Council will discuss cutting services, raising taxes with
residents over the next year
City officials have agreed to spend $74,500 to hire a consultant and tell residents their side of the city’s financial story, and find out what sacrifices residents are willing to make to bring the city’s budget back in line.
“We are operating on a deficit now, and if residents want to continue to maintain the level of services we have now, we will need to come up with some kind of revenue to sustain what we have now,” City Manager Ed Tewes said. “If they want services to increase, we will need even more revenue.”
Increasing revenue could mean raising taxes for local residents, according to Morgan Hill Mayor Dennis Kennedy.
“(Raising taxes is) certainly very much a possibility,” Kennedy said.
The Morgan Hill City Council in late August hired Viewpoint Learning, Inc. to design and manage “conversations with the community.” The meetings are intended to educate the public on the city’s financial status and engage residents in a dialogue about how to address the situation. The meetings with the public will be conducted throughout the year.
“The challenge will be to feel out what residents believe is the appropriate level of services needed in the community. We will reach out to them and include them in discussions,” said Councilman Greg Sellers about the upcoming meetings with the community.
During the pending conversations, Morgan Hill residents will be asked to re-examine what kind of city they want, what services to expect, what they are willing to pay for and under what conditions.
“We are faced with tough decisions with an ongoing deficit and are projecting it will continue,” Kennedy said. “We are going to make decisions about what possible steps to take to find other sources of revenue, or we will have to cut services. It’s critical that the community will be a part of this. We will have to find out from residents what services they are willing to pay for, what we could cut, should it be recreation programs, police, fire services, the maintenance of parks?”
The conversations will focus on the $1.2 million deficit the city is facing, which has caused the city to dip into its reserves. This means, to simply maintain services at the current level, the city will need to find $1.2 million in additional revenue each year. Any improvement in services, such as additional fire protection, park maintenance, children’s activities, will require the city to garner even more revenue or cut other programs.
City officials point to cuts in the state budget and increasing costs for employee benefits as factors that have taken a toll on the budget. The expense of operating recently constructed Redevelopment Agency projects such as the Aquatics Center, which cost $411,000 last fiscal year, adds to the city’s budget dilemma.
Latest city figures show Redevelopment projects such as the Community Cultural Center and Aquatics Center cost over $800,000 last fiscal year. City officials have acknowledged that though they did not expect revenues to meet expenses in the first few years of operating the new facilities, last fiscal year’s deficit turned out to be much higher than they estimated.
The city has had to reduce some staff and services, designate low-maintenance areas in parks, and dig deeper into its reserves. Continued dipping into reserves to support services affects the reserve pool, which is traditionally set aside for emergencies. The city projects reserves will drop to $8.5 million this year. The reserve account was at $11.3 million in July of 2003.
“We want them (residents) to be aware of the $1.2 million deficit and bring them into discussions, share with them the reasons why we have a deficit,” Councilman Mark Grzan stated. “We will discuss choices, possible solutions. This could mean reducing services, increasing fees for services. We need to maintain a cautious approach. We will be forthright with them, explain why we got to where we are at. The council will manage the process, but ultimately it will be a community decision.”
A detailed poll conducted earlier this year shows the age-old contradiction in public opinion – residents are happy with local government and support improving services, but at the same time, they aren’t willing to pay for it.
After the conversations, the city plans to explore options beginning in January of 2006 and develop a consensus on a plan by May 2006.
Viewpoint Learning, Inc. is experienced in managing community conversations and will provide city leaders with the tools and training to inform the public about issues facing the city and to engage citizens in meaningful discussions.
Consultant services will cost $50,000 and related materials and expenses, $25,000. To make sure there are enough funds for the process, the council approved a $25,000 increase in this year’s budget within the general fund.
Rose Meily is covers City Hall. Reach her at 779-4106 ext. 201 or by e-mail at rm****@*************es.com.
