The recently released update to the economic forecast looked much better than expected. The State Auditor provided data for each city and ranked cities by area. Here is a look at Nevada City, Grass Valley and Truckee.
Comparing cities in the Sierra region, Truckee is in the Top 3 with a score of 90.61 out of 100 possible. Nevada City is doing pretty well with 70.22 out of 100 points. Grass Valley managed 53.92 points.
Grass Valley
The data is for 2019-2020 shows General Fund reserves for Grass Valley in the red zone, “it has saved enough funds to cover about 2 months of expenses, and its reserves have been declining, on average, by 12 percent annually,” according to the report. Revenue trends: “Rather than increasing, this city’s general fund revenues have decreased, on average, by 5 percent over the last few years. This may constrain the city’s ability to respond to economic changes and pay rising costs of services.”
On the positive side, Grass Valley’s “long-term debts equate to only 38 percent of the city’s total government revenues, indicating it has substantial capacity to pay its debts. In order to be low risk for debt burden, a city’s debt should ideally not exceed 40 percent of total government revenue.”
Nevada City
For Nevada City, “This city has enough funds set aside in reserves to cover its expenses for about 4 months in the event of a fiscal emergency, such as an economic recession, and its reserves have been growing, on average, by 59 percent annually. This city’s long-term debts equate to 50 percent of the city’s total government revenues, indicating it likely has sufficient revenues to pay its debts. In order to be low risk for debt burden, a city’s debt should ideally not exceed 40 percent of total government revenue.”
Nevada City has enough cash and investments to cover 408 percent of its unpaid bills at year end, which exceeds the low risk threshold of 150% in liquidity. However, “projected annual payments to its CalPERS pension plan in fiscal year 2027-28 are significant compared to its current total government revenues” when it comes to future pension costs.
Truckee
The Town of Truckee has enough funds set aside in reserves to cover its expenses for about 14 months in the event of a fiscal emergency, such as an economic recession, and its reserves have been growing, on average, by 3 percent annually. The town’s long-term debts equate to only 29 percent of the city’s total government revenues, indicating it has substantial capacity to pay its debts. Revenues have increased, on average, 7 percent annually over the last few years.
The town’s projected annual contributions to its CalPERS pension plan in fiscal year 2027-28 are moderate compared to its current total government revenues. This city’s Other Post-Employment Benefits Funding (OPEB) plan, which covers other post-employment benefits like health and dental for retired employees, has enough assets to fund 40 percent of employees’ OPEB costs.
According to State Auditor, “In November 2020 we published an economic forecast model to estimate the impact that the response to the COVID-19 pandemic would have on the revenues of cities throughout California. We found that almost all cities were projected to lose some revenue, but we found that COVID-19 restrictions significantly affected cities that rely on tourism and entertainment. We updated our assessment in August 2021 to determine the financial situation of California cities in light of stimulus payments from the federal American Rescue Plan Act, property taxes, and increased tax revenues as the economy has started reopening.”
Find more details about all California cities on the State Auditor’s dedicated portal.