As Hollister leaders have realized, there isn’t a perfect
science to calculating the city’s money problems and
– in turn – how many employees will be laid off.
Senior officials recognized this week they may have
overestimated the $1.8 million shortfall for next fiscal year by
about $500,000.
As Hollister leaders have realized, there isn’t a perfect science to calculating the city’s money problems and – in turn – how many employees will be laid off.
Senior officials recognized this week they may have overestimated the $1.8 million shortfall for next fiscal year by about $500,000.
But it likely won’t result in fewer layoffs, officials said, because the projection was optimistic to begin with.
Meanwhile, a lot – namely, how much funding the state Legislature could shift away from Hollister in the coming year – remains unknown.
“We know the future’s going to be difficult,” Mayor Tony Bruscia said. “We know the numbers aren’t good. But we don’t know exactly where we are.”
The possible mistake in the deficit projection relates to a pending sale of the downtown fire station to the Hollister Redevelopment Agency (RDA) – viewed as a creative “one-time solution.” Hollister officials plan to sell that property, along with the old Fremont School, for $2.77 million.
The estimated price of the station was listed in the staff report at $255,000. Though the property, including the land and the building, was recently appraised at $696,000 to $767,000, according to the appraisal summary.
City Manager Dale Shaddox said RDA Director Bill Avera may have provided only the land’s value. Whether it is legal for the RDA to buy land and the building, Shaddox said, “I’m still trying to track that one down.”
It could mean an extra $441,000 to $512,000 in General Fund spending next fiscal year.
“We owe the City Council a response on that,” Shaddox said.
He plans to provide answers to that question and others at the Jan. 28 meeting, where the Council is expected to approve a layoff plan. Shaddox will give several scenarios – some more devastating than others – regarding the city’s long-term financial future.
All of the scenarios have one thing in common: The city would be operating in deficit for several years to come.
As of today, the proposal hasn’t changed. Shaddox plans to recommend that 36 employees be laid off, effective July 1. The cuts would save about $1.8 million in 2004-05 and more in future years.
“From my standpoint, we are exactly in the same place,” he said.
Shaddox and Bruscia both referred to the “five-year trend analysis” released Jan. 12 – which projects millions in future deficit spending – as optimistic.
Those numbers could get worse, they said, depending on several state Legislature proposals under consideration.
For one, city officials remain uncertain about the $2 million Hollister receives annually for Vehicle License Fee revenues. Therefore, Shaddox projected the city would receive $1 million. He called it a “middle of the field” estimate.
“I don’t want to be seen as painting the worst-case scenario,” Shaddox said. “I’m trying to strike a middle ground and I’m trying to obtain some level of optimism here.”
Moreover, Gov. Arnold Schwarzenegger’s budget proposal includes several shifts of cities’ revenues – property taxes, sales taxes and booking fee reimbursements – that may not be paid back.
For now, though, the annual projected shortfall remains at about $2 million a year after 2004-05 – and only if the layoff plan gets approved as is, officials said.
“We haven’t run one worse than that ($2 million projection) because, frankly, that’s just scary,” Bruscia said.
Meanwhile, criticisms have circulated among city employees concerning the number crunching, Bruscia said.
People have wondered about outstanding debts that remain unpaid to Hollister – $1.4 million from San Benito Foods for its use of the industrial sewer plant and about $300,000 in unpaid loans to local business.
But even if those debts were recovered, Shaddox said, those funds would not be eligible for General Fund spending – or employees’ salaries. The cannery’s debt would go to a sewer fund, and the businesses’ loan payments would go to the RDA Fund.
The same goes for $54 million the city maintains in investments, on which Hollister earns about $2 million a year. Only $8.9 million of that – also known as the General Fund reserve – is eligible for payroll spending, Shaddox said.
