For City of Scotts Valley staff, preparing the budget is a year-long endeavor. That’s because it’s the critical financial document that provides a roadmap for where the community is headed.
And on May 21, Scotts Valley City Manager Mali LaGoe presented her proposal for where City Hall should be on its way to, and how to get there.
Road conditions, policing and wildfire prevention were some of the key things that underpinned planning efforts this year, LaGoe said.
“We also really want to see the community thrive,” she said, adding this includes “—really taking care to develop our City’s brand and reputation.”
So while City Hall facilities are in “pretty aged condition,” the local government also struggles with a variety of factors that are holding it back from soaring to the levels of some other Monterey Bay or Bay Area municipalities, she explained.
It’s hampered by the fact that it gets a lower share of property tax than many nearby jurisdictions (“half,” in some cases, City officials noted).
“It’s crazy how much that impacts a City,” Mayor Derek Timm said. “When you’re receiving half…our budget becomes unpredictable.”
Scotts Valley relies on sales taxes from businesses like Target and mom-and-pop shops, but these numbers have been weak—which the City points out is a factor facing many municipalities across California.
Plus, there’s about $2.2 million in government money for emergency road repairs that staff are trying to get reimbursed for, but that’s still floating out there somewhere in the ether.
And LaGoe said Scotts Valley had been hampered by America’s litigious nature. (“Public entities are seen as deep pockets,” she said.)
Administrative Services Director Stephanie Hill said while City revenues are projected at $30.9 million (that includes a General Fund balance of $20.1 million), expenses are pegged at $36.1 million. That includes about $15 million from sales taxes.
Thankfully, property tax revenues are up slightly.
A new business tax approach is bringing in an extra $300,000 this year. But because Scotts Valley eased the shock of its introduction via a two-year phase in, this is anticipated to rise to $700,000 next year.
The Transit Occupancy Tax (hotel tax) revenue is up slightly, as is the Utility Users Tax and franchise fees.
Service fee revenues jumped thanks to the City being fully-staffed. And the City saved money by bringing much of its engineering in-house.
The City had “a bit of a rough go” with its $2.2 million Schwab “115 trust” account for pensions, as President Donald Trump roiled markets earlier this year with his tariff agenda. However, it’s still making some money.
Scotts Valley plans to deploy $1 million in General Fund set-aside dollars and $4.2 million in other reserves to balance the budget.
The City has kept $2.5 million in reserve. That’s an 11% set-aside—the City would like to be at 15%.
Overall, City Hall says the picture is better than it could’ve been, given that Measure X did pass in the fall.
However, there’s still plenty of deficit spending planned for the years ahead.
Council discussed the possibility of trying to hike the hotel tax from 11% to 12%, delaying additional City hires and cancelling the community grants program.
With the ongoing pause to Scotts Valley’s fireworks display continuing into this year—something even the police chief invested some of his political capital to addressing during a recent Chamber of Commerce function—the idea of also shutting off the tap for things like senior nutrition and youth programming was a bridge too far at this point.
Instead, Council directed staff to put $50,000 in the budget for community grants, but to hold off on spending it until later this year.
The budget was back on the agenda for approval at the June 4 Council meeting.
