Fresno City Hall photo by Breanna Hardy

The City of Fresno is falling short of meeting its budget goals for fiscal 2024, according to the most recent forecast.

At Thursday’s Fresno City Council meeting, Budget Director Henry Fierro provided an update to forecasted revenue figures.

Fierro said the City should see higher business license and room tax revenues this year, but at rates lower than forecast in the record $1.87 billion budget adopted June 2023.

As of Feb. 22, the year is forecast to end with sales tax revenue of $148.52 million — about 3.3% lower than the budget forecast.

In 2023 the City collected $145.1 million in sales tax revenue.

Fierro anticipates collecting $179.8 million in property taxes for fiscal 2024 — about 3.3% higher than forecast.

In 2023 Fresno collected $145.1 million in property taxes.

“While our sales tax is growing more than the prior actuals, we are seeing a little bit of a slow down when compared to the budget. But there is an offset with the property tax. That’s helping our growth overall,” said Fierro.

The budget forecast $24.12 million in business license tax revenue, with actual revenue nearly 4% lower.

According to Fierro, sales, property, business license and room taxes represent 79% of the city’s total annual operating revenue. Sales tax and property tax accounts for 71% of that.

Fierro pointed to economic conditions for the lower-than-forecast revenue.

The general fund under the adopted budget is $485 million. The current general fund is $514.15 million.

The most current forecast finds the City budget with about $626,900 remaining for fiscal 2024.

Cannabis tax revenue from the city’s seven operating dispensaries also fell short of forecasts.

Fierro said the cannabis budget is based on the number of businesses currently permitted and operating, as well as on the number of permits expected to be issued by the end of the year.

The city’s adopted budget from cannabis tax revenue this year forecast $5.38 million, with the Feb. 22 estimate closer to $2.26 million.

City Manager Georgeanne White said that the city will need to budget more carefully to “stay out of the red” in 2025.

“Every dollar that we don’t carry into fiscal 2025 means that we are going to have to scrub something from the 2024 budget to find a cushion to absorb any potential deficit in 2025,” White said.

She attributes the shortfalls in the city’s cannabis tax revenue to the length of time it takes for a dispensary to come online.

White broke the current status of cannabis dispensaries in the works:

— Five are under construction or waiting on an inspection permit

— Five have building permits issued

— Three are going through the planning and compliance process

— Three that are going through the conditional use permit process.

 

Mayor Jerry Dyer said illegal cannabis sales hold the city back from meeting its revenue goals. Until the black market is curtailed, the city will continue to miss out, he said.

Councilmember Mike Karbassi said he is concerned about the city’s fiscal position, noting the biggest impact comes from sales tax forecasts falling short.

Fierro said the budget process took a pulse on all available information regarding the economy. He said there is an expectation for improvement, and those improvements were factored into the forecast.

“This is sobering,” Karbassi said. “We are a lot better off than the state right now, but at the same time, this isn’t great news.”