Thanks to an avalanche of foreclosures, the average Gilroy
property value has fallen 11 percent, more than any other city in
the county, according to the Santa Clara County Tax Assessor.
Thanks to an avalanche of foreclosures, the average Gilroy property value has fallen 11 percent, more than any other city in the county, according to the Santa Clara County Tax Assessor.
The decline will apply to next year’s budget, which begins July 1, and equals a nearly $1.1 million hit to city coffers in addition to shrinking sales tax revenues that have been knocking the indebted general fund for more than a year now. Falling sales tax revenues, depressed home values and a standstill in development have practically erased $3.8 million in general fund expenditure cuts City Administrator Tom Haglund made from this year’s budget before Christmas.
When he came on board in May 2008, a month before the council passed the current budget, Haglund immediately cut $4.5 million in expenses from his predecessor’s spreadsheet. The budget the council approved still ran a $3.9 million deficit, but that shot up to $6 million as the economy slowed last year. Laying off 48 full-time employees Jan. 31, freezing vacant positions, cutting back on materials and services, and tweaking major infrastructure projects brought the deficit down to $2.3 million, but it rose back up to $3.8 million in February.
The latest property tax blues will make it harder for Haglund to deliver a balanced 2009-2010 budget to the council within the next couple of months, but he said the city will rise to the challenge.
“This is a challenge that we will rise to meet,” Haglund said. “We need to look back and realize that this city has taken very significant measures to bring its general fund into balance.”
The last time the council addressed next year’s budget was during layoff talks last winter, when it expected cuts to bring next year’s general fund nearly $1 million in the black.
