20 MONTEREY COUNTY WEEKLY june 15-21, 2023 www.montereycountyweekly.com again expect to see a half-cent sales tax measure on 2024 ballots after voters defeated a similar measure in 2022. “We’ve still got a ways to go, but we’re proud of our progress,” Adams says. “We’re definitely not going to rest on our laurels.” Gonzales Gonzales has drawn up a “status quo” budget for the 2023-24 fiscal year that is little-changed from the previous year’s, according to Mike Howard, the city’s finance director. “We’re not anticipating a recession, but an economic slowdown,” Howard says of the conservative approach to city finances. “There hasn’t been a lot of major shifts [to the general fund].” Longer-term, Gonzales is focused on initiatives like the construction of a new community center, slated to be located on Fifth Street across from Gonzales High School, as well as a new industrial wastewater treatment facility to accommodate the growth of the city’s industrial park, which houses agricultural producers like Mann Packing and Taylor Farms. Those projects aren’t accounted for in this year’s budget, Howard says, noting that the city expects to finance both with a combination of grants and low-interest loans from the state. The industrial park and its tenants represent the largest tax revenue driver for Gonzales’ general fund, according to Howard. But that could change in the coming years given the expansive, long-gestating residential projects drawn up by the city, which could potentially triple its population of 8,300. Those plans are contingent on the annexation of surrounding farmland, which remains subject to county approval. “If those things come to fruition, we could see a significant number of homes added to the city, which would shift these [revenue] numbers,” he says, adding there are “still many hurdles” to address before those plans move forward. The pandemic, meanwhile, did not significantly impact the city’s finances, Howard notes. “Property taxes continued to increase and home sales were still happening during the pandemic,” he says. Carmel Carmel City Administrator Chip Rerig is taking a glass-half-full approach to the incoming 2023-24 budget. “The data we’re looking at is a deceleration of growth in the village,” he says. A combination of punishing winter storms that kept visitors at bay, three years of deferred capital improvement projects in need of attention, an unstable economy and the high cost of housing regionally which impacts the workforce, among other challenges, led to staff presenting the City Council with a conservative budget. They are projecting $30.5 million in revenues and nearly $41 million in expenses, which Rerig plans on balancing by using $10 million from another fund, made up of revenue saved over recent years. That money will be used for those deferred capital improvements, like pavement, sewer work and seawall repairs. Included in the budget is funding for much-needed and long-awaited renovations to the Carmel Police Station. The city dramatically cut its workforce at the start of Covid-19 and then started filling vacancies last year at a fast clip. For the next fiscal year Rerig does not want to increase the number of employees, however he told the City Council he wants to consider increasing library staff when they do a mid-year budget review. While library hours have been expanded post-pandemic to 10am-6pm, weekdays, it remains closed on weekends. Del Rey Oaks Like other cities, Del Rey Oaks has drawn up a “status-quo budget” compared to the previous fiscal year, according to City Manager John Guertin. Yet there have been changes in the city’s revenue composition, he says. Annual tax revenues from the city’s sole cannabis dispensary, Del Rey Farms, have declined to less than $100,000 from a high of around $900,000 just a few years ago—part and parcel of an overall struggling cannabis industry. Guertin credits his predecessor, Dino Pick, and the City Council for having “the foresight not to go on a spending spree” with cannabis tax revenues, instead keeping them in reserves and putting them toward future staff retirement costs. “They used that money to build a stronger financial foundation, rather than hiring new staff or buying equipment,” he says. As one of the smallest municipalities in Monterey County, Del Rey Oaks faces a unique set of circumstances in planning a budget, with revenue overwhelmingly coming from sales taxes from retailers like the Safeway on Canyon Del Rey Boulevard and Tarpy’s Roadhouse. “We have very narrow revenue streams and they’re all impacted by the same economic drivers—so if there’s an [economic] downturn, that impacts most of our revenue sources,” Guertin notes. Fortunately, most of those businesses “weathered the pandemic well,” according to Guertin, with sales tax revenue now rising “at a pretty good pace,” offsetting some of the lost cannabis tax revenue. The city has also benefited from higher transient occupancy tax revenue due to an increase in its number of short-term rentals, he adds; next year’s budget forecasts $190,000 in TOT revenue, up from $25,000 in 2018-19, pre-pandemic. Guertin says the city and its financial auditors aren’t very concerned about another economic downturn in the cards. Rather, they “have a pretty rosy outlook for the next year” and don’t forecast a recession. “I feel better going into the next fiscal year than I did this one,” he says. Sand City Sand City does not yet have a draft 2023-24 budget available to review as of the time of this writing, but there isn’t reason to believe its fiscal situation will be markedly different than the last fiscal year. But it’s also a city that, from a fiscal perspective at least, should be viewed through a different lens: Hardly anyone lives there—the population is 376 as of Jan. 1, according to the California Department of Finance—but hundreds of people pour in every day to stock up at its shopping centers. It also houses a lot of industry—its founders over 60 years ago wanted to literally name it City of Industry, but the name was already taken by a city in the Los Angeles area—which also contributes to its impact in the region. Financially, the city, which has a very small staff, is sitting in somewhat of a catbird seat—the city had $8.5 million in revenue in fiscal year 2020-21, against $6.7 million in costs. That’s a difference of $1.8 million in one year, and in the last two years, the city has added about another $1.75 million to its coffers from the same revenue-versus-cost delta. The city also has a major project coming online in the next few years— South of Tioga—which will add hotel rooms (Sand City currently has none) and hundreds of apartment units, if the project is indeed built. But City Manager Vibeke Norgaard says she doesn’t expect the city to see any revenue coming in over the next fiscal year from that project, as it will not yet be completed. Norgaard adds that there are other miscellaneous expenses the city is working to tabulate—the city bought two new police vehicles a couple of years ago, for example, which just recently arrived, and that “you pay for them when they arrive.” While the fiscal landscape of Sand City’s future shows good reason for optimism, there is some headwind: in June of last year, the city received its last $850,000 annual lease payment from California American Water for Sand City’s desal plant—payments going forward until 2039 are only $7,000 annually. But Sand City voters, by a 67-percent margin (only 131 residents voted), passed Measure L last November which will boost the city’s transaction and use tax (a sales tax, essentially) by 0.5 percent. That is expected to generate about $1.4 million revenue (or more) annually. Running any city is expensive— roads and sewers, salaries and pension liabilities—but Sand City is in a better position (if not the best) than most local cities. “The challenge is because we had 20 years of financial hardship, we have a lot of deferred maintenance.”
RkJQdWJsaXNoZXIy MjAzNjQ1NQ==