April 5, 2002

City needs more budget cuts, manager says

Low taxes, rising costs blamed

By DAN WHITE
Sentinel staff writer

SANTA CRUZ — City leaders say the budget picture is grimmer than first thought.

Just two months ago, City Manager Dick Wilson estimated budget cuts of $1.5 million would be needed through the next fiscal year, which ends June 30, 2003.

He now estimates the required cuts at $3 million or more, blaming much of the discrepancy on lower-than-expected sales tax and transient occupancy tax, coupled with rising costs for next year.

It is difficult to predict when the city will make any cuts, whether there will be layoffs or where cuts will come from, Wilson said. It depends how deep the city is willing to dig into its emergency-fund balance of about $6.5 million.

The city is also facing an intense tax-repeal campaign, driven by tax critic and radio talk-show host Steve Hartman, to roll back the city’s 7 percent utility tax. That will be on the November ballot.

The tax generated $8.25 million in the 2000-01 fiscal year, is expected to generate $8.38 million this year and about $8.4 million the next.

City officials say they are preparing budget projections, some based on impending cuts, and others based on the possibility of utility tax loss. All scenarios involve the city’s general fund, which supports about $42.4 million in services, including 490 full-time positions. About 70 percent of the general fund budget goes to salaries. The total city budget is around $127 million.

Wilson said the city would have to cut more than 100 full-time positions if it loses the utility tax.

Hartman charges the budget is full of hidden flab, especially parks. He claims the city parks department is overstaffed and that the parks are underutilized. He points to greenbelt properties such as Pogonip, 600 acres near UCSC, saying the land is essentially set aside for students who don’t have a permanent stake in Santa Cruz.

Slightly less than half of the general fund goes to public safety: $14 million for police and $5.9 million for fire.

Wilson said Santa Cruz, compared to state averages, has a relatively low percentage of its general fund budget going to public safety — the average is closer to 70 percent, he said — and an unusually high percentage going to parks.

Santa Cruz devotes $8.8 million, about 20 percent of its general fund, to its parks, while the state average is closer to 11 percent.

In addition to maintaining Pogonip, a forest and meadow-covered property popular with hikers and runners, city staff there maintains trails and cleans up the numerous homeless encampments. The city also runs Delaveaga Park, with its golf course and famous flying-disc course, hiking and bike trails.

Wilson said the parks budget reflects longtime community desires, not the whims of any one particular council.

"It reflects choices made by Santa Cruz city councils for 100 years," he said. "It reflects decisions made for a long time, and reaffirmed over a long period of time. We’ve had repeated greenbelt votes. It’s a huge value here."

Wilson said if parks funding is slashed, it wouldn’t lead to development of preserved open spaces, which are protected in perpetuity. But he said it could lead to a dramatic decrease in maintenance and recreation programs.

Other general fund money includes $4.1 million for public works, $2.8 million for community development, $2.1 million for social services.

If the pending budget cuts are as bad as Wilson projects, there is little the council can do except discuss which rollbacks will have the least impact on the public.

But the utility tax is a political issue that will be played out over the next six months, and council members are discussing how to get the word out.

Councilwoman Emily Reilly has been looking closely at the results of the March election — when county voters repealed the county utility tax — to help predict the outcome of the city’s utility tax battle.

She said she found it heartening that Santa Cruzans voted for Proposition 42, to preserve a sales tax on gas for transportation projects, and on the Measure C and D school bonds. She said these results show "that we need to do a better job of explaining to the community what is being done with all the money."

 

Contact Dan White at dwhite@santa-cruz.com.