrez said rates had not kept pace with operating expenses. The council approved rate increases in 2025-26, the first since 2006, but replenishing the fund will take time. From 2012-13 through 2024-25, the fund lost $5 million in cash as reserves were used to cover operations.

In 2023-24, the council transferred $3.5 million in connection fees as a loan to the water fund. Repayment is required to begin in 2029-30.

Councilmember Nancy Santana suggested the water fund would not be in deficit without salary and benefit costs. Moody explained that employees are needed to operate the water system.

Santana said the city should consider selling its water and sewer operations to a private company if it cannot afford the costs.

Pamma disagreed, saying privatization would not serve residents’ interests because it would lead to higher customer rates.

Moody said the city, as a public utility operator, can set rates to cover costs, while a private company would also seek a profit.

The sewer fund is not currently in deficit, but Gutierrez cautioned that it is trending downward because rates are not keeping pace with expenses. “We are depleting reserves,” he said.

The city is delaying some sewer improvements and maintenance to save money, although deferring the work could increase future costs.

Gutierrez said a sewer rate study will be needed to determine increases sufficient to cover future operations.

Regarding the streets fund, Gutierrez said its money is restricted, so the city holds it until enough is available for an eligible project. The city also recently began submitting claims for about four years of available Transportation Development Act funding, totaling $2.4 million.

Pamma credited Gutierrez and Moody with discovering the unused funding and beginning the process of claiming it for local projects.

Moody outlined efforts to reduce costs, including delaying capital projects, renegotiating public safety contracts and replacing costly consultants with city employees. To increase revenue, the city has reduced impact fees to encourage development, updated its master fee schedule and pursued grants. The city also supported Sutter County’s Measure G, which would have provided funding for public safety costs. At the time of the report, more votes had been cast against Measure G, and the race remained too close to call.

Santana said the city had used $10 million over the past few years and asked whether any of it went toward employee salaries and benefits.

“Where the money has gone is where it was budgeted,” Moody said, explaining that some was used to pay city employees.

Pamma praised the detailed presentation and said the city had operated at a loss for years and would have reached this point sooner without the one-time federal funding. “The biggest issue here is that we don’t have consistent revenue coming into our city,” he said.

Chapdelaine said the structural deficit, with costs exceeding revenue, has existed for years, but recent efforts are beginning to make a difference.

Santana noted that the Parks and Recreation Department budget of $1.12 million exceeds the $1.11 million fire contract and asked why the city was prioritizing parks over fire services.

Moody said the council sets priorities and approves the budget. Further cuts to parks and recreation would reduce expenditures but also decrease revenue from programs and facility fees.

Santana asked additional questions about the budget, including how departmental budgets account for employee salaries and benefits, supplies and services.

Chapdelaine said independent financial audits had predicted the deficit for years. He said the audits had not identified misuse of funds, but rather a structural deficit caused by revenues falling short of costs.

Santana said Measure G appeared unlikely to pass and asked whether Live Oak could pursue its own tax measure.

Moody said failure of Measure G would seriously affect the city’s ability to pay for public safety because “there’s a million-dollar hole that’s going to be very hard to fill.” He said the council could direct staff to explore a Live Oak tax measure.

The next Live Oak City Council meeting is scheduled for Nov. 18.