Scotts Valley faces deficit again

Deficits are still the order of the day as the Scotts Valley City Council begins the final steps to approve the city’s budget for the 2012-13 fiscal year.
A proposed budget was introduced by City Manager Steve Ando at the council’s Wednesday, May 2, meeting. Voting on the budget won’t happen until June, and the budget won’t begin until the next fiscal year, which begins July 1.
The budget projects the city’s general fund revenue will total $7,789,650 and expenditures will total $8,669,057, resulting in a deficit of $879,407.
The general fund pays for police and public works services, as well as other personnel costs.
The lion’s share of those expenditures are in the category of salaries and benefits, a sector of the budget that will increase $446,207 over the 2011-12 fiscal year, due in large part to the state-mandated shutdown of the city’s redevelopment agency.
“There were costs that were paid for by (redevelopment) funds — salaries mostly,” Ando said. “Now, with the elimination of the agency, those costs must be taken on by the general fund.”
The news is not all bleak, however. At some point during the upcoming fiscal year, the city expects to begin receiving about $2.1 million in back taxes a court decided the city is owed by Santa Cruz County.
The ruling also means the city will receive an extra $200,000 in tax revenue each year going forward, as Santa Cruz County will no longer withhold those tax receipts.
Finally, to cover the general fund’s operating deficit, the city plans to dip into its $3 million pool of Measure C reserve funds — a practice that Ando said could be done with similarly sized deficits until 2015.
Measure C was a five-year temporary sales tax that expired last year.
Councilman Jim Reed said that the deficit situation was exactly the sort of rainy day the city had had in mind for the Measure C funds.
“The Measure C monies — we said we were going to do a few limited things for services, and the rest we socked away as a bridge to the future,” Reed said. “The fact is, we have these reserves to use in a time like this.”
At its May 16 meeting, the council continued the preparation for the 2012-13 fiscal year by focusing on revenues and expenditures stemming from the city’s recreation division, as well as is wastewater and recycling programs.