Group reaches consensus on how to ‘spread the pain’
The majority of the nearly 400 people who participated in the city’s community conversations want to preserve Morgan Hill’s level of services, according to results of the process unveiled Saturday during the final capstone meeting on the project.
But since the majority also supported a level of city services that requires additional resources, 66 percent would impose a development tax, 58 percent would support increased sales taxes through retail development and less than 15 percent would ask residents to pay higher sales and parcel taxes or other assessments.
Other revenue enhancements considered by conversation participants were imposing a real property transfer tax and terminating the Redevelopment Agency. If Morgan Hill were to become a charter city, which would require a public vote, it could impose such a tax. It would be paid every time property was sold within city limits and it could be paid by either the buyer or the seller.
The RDA is scheduled to end in 2008. Legally, redevelopment funds must be used to eliminate blight and provide affordable housing; they can’t be used for general city operations. The RDA spends $23 million annually for capital projects and affordable housing.
A total of 34 percent supported cuts to administration, 31 percent supported cuts to recreation and 18 percent supported cuts to park maintenance. However, the other options, cutting or contracting the police force, fire and emergency-response services, received less than 15 percent of support.
As far as services to enhance, 71 percent of participants chose police service as their first or second priority and 55 percent chose increased summer and after-school programs as their first or second priority.
Public feedback from the conversations was positive, officials said, adding that 79 percent of participants said the overall experience was very or somewhat useful and gave even higher ratings to the discussion of the city’s finances and those who facilitated the process which totaled 26 conversations.
“Today’s event is a capstone to a path-breaking process of engaging the public about the future of Morgan Hill,” said Morgan Hill Mayor Dennis Kennedy in his opening remarks at the Morgan Hill Community and Cultural Center. “As community leaders, the council and city needs your advice on ways to address our structural deficit that will be technically feasible, able to gain public support, and make sense for the future of Morgan Hill.”
About 30 community leaders participated in the event, whose format combined a presentation on the city’s structural deficit, a brainstorming exercise on trends and changes that shaped the city’s financial predicament, and smaller working groups to study choices for the city’s future.
The city’s budget deficit is close to $1.5 million this year and could be as much as $2.4 million by 2010. The council could place a tax measure on the November 2006 ballot. The deficit being forecast is for the city’s existing staffing levels.
The group was led by Steve Rosell and Heidi Gantwerk of Viewpoint Learning, who designed the community conversations process for the city at a tab of $75,000.
Morgan Hill City Manager Ed Tewes said the process was needed as the city wanted community feedback on how to deal with its impending $1.5 million structural deficit.
He said the city learned four years ago that, “Morgan Hill is not immune to the economic downturn of the national economy,” Tewes said. “When the economy tanked…we saw a significant reduction in our revenue to support city services.”
The recession translated to a reduction of sales tax and transient occupancy tax, which increased the city’s costs because a major portion of its funds pay employees’ salaries and benefits. Those costs went up when the stock market went down, Tewes said.
More than 1.2 million is paid by the city now on retirement benefits, Tewes said. “It’s a long term deficit. It’s not going to be quickly resolved with quick fixes… but we had enough resources for a soft landing.”
Cuts have already been made across most city departments saving more than $1.2 million a year, he added. The city has eliminated 10.75 positions in administration, recreation, park maintenance and police support. It has also reduced facility hours and expenses for employee training, conferences and events and it’s reduced public communication and management studies.
“We knew that if the voters were going to approve other sources of revenues there had to be a greater level of understanding of the nature of the problem and the possible solutions and that’s how the community conversation process began,” Tewes said.
Gantwerk said: “The city council will have to make these decisions but they have to incorporate technically feasible choices. They have to work. They have to have public support and they have to make sense for Morgan Hill.”
The group was then encouraged to find common ground.
The city spends $15 million per year in municipal services. More than 80 percent of that is for police and fire. The city only takes in $13.5 million, leaving a $1.5 million shortfall.
Jack Dilles, director of finance, felt the series were fruitful in terms of the staff hearing what the general consensus on the budget is so far.
The council will have an all-day workshop May 19 to see what common ground people have, Dilles said.
Leaders gathered Saturday reached common ground on considering a mixture of revenue enhancements for the city such as adding car dealerships which could bring approximately $250,00 in sales taxes per year.
They also agreed to revise the RDA’s policies, consider a real property transfer tax, enhance the downtown, impose a development tax with equity considerations on a sliding scale, and that the council must do a better job at convincing the community that the revenue generating measures support the city’s values. Other suggestions were also made which, surprisingly, the group supported without dissent.
