Arroyo Grande Coast News News

AG Seeks Public’s Help with Looming Budget Deficit

The Arroyo Grande City Council will be seeking the public’s input on ideas to tighten the belt or make more money to close a growing budget deficit that could exhaust city reserves in five years.
“This is the single most important discussion we’re having in the city and will have in the next six months,” said Mayor Jim Hill.
Among the measures presented to the council were reducing staff, offering early retirement incentives, and outsourcing work, as well as raising taxes and fees, selling city property or ramping up economic development opportunities for additional revenue.
Two of the factors exacerbating the growing gap between revenues and expenditures are a requested increase from the Five Cities Fire Authority and increased costs for retired employees. CalPERS cost increases are affecting cities across the state, said City Manager Jim Bergman.
“This is not like a downturn in the economy where things come back up,” he said. “We don’t foresee these costs going down.”
The fire authority is seeking a $1 million increase in funding from Arroyo Grande, increasing the city’s cost from $2.2 million to $3.3 million. Additionally, retirement costs are expected to rise from its current $2.3 million a year to $3.5 million.
“On that [statewide] list, Pismo Beach ranked 13th lowest increase, and Arroyo Grande ranked 14th lowest increase. But that increase is still going to be 34 percent above what we pay today,” Bergman said. “It’s going to cause us all to think about our budget and lead to very robust discussion as we go forward in this next year.”
He said the council’s options are to spend less, generate more revenue, or a combination of the two. Bergman laid out a preliminary timetable for seeking public input on budget priorities and the consideration of the range options for closing the budget gap by mid-March.
Mayor Pro Tem Caren Ray expressed concern.
“I think when the community begins to really understand what it is we are saying, which is ‘we are severely underfunded just doing what we do now’ – and we don’t do enough for sidewalks and roads and things people really care about,” Ray said. “When they begin to feel that impact, potentially on Soto Field, or in parks and rec or feel that somewhere else, we have got some really, really serious outreach to do. I have a concern that we have a really compressed time table.”
“Your council’s stewardship of getting a 34 percent reserve gives you time,” Bergman said, adding that on a two-year budget cycle they could formulate a plan in the first year with major changes to follow in the second.

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