• City warned of new budget constraints

    With the intention of preparing the City Council, and thus the citizens, for more bad news to come, Director of Management and Budget Jim Becklenberg presented a budget update at the March 4, 2009 City Council meeting that offered grim prospects for the next five years, beginning with the Fiscal Year 2009/10 budget.

    “Key assumptions” under which previous budgets had been offered took into account flat or declining revenues, a moderate recession and modest expectations. But Becklenberg now says that the recession is taking a bigger toll on city coffers than had been anticipated, with nearly all revenue sources falling short of estimates. “We haven’t found the bottom of this recession yet,” he said.

    He braced the council for a $1.3 million budget gap.

    The gap, he says, is almost entirely due to declining revenue. And the biggest shortfall is in transient occupancy taxes (TOT), a statement echoed by Pacific Grove Chamber of Commerce president Moe Ammar, who reported that countywide TOT revenues are down 35 percent.

    Becklenberg is looking at a loss of 15 percent in TOT for Fiscal Year 2008/09, 10 percent in the coming year, flat TOT revenues for the following two years, and he is not expecting any increases there until Fiscal Year 2012/13.

    He sees sales tax revenue falling by 12 percent in Fiscal Year 2008/09, and 10 percent in the next fiscal year before flattening and then beginning to rise in Fiscal Year 2012/13.

    There will also be incremental losses in other areas as well: Business license taxes are expected to fall another 10 percent. Because of the general malaise in the home-buying, building and remodeling market, building fees, he says, will likely fall another 20 percent. And as the recession deepens, it is expected that property taxes will go unpaid.

    Faced with falling income and having to make choices, he reasons that families will meet other obligations before paying their property taxes.

    “There’s more uncertainly here than I’ve ever seen,” he told the Council. “We have no margin for error.”

    Because he is familiar with the attitude of the Council and the citizens of Pacific Grove toward the library, Becklenberg has set the library in a separate “column” from the rest of the budget, and has asked the Council to direct staff to develop additional options for funding the library at current levels.

    He said the staff is developing options in a number of key areas. On the revenue side, they will be looking for new revenues. They will be looking for more service cost recovery, such as fees for services which do not currently have a fee associated with them, or increases in fees for which a fee is already charged. The will also be looking at consolidating overhead services with other agencies, similar to the explorations with fire protection services and building department services.

    On the expense side, staff will present options for eliminating now-vacant positions, employee layoffs, furloughs and pay cuts. They will examine the suspension and/or deferral of contract projects and service reductions.

    There will be a series of public meetings about the budget, and he is hopeful that there will be concrete suggestions forthcoming from the public about how to deal with the shortfall in general, and the library in particular.

    Councilmember Lisa Bennett concurred, saying she is hoping there will not be a litany of complaints about the budget but instead some solid support from the citizens of Pacific Grove.

    There is some good news.

    The budget is balanced for the current fiscal year, and reserves will help offset the coming shortfall.

    Measure U income is helping the bottom line.

    CalPERS losses, and the City’s need to help make them up, will not take effect until 2011/12.

    And a mixed blessing: Police contract raises of $300,000 due in the coming fiscal year are based on a full hire contingent, but the department is still down five officers.

    Becklenberg is expecting concrete income figures soon for third quarter TOT, 2nd quarter sales tax revenue and the first Cal-Am Water franchise payment. As of the April 15, 2009 City Council meeting, Becklenberg promises updated revenue information and recommendations for closing the gap. The budget is to be present to the City Council on May 20 and the Council, it is hoped, will pass if by June 3, 2009.

    posted to Cedar Street Times on March 8, 2009

    Topics: Current Edition, Front PG News

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