Revenue forecast slightly higher for SV next year

Budget time is fast approaching for the city of Scotts Valley as staffers begin to prepare for the 2011-12 fiscal year, which begins July 1.
At the May 4 meeting of the Scotts Valley City Council, City Manager Steve Ando presented a proposed budget that estimates slight increases in sales tax and transient occupancy tax income, along with infusions of cash from the city’s reserves, to bring estimated general fund revenue to just over $7.24 million. That would be a $115,360 revenue increase for the city over the present year.
The increase in revenue comes even after the expiration of Measure C, the five-year sales tax that started at a half-cent in 2006 before dropping to a quarter-cent in 2009 and ending altogether on April 1.
The increase stems from the following sources:
– Sales tax receipts are predicted to rise by 1.2 percent, which translates roughly to a $20,000 boost in revenue.
– Franchise fees are budgeted to increase by 1.7 percent, about $8,000.
– Transient occupancy tax revenue is expected to increase by about 3.4 percent, roughly $20,000.
– Charges for services — specifically, building permit fees — are expected to climb by $93,000 over 2010-11 due the impending construction of the Blue Bonnet and Woodside housing projects.
– On the negative side, business license taxes will decrease by about $10,000 as Seagate Technology moves its headquarters out of the city.
“The revenue is starting to come back,” said Ando. “It’s not where it used to be, but it is coming back.”
Even so, the city’s projected expenditures for the upcoming fiscal year are budgeted at just over $7.99 million — leaving an estimated $748,863 deficit.
To close the deficit, an addition of $300,000 to the general fund from leftover state gas tax revenues is written into the budget. Each year, the city receives roughly $180,000 in gas tax money, which has been stockpiled as a reserve.
Ando estimated that drawing from the general fund reserve, projected to be $2.6 million at the start of the fiscal year, combined with on-hand reserves, could cover the city through the 2013-14 fiscal year, but that would leave the city with a perilously low reserve after that.
As proposed, the budget shows the city’s largest cost is salaries and benefits, projected at $6,514,292, with the Scotts Valley Police Department accounting for $4,031,548 — nearly 56 percent of expected annual revenue.
Also, $725,000 from the sale of the Erba Lane property to the Redevelopment Agency will be part of the general fund for the 2011-2012 fiscal year, but the budget estimates did not include that amount, to avoid creating an abnormally high statistical anomaly that would not be repeated during the following years, Ando said.
The City Council expects to give final approval to the budget at its June 15 meeting.
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At a glance
– To see Scotts Valley’s past, present and proposed budgets, go to www.scottsvalley.org