Analysis: Hernandez-Thorpe’s claim of Antioch “rainy day fund of over $63 million” accurate but balanced budgets claim is false
City ran deficits three out of four years he’s been mayor and are projected to increase
By Allen D. Payton
In the slate mailer entitled, “Budget Watchdogs Newsletter” received by voters this past week, which Antioch Mayor Lamar Hernandez-Thorpe’s campaign paid for him to appear on, he claims to be “A fighter for fiscal responsibility” and “has delivered balanced budgets over the last four years and helped build a rainy day fund of over $63 million.”
The first claim has been determined to be false while the second is considered accurate. The mayor was twice asked about both of his claims, but he did not respond.
Rainy Day Fund – Accurate
According to the City staff report for the General Fund Budget Stabilization Fund in the Fiscal Year (FY) 2023-25 Budget adopted by the council on June 13, 2023, “In fiscal year 2018, the City established a Budget Stabilization Fund to set aside monies for future budget variances, unexpected occurrences, emergencies and the like. General Fund reserves over 20% of unassigned fund balance were used to establish the fund and future General Fund unassigned reserves over 20% can be moved into this fund. Per City Council direction, beginning in fiscal year 2020, these funds will be used to pay the difference in the full Actuarial Determined Contribution for OPEB payments from the pay as you go costs currently made by the City to address the unfunded liability for OPEB.”
OPEB refers to Other Post-Employee Benefits for retirees.
When asked about the claim of the “rainy day fund” without mentioning who made it, City Finance Director Dawn Merchant responded, “I am not sure about the claim as we do not have a $63M rainy day fund. I can only assume that claim is adding the Stabilization Fund and General Fund reserves, however, again, I am not sure.”
She also shared, “As of 7/1/24, the Budget Stabilization Fund balance is $37,627,378.” On that same date, the General Fund reserves balance was $32,555,999. So, by adding the two the total was $70,183,377 which supports the mayor’s claim as accurate.
UPDATE: Later, Merchant shared, “The $32,555,999 beginning fund balance is based on the revised FY24 budget, so that is not an actual, that is a projected based on the FY24 budget. Once the books for 6/30 are wrapped up, we will have the actual ending 6/30/24 fund balance.”
Balanced Budgets Claim – False
However, Hernandez-Thorpe’s claim he “has delivered balanced budgets over the last four years” is false. Because the budgets approved by the City Council for the current and past two of the four years during his term as mayor, have spent or are spending more than the City has been or is receiving in sales, property and other tax revenues. The budgets include the following deficits:
$3,995,625 in FY2022-23.
$5,343,928 in FY 2023-24; and
$4,617,143 projected for the current, FY 2024-25.
That last amount is being covered by the Budget Stabilization Fund.
City Budget Projects Increasing Deficits
In addition, according to the General Fund Projections for 2023-2028 presented to the city council on June 11, 2024, the General Fund is projected to run the following deficits:
$12,995,259 in FY 2025-26;
$13,561,074 in FY 2026-27; and
$14,855,649 in FY 2027-28.
The first two are expected to be covered by transfers from the Budget Stabilization Fund, but it will only cover $1,253,902 in the third year of what could be Hernandez-Thorpe’s second term as mayor if he’s re-elected because that Fund will be depleted in FY 2028. That would result in a projected net deficit for the City of $13,601,748 by June 30, 2028, which would be covered by the General Fund reserve leaving it with an Ending Balance of just $17.4 million or 17.06% in reserves versus over 31% and 32% for the previous fiscal years.
The mayor faces two challengers in the campaign, former Antioch city manager, Ron Bernal and second-time candidate for mayor, Rakesh Christian.
The election is November 5th.
Please check back later for any updates to this report.
the attachments to this post:
City of Antioch Genl Fund Projections 6-11-24
Budget Watchdog Newsletter Lamar’s claims
