With Hollister’s budget hearings less than two weeks away, City
Manager Dale Shaddox must peel away at department requests that
initially stacked up to $1.8 million above total projected
revenues.
With Hollister’s budget hearings less than two weeks away, City Manager Dale Shaddox must peel away at department requests that initially stacked up to $1.8 million above total projected revenues.
“During the last three weeks, I’ve been trying to eliminate that gap,” Shaddox said.
While he plans to present the City Council a balanced budget June 23, he will also hand Council members a list of projects or services sidelined from his budget – many of which Shaddox said are critical to the city’s future.
From that list, Council members will have the unenviable task of debating whether to shelve projects or accept a deficit. Whatever survives the Council’s cuts will be funded out of the General Fund reserve, which is comprised of surpluses from previous years.
“It’s a tough number ($1.8 million) to swallow,” said Councilman Tony LoBue. “I think we’re going to be pulling in the reigns as far as expenditures go.”
Shaddox’s list of projects on the budgetary plank will likely include construction of a new Civic Center, Fire Station 2 and plans for a new animal shelter, he said.
The Civic Center – which carries an estimated total cost of up to $15 million – seems “unlikely” to continue for the year, he said. Moving forward on Fire Station 2 is “very likely,” and he called the animal shelter “up in the air.”
Those capital expenditures are among a “whole host of” projects and services facing postponement.
“My plan is to have an operating budget that is balanced, for basic operations,” Shaddox said. “If the Council wants to move ahead with other projects, it will have to come out of the General Fund reserve. They’ll be presented with a full set of options.”
The General Fund reserve – essentially the city’s safety net – will have between $8 million and $10 million remaining for the 2003-2004 fiscal year, according to Finance Director Barbara Mulholland.
The reserve maintained a high point of $15 million in 1999, but annual deficits since have caused it to dwindle. With the fiscal year ending June 30, the city has drawn $1.6 million from this year’s reserve, Shaddox said.
Although the city “ought to” use some reserves, Shaddox said, it must be “careful not to go below that critical line” – which he said should be drawn at $4.5 million or about 30 percent of the budget.
“And we’re heading in that direction,” he said, referring to the trend in recent years.
Department heads were advised by Shaddox more than a month ago to plan their budgets conservatively. Some of them, however, submitted “very ambitious” requests, according to Mulholland.
“The department heads came in with work plans with what they would choose to do,” she said. “The problem is, at some point you have to say, can we afford all the things we choose to do?”
In 2002-2003, Public Works departments received the most funding at $9.1 million. The Police Department received the second most last year at $4.9 million. There were no concrete departmental projections for next year’s budget.
Mulholland projected the city to have a revenue stream in the coming year of $15.5 million. The projected largest portion – $3.7 million – will come from sales tax revenues, she said.
One of the most harmful revenue hits will be a loss of building impact fees because the cease and desist order imposed in May 2002 after a 15-million gallon sewer spill. Last year those permits generated $459,000, while the projection for the coming year is just $75,000.
Officials attributed weak revenues to several unfortunate circumstances – including a depleted state economy, relatively low property tax increments, a consistently weak sales tax base and the building moratorium.
Councilman Tony Bruscia said Hollister receives a lower share of its property taxes – about 17 percent – than any other cities in the state. The average, he said, is about 23-25 percent.
“It’s a major issue,” Bruscia said.
Mulholland said the state set a basic rate years ago that most cities have since changed by adding special taxes. Hollister, which collects about nearly $1 million annually, could change its rate only by a public vote, she said.
Mulholland called the grim revenues “the perspective of what the next several years are going to be.”
The General Fund reserve, the product of Hollister’s historically conservative spending stance, is thwarting a much worse crisis –for now. Bruscia said Hollister has been “running very lean for a number of years.”
“Thank goodness for those reserves,” he said. “A lot of cities do not have that.”
According to several Council members and city officials, Shaddox has furiously worked on the budget – starting on the grueling process almost immediately when he arrived in early May.
“Everything he is doing right now is about the budget,” Conroy said. “The man is budget oriented.”
Come June 23, LoBue said the Council must “prioritize what’s best for the city.” Shaddox set a July 7 goal for adoption.
“Everybody’s going to have to feel the pain,” said Councilwoman Pauline Valdivia.
