The Morgan Hill City Council tonight is scheduled to vote June 17 on a two-year budget that is heavily impacted by revenue losses due to the Covid-19 pandemic and related shelter-in-place orders.
City staff’s recommended budget proposes about $2.3 million in service cuts for the fiscal year 2020-21, and about $2.4 million for 2021-22.
The council meeting will take place online at 7pm June 17. A link to join the meeting on the Zoom app will be posted on the city’s website at http://morganhillca.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1918.
The budget recommends reducing the city’s workforce by a total of five full-time positions, though no layoffs are proposed. The city’s assistant city manager for development services and community services supervisor are retiring later this year, and staff has proposed leaving those positions vacant at least through the end of 2021.
Furthermore, due to a hiring freeze enacted by City Manager Christina Turner earlier this year—shortly after Covid-19 resulted in a halt to public gatherings and “non-essential” activities—the vacant positions of municipal services assistant, accounting assistant and engineering technician are not funded through 2020-21 in the recommended budget.
In March, the city furloughed nearly 100 temporary staff in response to Santa Clara County’s shelter-in-place orders. Some of these have since been rehired to work at the Aquatics Center, which opened for limited membership swimming, private lessons and team practice June 15.
The proposed budget projects widespread revenue losses in recreation service fees, sales tax and hotel tax collections. These losses are wholly attributed to the Covid-19 shelter-in-place and continued closure of vast sectors of the local and state economy, according to city staff.
City finances are directly impacted by the closures of the Centennial Recreation Center, Dennis Kennedy Aquatics Center and the Community and Cultural Center—all of which traditionally generate significant revenues through membership and user fees. The recommended budget document projects recreation revenue losses of $1.2 million by the end of the current fiscal year (June 30), about $674,000 in 2020-21 and about $447,000 in 2021-22.
City staff also project sales tax revenue loss of about $681,000, and hotel tax revenue loss of about $710,000 over the next two years.
The biggest chunk of service cuts proposed in the two-year budget is correspondingly in the city’s recreation and community services programs. The budget proposes cutting a total of about $760,000 from these programs in 2020-21, and about $860,000 in 2021-22. Specifically, according to Community Services Director Chris Ghione, these cuts include:
• Reduction of hours of operation at the CRC and CCC;
• Elimination of free community events such as Summer Fun in the Park and Get Fit;
• The splash pad at the CCC will not be turned on;
• Potentially eliminating the mailing of recreation guides;
• A reduction of recreation staff positions by 2.5;
• Fewer hours at the CRC Senior Center, which remains closed due to shelter-in-place guidelines;
• No staffing at the skatepark;
• No pay raises for part-time staff;
• Fewer hours at the CRC teen center.
Ghione said as the state and county allow recreation facilities to continue to reopen, revenues will return and the city will consider rehiring to fill vacant, unfunded positions.
“We’ll be doing more with less staff at the CRC and Aquatics Center” until revenues return, Ghione said.
City service cuts proposed in other departments within the two-year budget include:
• Eliminate city services for cat sheltering and contribution for spay/neuter assistance ($70,700 savings over two years);
• Eliminate the police department’s Parent Project program ($6,060 over two years);
• Eliminate the Citizens Police Academy ($15,756 over two years);
• Eliminate police department’s annual National Night Out event ($20,200 over two years);
• CalFire contract personnel savings ($550,000 over three years)
• Eliminate a part-time position in the economic development department ($73,572 over two years);
• Eliminate of cost-of-living raises for City Hall management staff ($213,000 over two years);
• Eliminate DUI checkpoints ($5,000 over two years);
• Eliminate police explorer training and related conference ($5,500 over two years);
• Eliminate emergency maintenance contract for the police mobile command vehicle ($25,000 over two years, shared with City of Gilroy).
Additional cuts—about $1.6 million over two years—are proposed in the city’s development services fund, which is largely financed by developer fees.
The total recommended operating budget for the City of Morgan Hill is about $109.9 million for 2020-21 and about $111.3 million for 2021-22. This includes a general fund budget of about $43.8 million for 2020-21 and about $44.7 million for 2021-22.
The council will also vote on a proposed six-year Capital Improvement budget of about $191 million.