The Morgan Hill City Council voted unanimously Wednesday to approve an operating budget for the fiscal year that begins July 1 and includes about $29 million in general fund expenditures.
That’s about $1.8 million more than the current general fund budget.
Despite the fact that the city’s general fund lost about $900,000 in revenue when the state closed the redevelopment agency earlier this year, rising sales tax revenues which have already jumped 24 percent this year and are expected to keep increasing are largely responsible for the improved local projections, according to city staff.
The proposed budget also includes two new full-time positions, including a multi-service officer in the police department.
Rates for monthly memberships and rentals of two of the city’s most popular recreation facilities – the Centennial Recreation Center and the Aquatics Center – will increase as of July 1 when the new fiscal year starts. Monthly memberships to the two facilities will rise about $4 for families, and $3 for individuals. Fees for lane use at the city pools are also slated to go up with the budget, as are rentals for the Aquatics Center.
The fee increases are expected to bring in an extra $162,000 per year to the community services department, and will fund continued maintenance of the buildings and staff time to extend some of the CRC’s programs, according to city staff.
The budget also includes raises of about 2 percent for city hall’s 30 management staff who are not represented by one of the three local labor unions. Those raises will cost the city about $110,000 annually, according to city staff.
Depending on negotiations with the three labor unions that represent the rest of the city’s employees, the city thinks it will be able to augment its reserve balance starting in 2014. The contracts between those employees and the city expire in June 2013, and that’s a key area where the city will look to save some money through some combination of lower wages, a tiered retirement system, asking employers to contribute more to their benefits and other personnel costs.
Most of the increase in general fund expenses is attributed to rising, contracted salary costs, rising retirement costs for city staff borne by the general fund, and increasing internal service funds such as workers compensation and general liability insurance, staff said.
The 2012-2013 budget adds a multi-services officer to the police department. The officer will assist in the transportation and booking of arrested suspects, traffic control, vehicle abatement and processing crime reports.
Staff also predict an increase of $1 million in general fund costs to fund police department activities – an amount that was previously picked up by the RDA to staff three positions, increased pension costs and the previously negotiated 3 percent salary raise for the POA and CSOA.
Police department costs make up about 57 percent of the city’s general fund.
In the community services department, staff have proposed a restructuring that will eliminate a vacant senior park maintenance position, add a community services coordinator position and reclassify other existing job titles.
Another key, ongoing challenge to the city, for years to come, will be the rising costs of the general fund’s contribution to CalPERS retirement benefits for city staff and retirees, city staff said.
The city currently pays 32.5 percent of salaries for sworn police officers to CalPERS, and 16.2 percent for all other employees, staff said. The rates are likely to go up another 4.7 percent by 2017 for sworn personnel and 3.1 percent for others.
For the 2012-2013 fiscal year, that amount equates to about $3.8 million paid for retirement costs out of the general fund, or about 13 percent of the general fund.
