The mayor and city administrator want to educate and answer
number-weary voters who keep hearing about a
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multi-million dollar deficit.
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Gilroy – The mayor and city administrator want to educate and answer number-weary voters who keep hearing about a “multi-million dollar deficit.” This comes amid the city’s indeterminate plans to acquire Gilroy Gardens, build an arts center, split sidewalk repair costs with residents, construct a new library and honor raises to some top-level employees who aren’t unionized.
Mayor Al Pinheiro and City Administrator Jay Baksa plan to hold a series of public meetings with businesses and community groups throughout the city starting tonight at City Hall to illuminate Gilroy’s $125 million budget and the $4.7 million general fund deficit.
They held about nine such meetings last year, and for the most part, attendance was low, Pinheiro said, but he hopes the turnout is greater this year.
“We want to make sure people have full access and ask questions about anything regarding the budget,” Pinheiro said.
Most councilmen and candidates favor limiting spending since revenue’s drastically harder to control, especially during an economic slow-down. New downtown businesses not having to pay certain development fees have contributed to the short-term problem, and some say dipping into the city’s $26.7-million reserve fund would solve the $4.7-million general-fund deficit problem. But this would only work if expenditures wane in the long run.
While the city’s entire projected revenue falls $9 million short of its estimated $125 million in expenditures this fiscal year, that difference ebbs and flows with capital projects such as the arts center, which is on hold and is estimated to cost about $25 million, according to Baksa. The new police station, which cost about $27 million, and the sports park off Monterey Road are examples of finished projects whose financial effects are still wiggling their way out of budget figures.
Baksa said the $9 million gap “is not the one we’re talking about.” Rather, he and Pinheiro will address the estimated $4.7-million general-fund gap.
The vast majority of the general fund budget pays salaries and benefits for the city’s 264 employees. The gap between general fund revenue and expenditures was $2.5 million last year, and as of June 30 this year, it was $817,000, according to Baksa. The city’s fiscal year runs from July 1 to June 30.
“We brought the deficit down $1.6 million last year, and I would expect this will occur again this year,” Baksa said.
The difference between the total budget ($125 million) and the general fund is $77 million. This money is spread across several coffers that support new buildings, roads, sewers and other public improvements. Money in those funds is reserved for specific uses.
All these budget pains come amid the city’s potential acquisition of Gilroy Gardens’ 536 acres along Hecker Pass Highway, which could cost between $13 million and $25 million.
One deficit culprit has been the downtown fee waiver program. Not having to pay “impact fees” in the downtown area has attracted many new businesses to the area that will ultimately produce tax revenues, the council has argued.
But Community Development Department Director Wendie Rooney said Gilroy has waived $2.5 million in quick-cash impact fees under the program since the beginning of 2004.
Baksa said the other more “nebulous” and “volatile” factor is the broader economy.
“We’re seeing a slow-down in home construction, and there’s an enormous rolling effect from that,” Baksa said. “Jobs and materials that go into homes have slowed. Less refrigerators are being purchased. Sales tax is down.”
Pinheiro agreed, and so did mayoral candidate Craig Gartman – who joined Councilman Dion Bracco in not voting for the budget.
“The only thing the city council can control is how much money we spend,” Gartman said. “If anybody says we’re going to get out of this by increasing revenues, taxing the citizens of this community, or with a pot of gold they have hidden somewhere, they’re wrong because we have no control over revenues, only over expenditures.”
To offset sluggish revenue, Baksa said city staff “has been very good and diligent about not spending.” One way they’ve done that is by postponing new-hires to save money after a position has been emptied, he said.
Other fixes could be as little as reducing employee travel and training or the city’s contribution to an organization to the more “draconian” approach of shutting down, say, the museum, Baksa said.
Candidate Perry Woodward said the city’s top-heavy, and needs to shave off some of its 42 top-level employees and should conduct a scientific poll of residents to figure out how they want to deal with the budget.
Incumbent Russ Valiquette prefers “tightening our belt up” by using reserve cash to slowly shrink the deficit.
“It’s the same things people do when they’re at home,” Valiquette said. “We could’ve gotten rid of the deficit this year, but are people willing to have services cut off and people laid off?”
