GILROY
– The city of Gilroy could eventually have to begin layoffs if
the state decides to pull $1.8 million a year in car tax revenues
to balance its own budget shortfall.
GILROY – The city of Gilroy could eventually have to begin layoffs if the state decides to pull $1.8 million a year in car tax revenues to balance its own budget shortfall. More dramatic cuts to services could follow if the city has to face other potential revenue drains or new expenses that potentially loom on the horizon.
City Administrator Jay Baksa unveiled several different versions and projections of the city’s budget for the City Council Monday – ranging from relatively minor reductions in services to wholesale, dramatic slashing – that are based on a complex web of different scenarios that may play out in the course of the next few months and years.
Those scenarios range from Gov. Gray Davis’ suggestion to keep the city’s share of car tax revenues to balance the state budget to the loss of sales tax revenues expected from the Newman Development Corp.’s Pacheco Pass shopping center, where a financial incentive deal is the target of a referendum attempt by labor unions and other critics.
Baksa foreshadowed what such “triggers” would mean to the city’s budget for Council Monday, based on work with city department heads and lists of generalized budget priorities submitted by Councilmembers earlier this spring.
While layoffs or other more dramatic cuts probably won’t need to be decided on before the city adopts next year’s budget this summer, officials are trying to look forward and prepare for future impacts. Triggers such as the state’s yanking of the car tax could come down relatively quickly, and the city would have to react, Baksa said.
“We’re preparing for the worst, and obviously we’re hoping for the best but we have to have a plan in case this happens,” Baksa told the Council. “That’s what we’re doing today.”
Baksa outlined a series of three “tiers” of potential cuts Monday that would be likely to happen in the later part of the decade, as well as rough estimates about what different scenarios could trigger them.
Proposed cuts in the first tier could include reduced sidewalk repair, elimination of a land-use plan proposed for the north-central area of the city, reduced fire public education, a halfing of hours at the city’s museum, and the loss of special services – such as trips to ball games – at the youth and senior centers. Park maintenance could be cut by 15 percent and the city’s code enforcement program eliminated.
While nine full-time positions could be cut, the city could probably handle that through attrition, such as retirement, Baksa said.
The second tier potentially includes deeper 25 percent reductions to the visitors bureau and EDC, elimination of fire education, a halfing of the police neighborhood resources unit, elimination of swim and playground programs, a shuttered city museum and reduced hours at the youth center.
It could mean the loss of 20 full-time positions as well as over 11,300 part-time hours.
“There would have to be a formal, organized layoff policy at that point,” Baksa said.
Under the third tier, the city’s recreation offerings could be devastated, police officers reduced and the planned third fire station shuttered. The youth and senior centers could also be closed, the city would stop funding the visitors bureau and EDC and certain street maintenance sealing could be almost halved, among other cuts.
Forty-three full-time positions could be lost as well as over 23,000 part-time staff hours.
The loss of sales tax revenues the city eventually expects to receive from the Newman shopping center itself would likely trigger cuts into the second tier, Baksa said. The loss of the car tax or Vehicle License Fee revenue would probably trigger cuts into the third tier of proposals.
The combination of two triggers – such as loss of Newman and the VLF revenue combined – could mean adopting cuts in all three tiers and then some.
There are several triggers besides the VLF and Newman, such as increased benefit costs resulting from labor negotiations, a construction slowdown, continued increases in health and retirement costs and further drops in sales tax revenues.
While multiple triggers are obviously the most dramatic scenario, no one thinks that it’s impossible, Baksa said.
“I don’t think there’s anyone here today who couldn’t envision one or two of these (triggers) happening,” he said.
But they may not happen at all.
“If things get better, you never have to deal with these (tiers),” Baksa said. “If they get worse, you have to deal with them sooner.”
In the meanwhile, the city has unveiled general parameters of a stopgap budget meant to hold the line for the next couple of years in hopes that the economy will show some recovery.
It assumes the city will not add new positions or programs unless they pay for themselves, and also outlines 10 percent reductions in funding to the city’s Visitors Bureau and Economic Development Corporation, a freeze in part-time wage rates, and reduced services such as less frequent tree trimming.
But even if the city still gets its car tax revenue and the shopping center continues, if the economy does not recover city leaders will still face some tough decisions because expenditures will heavily outpace revenues toward the later part of the decade and drain the city’s reserves.
All of the first tier and part of the second would likely kick in at that point, Baksa said.
Council did not debate or comment much on specific reduction proposals during Monday night’s update, save questions from Councilman Al Pinheiro on the logic of cutting funds the city’s Visitors Bureau and Economic Development Corporation receive since they tend to generate new revenue for the city.
Baksa said those ideas were the result of attempts to begin the reduction planning with across-the-board cuts before any one group gets hit in its entirety.
“If you want to make ultimate changes in this, you have to find (the money) somewhere else,” he warned.
