City weathers economy, on track with budget projections

Bills

The city’s budgetary outlook may be bad, but it’s not getting
worse, City Finance Director Christina Turner said this week.
The city’s budgetary outlook may be bad, but it’s not getting worse, City Finance Director Christina Turner said this week.

Turner gave a quarterly budget update during Monday’s City Council meeting, noting that as of Dec. 31 the city had spent about half of the $34 million that the city projected to have in its general fund for fiscal year 2009-10. Because the city is keeping pace with its projections, it will be able to maintain a reserve balance of about $18.9 million

“Assuming the economic storm doesn’t get worse, we believe that we’re prepared to weather it,” Turner said Thursday.

While sales tax and property tax figures remain lower than they were a year ago, Turner said property tax figures are not as bad as expected and capital funds – collected from fees paid by developers for construction, water and sewer infrastructure, and permits – are better than expected.

The city has budgeted $11.1 million in expected sales tax revenue for fiscal year 2009-10, down from $11.6 million in actual revenue the previous fiscal year. That can be attributed to decreased service station receipts, new and used auto sales, energy sales and sales among businesses.

Sales tax receipts through Sept. 30 are 14.1 percent lower than the previous fiscal year, although Turner noted that the city anticipated such a drop. Sales tax figures from the past holiday season will not be available until April, she said.

While property tax receipts – budgeted at $9.4 million for this fiscal year – also have plummeted between this fiscal year and the prior year, they only dropped by about 11 percent compared to a 15 percent decline that the city anticipated. As a result, the city expects to have about $300,000 more than it expected in property tax revenue this fiscal year.

The city also received some unexpected good news regarding its capital funds, as the city collected about $1.8 million in developer impact fees between July and September. Most of that came from the new Christopher High School, although some funds also came from development in northwest Gilroy and Eagle Ridge in western Gilroy, Turner said.

She repeatedly told council members that the city needs to be conservative with its expenditures and revenue expectations. That that means not spending money on unnecessary items just because there is money in the budget, she said Thursday.

“We’re not putting on rosy glasses when rosy glasses should not be put on right now,” Turner said.

Still, she noted that the city is on track now because it made plenty of “deep, painful cuts” in 2008-09, some of which resulted in layoffs.

Councilman Craig Gartman was the only council member who spoke about the budget Monday, saying that he would like to see more actual figures in addition to budgetary figures. He said he wants to draw his own conclusions on the city’s current status, noting that the current economy has done things that even had former Federal Reserve Chairman Alan Greenspan scratching his head.

“I want to see the reasoning behind those projections,” Gartman said.

Meanwhile, Councilman Perry Woodward said this week that he did not see any surprises in Turner’s presentation and that the city is being faced with the same economic challenges that are impacting everyone.

“I think it’s kind of as we expected,” Woodward said. “It’s troubling that we are where we are, but I think we all know where we’re at.”

Leave your comments