Scotts Valley likely to face major cuts

The city of Scotts Valley is scrambling for ways to cut its budget by at least $400,000 as furloughs and layoffs inch closer in the current economic climate.
City staff reported to the City Council last week that if substantial reductions aren’t made, the city’s reserves will dwindle and the city will face a deficit of about $1 million by 2012.
“I think it’s fair to say that the city is living on borrowed time, financially,” Vice Mayor Jim Reed said, explaining why he requested that the city revisit its budget. “We’re basically looking at running out of money in about December of 2012. My goal would be to look at options that would lengthen that period by a couple years.”
During the Aug. 19 meeting, the council directed City Manager Steve Ando to look into cutting the city’s $8.3 million budget by at least $400,000.
Ando said reducing the budget by $400,000 would preserve the city’s reserves for a few more years, and reducing the budget by $500,000 would get the city through until the 2014-15 fiscal year.
“These budget reductions in and of themselves don’t really solve our problem.” Ando said. “It does extend the time the city could last with its own reserves. The needed time could give room for commercial development within the city and/or a turnaround in the economy, which then would provide ongoing revenues to balance the city’s budget.”
How the reductions will take form is not yet known.
However, with the exception of the Scotts Valley Police Department, all city positions are on the table for cuts, Mayor Randy Johnson said.
“We won’t know until we make the decisions, probably at next week’s (Sept. 2) City Council meeting,” Johnson said.
Options the council suggested include furloughs that would close City Hall once a month. The council also asked what could be saved by shutting down City Hall between Christmas and New Year’s Day.
Ando said there are other options he is looking into that he would not discuss.
To balance this year’s general fund budget, the city is taking $576,000 from its $2.7 million reserve.
The city will receive about $530,000 from Measure C sales tax this year, but Ando said that despite the best efforts of frugality, once the quarter-cent sales tax expires, the city will face annual deficits in the $1.1 million range.
We want to have a soft landing as opposed to a crash landing when Measure C expires, so we have to make some of these tough choices now rather than later,” Vice Mayor Reed said.
The chopping of the budget comes in lieu of the state borrowing 8 percent of the city’s property tax allocation — $174,000 — to help close a $26.3 billion deficit at the state level.
Councilman Dene Bustichi said that at the very least, the city should cut the $174,000 that the state is borrowing through the suspension of the 2004 Proposition 1a, which was intended to protect revenues collected by local governments from being transferred for statewide use.
“This will cause a lot of pain and I hope we come up with creative ways to combat that,” Bustichi said.
Mayor Johnson said that the state’s budget crisis, which led to the suspension of Proposition 1A and also a decrease in redevelopment agency funds, was part of the catalyst for reducing the budget.
“All of this stuff has to make the cities reconsider their budgets and where their spending is at,” Johnson said. “We’ve been trying to be more proactive. We want to make our reserves last. Without money, the city will not be a strong city. The state is unpredictable and there might be more cuts so we have to be prepared.”
• To reach reporter Michelle Camerlingo, e-mail

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