Future city councils will have a harder time dipping into rainy
day funds if current leaders lock up millions of dollars for
earthquake recovery and other emergencies.
Gilroy – Future city councils will have a harder time dipping into rainy day funds if current leaders lock up millions of dollars for earthquake recovery and other emergencies.
After four months of wrestling with the fine print of Gilroy’s budget, city council members Wednesday night tentatively agreed to earmark 15 percent of Gilroy’s annual operating budget as an emergency reserve. Those funds, which would equal more than $7 million of the city’s $47.5 million operating budget next year, could only be touched with the consent of a “super majority” of council – or five out of seven members. No formal action has been taken yet, though council plans to vote on the emergency fund rule before the November election.
The appropriate percentage for an emergency reserve has proven the elusive starting point for taming a budget crisis before it reaches full bloom. Two months ago, council members received early budget estimates showing the city was on a path to spending its entire $27 million reserve fund in the next six years. But before council could settle on a plan to plug up the yearly gap between revenues and spending, they first wanted to establish how much of the city’s reserve funds should be safeguarded.
“We either have to look at the future and say, ‘Do we need to provide our citizens with ‘x’ services?’ ” Mayor Al Pinheiro said, “or are we going to keep it in the bank and not provide those services that are needed.”
After settling on how much to set aside for emergencies, council called for a “gap closure” program that would bring the city’s spending in line with revenues within five years. Officials plan to approve a fiscal 2007-’08 budget in which expenses outpace earnings by $3.8 million. That five-year budget will serve as a placeholder until September, when council will review a detailed menu of potential cuts in programs and services that could help shore up deficits and preserve 15 percent for emergency use over the next three to five years.
The list of potential savings includes moving council elections to “even years” so they overlap with state and national elections. Assuming voter approval, the shift could save the city $60,000 to $70,000 every other year, according to City Administrator Jay Baksa. Council also will look to its own expense account for potential savings. Elected leaders spend roughly $67,000 annually to support local organizations, pay for memberships and conferences in various groups, and other government-related expenses.
Baksa, who announced earlier this month that he plans to retire in December after 24 years at the helm of City Hall, told councilmen Wednesday that he plans to put together a “gap closure plan that stands the test of time.”
He called council’s decisions Wednesday “a planned response as opposed to a knee jerk reaction.”
The budget council plans to approve in June will finance, with money from the general fund, the equivalent of 3.5 new full-time positions: budget analyst, fire battalion chief, police officer and a code enforcement officer who will go from part time to full time.
That budget is expected to take effect at the beginning of the fiscal year in July. Council is free to amend the budget in September, after they have reviewed the five-year plan for cuts aimed at reducing budget shortfalls.
