Next round of cuts will include noticeable reduced services
Coming face to face with a gaping $800,000 chasm in the 2004-05 city budget, the City Council spent 12 hours in retreat Friday and Saturday attempting to find a way out though the results are bound to be painful to residents and city staff alike.
Showing good faith in cutting costs at home, the retreat was held at the city-owned community center, not at an off-site location as in past years.
Council also considered its goals for the coming year – besides stitching up the budget gap – and came to some real conclusions.
For the first time, staff layoffs and “revenue increases” (for revenue, read taxes although fees are included) were on the table, though council was clear that they would do almost anything to avoid going there. Instead, they zeroed in on a list prepared by department heads of critical and not-so-critical services offered by each city department, changing few.
City staff has been asked by council twice in the past two years to cut 5 percent from their operating budgets; both times they met or exceeded those numbers. Such cuts were noticeable by staff but usually not by residents.Council agreed that it must now begin to look at reducing services that the community will notice.
“We have seen the last of the street repaving for the foreseeable future,” said City Manager Ed Tewes.
Monterey Road has been completely resurfaced between Main and Edmundson avenues over the past two years but no future repaving is in any budget.
Though this city, like every other governmental entity in the state of California, faces having an indefinite amount of counted-on revenue snatched by the state, and though Morgan Hill has built up a cushion in the form of an undesignated fund balance, the city budget is still in trouble. No one expects the $800,000 for the fiscal year beginning July 1 to be the end. Sales taxes and hotel taxes are down and the recently reduced Vehicle License Fee won’t be fully backfilled and the city can’t do much about it.
City Manager Ed Tewes explained clearly why this is so. Morgan Hill has no tax under its own control but must rely on the state (and county) to honor sharing arrangements, a situation that led to trouble in the recession of the early 1990s and is causing trouble now.
Because imposing a “utility tax” without asking for voter approval caused four members of an earlier City Council to be recalled in the 1990s, subsequent councils have been reluctant to bring the matter up again. A utility tax would be set by Morgan Hill only on Morgan Hill residents and no other government departments could get their hands on the money. The tax money would be plunked into the general fund that pays for police and fire protection, recreation services and some administration costs, but predominantly police and fire protection.
STILL BUILDING?
Tewes also provided council with an answer to a question they fully expect to be asked as budget cuts take painful effect. Why, if the budget is in crisis, is Morgan Hill still building aquatic centers, indoor recreation centers and – possibly – libraries?
The answer, he said, is that there is general fund money and there is Redevelopment Agency money and the two are forbidden by law to mix. RDA money cannot be used to pay police salaries but can be used for capital – or building – projects or other predetermined uses. General fund money, likewise, cannot be added to a library building fund, for example, but can be used to pay city salaries.
The voter-approved (in 1999) $147 million to be collected from property taxes for the RDA fund is to be used in ways set by the City Council as the Redevelopment Agency. The money has been appropriated and designated; it’s already there. Taxes destined for the general fund are not.
In five years, when the current RDA expires, there will be no more money for building projects, Tewes said, unless an “RDA 3” is considered and passed.
GOALS FOR 2004
Council made a firm commitment to establish a do-able plan before June 2004 for a new library, to include site selection and funding. Councilman Steve Tate and Mayor Dennis Kennedy announced this formally at a Measure B campaign event on Saturday afternoon.
Economic development investments will be measured by their direct and indirect “return on investment” (ROI) to the general fund.
The Finance and Audit Committee will review and update the ROI policy.
Partnerships – the Chamber of Commerce, for example – will be re-evaluated by ROI to the general fund.
Downtown is subject to different investment criteria – as council tries to blow on the embers to jump-start the downtown economy. But not too different, council agreed, making loans, not grants.
The Legislative Committee will evaluate state propositions so council can decide which to support.
New revenue: development impact funds, user fees could be raised; council definitely will investigate new sources of income, with a goal of whatever it is, that it be under local control.
Council members serve on many commissions and committees and will review what works and what doesn’t, with the hope of streamlining their work and that of the supporting staff. The words “reinventing government” and “leaner and meaner” appeared.
On-going goals will include taking advantage of securing open space opportunities as they appear but not city involvement with public are or Sister City work, since it was agreed that the Sister City committee will go on all by itself without prodding from City Hall.
Council goals will be put into action starting at Wednesday’s meeting, which has a lengthy agenda, sure to attract residents wanting to speak.
Council will hear an update on medical services objectives, hear results from an earlier meeting on plans for a $26 million indoor recreation center and hear a report from the library sub-committee, which is trying to find a way to a new library building. The public is invited to speak about all agenda items when they appear over the course of the evening and on subjects not on the agenda between 7-7:30 p.m. what is on agenda from 7-7:30
The complete Council agenda in full is available at the City Clerk’s desk in City Hall and on line. City Council and/or the Redevelopment Agency meets at 7 p.m. Wednesdays in City Hall Chambers, 17555 Peak Ave. Details: www.morgan-hill.ca.gov or 779-7271. Council meetings are broadcast live on cable access channel 17.
