A $600,000 projected shortfall in the city budget has morphed
into a slight surplus for the last fiscal year, though city leaders
remain sober about calls to beef up the police force and other
budgetary challenges.
Morgan Hill – A $600,000 projected shortfall in the city budget has morphed into a slight surplus for the last fiscal year, though city leaders remain sober about calls to beef up the police force and other budgetary challenges.
The City of Morgan Hill ended the 2006-07 fiscal year in June with a $53,871 surplus, according to City Manager Ed Tewes. The final budget figure is a far cry from the $600,000 deficit projection of May 2006 and the more recent deficit projection of $388,959, based on a May 2007 update.
Tewes pointed out, however, that the shift represents less than a 2 percent change from original spending predictions of nearly $23-million for the last fiscal year.
“This swing is within a very narrow margin — 1.9 percent here could be 1.9 percent the other way,” Tewes said, adding: “It’s certainly good news that we’ll have a slight operating surplus. It shows how tight the margins are for error.”
The final spending figure for 2006-07 came in at $22.5 million, Tewes said. Higher-than-projected property and sales tax revenues, as well as unexpected savings of $100,000 on police overtime accounted for the lower spending figure, Tewes explained.
Surpluses of several hundred thousand dollars are projected for the next four years as well, in large part due to a decision to steer taxes back to the city by shrinking the area governed by the Redevelopment Agency. Though the agency provides millions of dollars to redevelop blighted areas and support other building projects, city officials chose to remove business parks in the northern reaches of Morgan Hill from the RDA’s reach in order to recoup tax money generated by the area that would have normally gone to the RDA. The redrawing of RDA boundaries is expected to net the city $700,000 in the current fiscal year.
“We still believe that over the long haul, we have the ability to sustain a budget that provides the same level of staffing we currently provide,” Tewes said. “The debate is whether we should have significantly higher levels of service such as in the police department, which would require significantly greater revenue than we can forecast.”
City leaders hope to avoid asking voters to approve a new tax by exploring alternative financing methods, a move that comes in the face of public pressure to hire seven new police officers.
Mayor Steve Tate suggested that a tax may be unavoidable to beef up the 37-person department. City officials, he said, have already “cut as much as we can” to balance the budget.
“We’re providing all the services we can at the lowest cost possible,” Tate said. “From that standpoint, if voters don’t want additional services for the future, we can live with that. We’ll make it work.”
The council’s finance and audit subcommittee, charged with finding ways other than a tax to pay for new police officers, is expected to issue recommendations in coming months. If it fails to come up with an alternative, the proposed tax to finance new officer salaries would likely appear on the November 2008 ballot.
