A sneak peek at the five-year budget shows a surplus of half a
million dollars
Gilroy – A sneak preview of Gilroy’s five-year budget shows a half million dollar surplus for the year, rather than the $4.5 million shortfall projected last year.
The revenues would bring the city’s total surplus funds to $25.3 million, according to preliminary budget figures given to city leaders during a Monday workshop.
The preliminary figures contrast sharply with dire financial predictions issued last year by city officials, when a battle with the city’s firefighter union over wage increases and an expensive retirement package was just heating up. Now, as the fight continues in the hands of an outside arbitrator, city officials are finding themselves with a rosier financial picture than originally predicted.
“What this tells us is that we have a little room for maneuvering for the first time in three and a half years,” City Administrator Jay Baksa told council members and planning commissioners Monday night.
A number of factors contributed to the savings, according to Baksa, who pointed to returns of hundreds of thousands of dollars in state takeaways from local taxes, as well as financial belt tightening across all city departments. Cost-cutting included scaling back support for the city’s Economic Development Corporation and Visitors Bureau, freezing part-time wages and cutting hours at the Gilroy Museum. The cuts saved the city $28 million in recent years, according to Baksa.
“We didn’t have to do big stuff because we did a lot of little things that all added up,” he said.
That conservative approach netted the city $810,435 in the 2004-2005 fiscal year, compared to the nearly $600,000 deficit projected for that year’s budget. This year, surplus revenues will come in at $554,289, but Baksa is predicting a $4 million shortfall in the upcoming 2006-2007 fiscal year that begins in July.
He blamed that deficit on spiraling health care and retirement costs for the city’s 270 employees, noting that savings could come in that area as well. Last year, the vast majority of Gilroy’s public employees agreed to pick up a percentage of increases in their health care costs, and officials hope to convince firefighters and police to do the same. The police union begins contract negotiations with City Hall this spring.
In the meantime, council members can start thinking about restoring programs or adding new services, against the backdrop of an arbitration process that could steer some of those excess funds to firefighters.
The arbitrator is expected to issue a final decision by the end of April. Baksa is scheduled to present the city’s updated five-year operating budget to council on May 8.
The city had a total budget this year of $160 million.
