The Gilroy City Council will get a detailed look June 1 at layoffs, pay freezes, consolidations and other cost-cutting measures as the pandemic-induced recession deepens.
Across its various revenue sources, the city is anticipated to be short $11.3 million over two years, according to interim finance director Bryce Atkins, primarily due to a drastic decline in sales tax revenue. The city expects to lose 30 percent of its sales tax revenue, or roughly $3 million, this year, according to Atkins. The following year, a nearly $2 million shortfall is anticipated.
According to a staff report, 33 positions are expected to be eliminated across all city departments, 12 of which are currently vacant.
The recreation department, with eight layoffs planned, is one of the hardest hit departments in the city, as most recreational programs have ceased due to Covid-19.
The police department will reduce various vacant positions, the report showed, while laying off a pair of part-time office assistants and a property evidence technician.
In total, the reductions are expected to save the city $8 million annually, according to the report. If approved by the council, the decision will take effect July 1.
The council will also consider freezing a scheduled pay raise for department heads and council members.
Faced with the impending budget cuts, the council on May 26 urged the county to loosen its shelter-in-place order specifically in Gilroy.
The letter, written by Mayor Roland Velasco and signed by all members of the council, sought assistance with the county to work “collaboratively in sensibly relaxing the shelter-in-place order in the City of Gilroy and other less-dense areas of the county.”
Gilroy, the letter noted, is “geographically isolated” from the major population centers of the Bay Area, where Covid-19 is more easily spread, and is “more similar to rural areas, like San Benito [County].”
According to the letter, the Gilroy Fire Department responded to two known new cases of Covid-19 in the last 37 days. According to Santa Clara County Public Health, Gilroy had 80 confirmed cases as of May 28.
“In the state’s plan, there is a process for counties to apply for a variance from some of the restrictions and to re-open sooner,” the letter read. “In fact, our close neighbor to the south, San Benito County, has received such a variance as they have met the readiness criteria.”
Reopening Gilroy “must remain a data-driven endeavor, based on indicators of health,” but the “economic and fiscal impact” of the shelter-in-place order, which went into effect on March 17, cannot be ignored, the letter continued.
The council wrote that Gilroy is facing a “crippling” $7 million shortfall for this fiscal year and a $4 million shortfall next fiscal year due to “plummeting” revenues.
“The city council is acutely aware of the financial stress the shelter-in-place order is having on both residents and businesses,” Velasco stated in a press release. “The reason for our request is obvious: Our business community is at a critical point with many merchants considering whether it’s wise to continue holding out hope or better to simply close their doors and walk away. For every merchant that throws in the towel, the ripple effect will be felt throughout the community including lost jobs, lost income for landlords and vendors, and customers losing out. Business owners stand to lose everything they have and they and their employees deserve a fighting chance.”
The Gilroy City Council will meet virtually on June 1 at 6pm. To view the report, visit tinyurl.com/y95ldn4l.
