Even with Measure T, reserve would empty in 2 years
As the figures and the economy stand, Hollister officials
acknowledge the budget outlook is dire and might require major cuts
in the near future.
Even with Measure T, reserve would empty in 2 years
As the figures and the economy stand, Hollister officials acknowledge the budget outlook is dire and might require major cuts in the near future.
Council members learned at last week’s annual budget hearings that the rainy-day reserve – which stood at more than $15 million just six years ago – would be depleted altogether in less than two years if current spending and revenue trends continue.
The city’s general fund is used for day-to-day expenses, including employee costs that are set to rise by about $1 million over last year’s spending total due to workers’ raises and some additional hires related to the Measure T plan, according to projections provided by City Manager Clint Quilter.
Even with this year’s Measure T sales-tax injection from the 1 percent increase – about $2.1 million in that revenue will be allocated toward the city’s deficit – the city stands to operate about $1.7 million in the red during the 2009-10 fiscal year. Assuming Measure T expires in 2013 and the economy doesn’t reverse course, city officials are working against a structural deficit nearing $4 million.
Though Quilter has talked of potentially revising the spending plan after the state budget is finalized, Councilman Victor Gomez believes the city should start cutting now, at least on some level.
“No matter what, we have to cut,” Gomez said, referring to the state budget. “That’s what it comes down to. We could wait. We need to start cutting now. We need to figure out where to cut even if it’s small.”
Councilman Doug Emerson also acknowledged spending reductions are likely – “if the economy stays exactly where it is,” he said.
Emerson talked about accounting of the Measure T dollars in particular, noting how he thinks the city should continue keeping those funds itemized separately, as officials originally intended when they expected to use the money to significantly increase the workforce and services. Some of the additional workers have been hired, but most have not.
Emerson said the point would be to “keep us aware of the problem” with declining revenues. He acknowledged that with the rainy-day fund set for depletion on the current track, in essence “there is no rainy-day fund,” he said.
Cutting a large dollar amount from the general fund budget likely would require some kind of union pay concessions considering compensation makes up more than 80 percent of the total. That might be a difficult subject for council members after approving 4 percent annual raises across the board less than a year ago.
Gomez pointed out he has talked with neighboring cities’ officials and said he has “been getting mixed reviews” when it comes to unions’ reactions to the prospect of pay cuts. He noted how the dilemma for employees is that “instead of getting a 5- to 10-percent pay cut all across the board, you lose a couple of employees” when a workforce objects to broader reductions.
Gomez was not on the council when its members approved the raises. He said “nobody could have forecast” the economic downturn. At the same time, he said “hopefully, we make some better decisions” about such projections.
When the economy is so poor, he said, “Any kind of raise is like, what?”
