Coast News Grover Beach

Grover Beach Financial Forecast By Justin Stoner

Like many California cities, Grover Beach will be tightening its financial belt in the next couple of years to deal with increased pension costs, but new hotel projects and cannabis businesses starting up are pointing to a stronger financial future.
The Grover Beach City Council received a 10-year financial forecast from Bill Statler, a private advisor hired by the city, at a recent meeting.
“You have three key actors in the city fiscal story: Pensions are a big part of the story,” Statler said. “You have some hotel developments on the horizon which will significantly improve your fiscal health. And of course you have the cannabis tax revenues.”
The council spent two hours listening to the presentation and discussing the fiscal forecast – a precursor to
“This is a lot of information,” said City Manager Mathew Bronson. “This is really the start of our budget development process – the financial foundation. Just to reiterate, the long-term trends are positive. We have a bit of a gap next year that we will be working on. There are some levers we can pull on both the revenue and expense side to land on a balanced budget we can bring to the council.”
The first of the cannabis businesses are expected to start in April, according to Gayla Chapman, administrative services director. City officials expect to bring in about $2 million a year from the industry by 2021.
Statler showed the council a graph that projected revenues many years into the future.
“It will take a while for those hotel developments and the cannabis revenues to kick in you will have a solid eight years where revenues are clearly going to be significantly higher,” he said.
He projects the city would see about $990,000 a year above expenses.
“Without cannabis revenues city would have $1.3 million gap each year,” Statler said.
The gap, in part, is made up of a 30.5 percent increase in pension contributions from the city to CalPERS. Statler showed the council a graph that showed the city in the red without new revenues.
“I’m hesitant to use the word deficit. You’re not going to have a deficit; you’re going to adopt and approve a balanced budget,” Statler said. “But this [forecast] does point to the gap that is ahead of you, but for the corrective actions you will take.”
He cautioned the council that other unknowns, like a downturn in the economy, could affect city finances.
“Even as the cannabis revenues unfold, the economy is a key factor here. If the economy goes into recession, which is likely to happen in the next 5-10 years, it’s easier to scale back on improvement projects than it is to deal with ongoing operating costs. Given those uncertainties ahead my advice to you is when those favorable results occur allocate them for one-time resources,” he said.
Mayor John Shoals said new revenue from cannabis isn’t the city’s only new source of income.
“Maybe a discussion we need to have is revenue generation opportunities,” Shoals said. “Another thing we found out in the community survey was that the community seemed to be open minded to putting something on the ballot increasing the transient occupancy tax, as well as a business license tax. We have a system where Vons continues to pay the same as a mom and pop store.”


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