City grappling with budget shortfall

Gilroy council to review likely scenario May 4

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Gilroy is expected to dip into its reserves to weather the economic storm brought on by the COVID-19 outbreak and shelter-in-place order.

Future projects, such as the Glen Loma Fire Station and Sports Park expansion, could be on the chopping block.

The Gilroy City Council will get its first look at economic projections under COVID-19 at its May 4 meeting. The council is expected to make budget decisions in June.

According to a report by interim finance director Bryce Atkins, concrete numbers are difficult to determine based on the rapidly evolving COVID-19 situation. However, based on current information, the city expects to lose 30 percent of its sales tax revenue, or roughly $3 million, this year, the report stated. The following year, a nearly $2 million shortfall is anticipated.

Transient occupancy tax, which is charged to hotel guests, will also be severely impacted, with about a $1.3 million shortfall expected over two years.

All told, the city is anticipated to be short $11.3 million in revenue over two years, according to the report.

Revenue from Gilroy’s General Fund, which funds services such as police, fire and street maintenance, was already trending downward before the shelter-in-place order, the report showed.

Atkins’ report presented a list of projects that could be delayed to save the city $7.1 million. Those include postponing the Glen Loma Fire Station, Sports Park expansion and a downtown parking lot to a “future year.”

However, the one-time cost savings would only buy the city time to determine “additional steps” to address “financial challenges in the mid-term and over the long-term,” the report stated.

Potential city employee layoffs were not mentioned in the report.

The Gilroy City Council will meet virtually on May 4 at 6pm. The meeting will be streamed live at cityofgilroy.org.

The public can leave comments by emailing [email protected] or by leaving a message at 408.846.0204 prior to 5pm on May 4.

To view the agenda, visit gilroyca.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1826.