GILROY
– City Administrator Jay Baksa unveiled specific details Monday
on an unusual – and somewhat paradoxical – $129 million overall
city spending plan for next year.
On the operations side, the city has assembled a stop-gap budget
to help weather the economic storm. It features no new positions or
programs and some trimming
– although so far no layoffs or major cuts like some other Bay
Area cities are undertaking.
GILROY – City Administrator Jay Baksa unveiled specific details Monday on an unusual – and somewhat paradoxical – $129 million overall city spending plan for next year.
On the operations side, the city has assembled a stop-gap budget to help weather the economic storm. It features no new positions or programs and some trimming – although so far no layoffs or major cuts like some other Bay Area cities are undertaking.
But the city’s construction budget will be the largest ever because of planned expenditures on a suite of major capital projects such as the city’s new police station, the third fire station on Sunrise Drive and the sports park that are funded by impact fees collected from developers.
In his written budget message, Baksa called next fiscal year’s budget – which if approved, will go into effect July 1 – one of the most unusual and difficult he’s ever seen in 30 years in city government.
Baksa has assembled different versions of the city’s budget in recent months predicated on a wide variety of different and changing scenarios that could affect the city, and has spent almost 20 hours alone explaining it to the City Council over the course of six workshops.
What emerged in a hearing Monday is a budget that sees total expenditures rise by almost 25 percent to an estimated $129 million – mainly because of an unprecedented $55 million in expected capital expenditures. While total revenues are only $96 million, officials said the ratio is skewed because the city has already banked millions of dollars in impact fees, which are restricted for use on anything but construction or new equipment.
“It’s simply because we’re building so many projects in one year,” Baksa said of the ratio.The general fund, which is the city’s discretionary money that’s largely used for salaries and operations, will rise to approximately $34 million against an estimated $32.8 million in revenues.
Although the state is in the midst of a recession, the city set aside almost $24 million during flush times in the boom tech economy that are now being tapped to help cover slumping tax revenues as well as new services officials have already launched, such as the paramedic program.
Public safety – police and fire operations – will account for over 80 percent of the general fund – the highest percentage ever – with up to 55 percent of expenditures slated for police and 25 percent for fire, including overhead.
The general fund budget is meant to maintain the city’s core services through the next two years in hopes that economic conditions will begin to recover.
Unlike last year, when the city was in the midst of hiring the new firefighter-paramedics, the general fund budget includes no new positions or programs that don’t pay for themselves. Officials already excised nearly $1.6 million out of the current year’s budget by “nickel-and-diming.”
But several factors swirling around the city could trigger an increasingly painful series of tiered cuts in the future, ranging in severity from reduced funding for tourist and economic development services to – in the worst-case scenarios if several factors play in at once – reduced police and fire presence and gutted recreational programs.
Tops on the city’s worry list is a state proposal to take away the city’s share of revenues from the car tax or so-called Vehicle License Fee – a $1.8 million annual hit to the city’s general fund.
Other things that could trigger cuts include increased employee benefit and salary costs, reduced construction and long-term economic slumping.
The loss of a major east-side shopping center and up to $1.6 million in revenues it could bring with it is no longer a worry because opponents of a new Wal-Mart there recently abandoned a referendum attempt. But a new worry has replaced it – a state Assembly bill that officials said could eventually cost the city up to $1 million a year by tweaking property and sales tax formulas.
Besides the alternate budgets and other preparations already crafted, “There’s really not much more we can do at this point until some of these things get resolved,” he told the Council Monday.
Crucial sales tax revenues – the largest chunk of the general fund and a particularly volatile source of revenues that can fluctuate wildly with the economy – are estimated at roughly $12.1 million next year because of contributions from new economic development.
This year, the sales tax revenues are expected to be $10.5 million. However, revenues from new Costco and Lowe’s stores increased the projection for next year to $11.4 million. And another $600,000 is expected from other stores in the Regency and Newman shopping centers at the junction of U.S. 101 and state Highway 152.
Councilmembers proposed no changes on the budget during a study session Monday.
