Morro Bay's Adopted Budget

by Jack McCurdy

Synopsis:  Three employees will lose their jobs and the hours of three others will be cut, and the Dial-A-Ride transit service that seniors depend on to see their doctors and run other errands will be sharply restricted under a $25.7 city budget for 2010-11 adopted by the City Council, which at the same time grants pay raises as high as four percent to the city's remaining employees starting on July 1.

The jobs of three employees and the hours of three others were cut, and pickups and drop-offs at front doors by the Dial-A-Ride service that seniors depend on to see their doctors and run other errands were sharply restricted under a 2010-11 budget adopted by the City Council, which at the same time granted pay raises as high as four percent to the city's remaining employees starting on July 1.

However, a previously-proposed elimination of televised coverage of all city advisory boards except for the Planning Commission, as well as the City Council, was restored, ensuring continued public access over the air to city business conducted by these boards. 

The staff salary increase is required under a labor contract with employees represented by the Service Employees International Union, Local 620. City manager Andrea Lueker had been questioned at a May 19 workshop as to whether the union had been asked if employees might consider foregoing all or part of the increase in order to save jobs, and she said she thought the union had. Later, she said she assumed that the union had been asked. It apparently was.

Bruce Corsaw, interim executive director of the Local, said, "We had discussions with the city. We reviewed all options. We did not agree to change (the pending pay increase). We do not re-open contracts."

The jobs that were cut include an accountant, a building official, and an office assistant in the Recreation and Parks Department. The working hours of an administrative technician in the Fire Department and a crime prevention coordinator were reduced in half and the hours of a permit technician was reduced by one quarter, Lueker's budget report to the Council stated.

Those cuts will save about $370,000, her report said, and additional cuts in other part-time positions, interns and services will save a total of about $550,000 in the adopted $25.7 million budget, she said.

The city had faced a budget shortfall of $900,000 without reducing spending in 2010-11, and that was overcome through various reductions in spending on services and staff, Susan Slayton, the city's administrative services director, who oversees the budget, said. 

In her report, Lueker said the city had experienced "a budgetary 'perfect storm'" resulting from a combination of factors. She listed those as a 10.72% drop in sales tax revenues in 2009-10 with no expected increases in sales taxes in 2010-11, reduced transient occupancy tax (commonly known as a bed tax), flat program revenues from city services, a decline in planning and building and related fees, increased personnel costs, decreased or eliminated (state) transit funds and decreased franchise fees, such as from PG&E and the Gas Co.

The new budget contains a reserve of $2.97 million, based on the practice of maintaining 27.5% of the general fund in reserve, which was established as policy in 2003 by the Council, Slayton said. But it contains $176,000 more than the required amount under the Council's policy. No reason was offered as to why that excess amount could not be used to avoid some of the staff cuts and/or Dial-A-Ride (DAR) reductions. 

The DAR cuts resulted from "significant decreases in the state transportation fund," Lueker's report said. "Council has agreed to a flexible fixed route system to best utilize our funds and still provide service to the citizens. This flex route will involve fixed routes . . . and a reduced Dial-A-Ride flexible door service." It also is being called a fixed-flex system. 

Presently, there are no fixed routes. Vehicles take people of all ages door-to-door while making minor detours on the way to pick up and deliver other passengers traveling in the same general direction. Users are asked to call DAR at least two hours before seeking pickups. Under the new system, transit vehicles will use a fixed route, much like regular public buses do, although apparently there still would be opportunities for some to be picked up at their doors if calls for service are made a day ahead of time, but reportedly limited to one or two persons per hour.

The Council or staff reportedly was asked, as alternatives to the fixed-flex system, to consider having the conventional DAR operate only a half a day, instead of a full day, or operate a full day for less than five days a week in order to cut costs but still maintain the type of service that has been offered since 1977. Another proposal was to have the city review the impacts of the DAR cutbacks on residents on a monthly basis to determine if funding and scheduling adjustments might be warranted. Whether either of those alternatives was considered could not be confirmed.

The budget seems to show that total DAR revenues will drop from about $434,000 to $383,000. Yet the expenses for DAR will drop from about $311,000 to $137,000, the budget says. Questions about the reason for this apparent disparity were not answered. 

There was no discussion of DAR or the staff cuts when the Council adopted the budget on June 14. 

The Council also has a decision to make on whether to place a one per cent increase in the city transient occupancy tax (TOT) to 11 per cent on the  Nov. 2 ballot. The increase would generate an estimated $185,000 more per year in revenue. It is charged on all rents of lodging in the city for 30 days or less. It is the city's second largest revenue source, behind property taxes, city attorney Rob Schultz said in a report. Passage requires a majority vote at the polls but four votes of the five members of the Council to submit it to voters.

The deadline for placing it on the ballot is July 21. 

The Council avoided terminating televised coverage of the advisory boards by tapping funds of departments or programs related to the boards' jurisdictions. For example, funds to televise the Harbor Advisory Board will be taken from the city's harbor fund, which receives some of its revenues separately from the city's general fund. In addition, Steve Mathieu and Nancy Castle, owners and operators of AGP Video, the company that televises the meetings, agreed to forego $6,000 of its fees to ensure coverage of all the meetings.

However, the funding plan will require concurrence by several other agencies, such as the Cayucos Sanitary District board, which partners with the Council on the Joint Powers Agreement (JPA) board to operate the wastewater treatment plant. It would have to approve use of revenue from the jointly-administered sewer fund for televising JPA meetings.

Belted Kingfisher on Banner by Cleve Nash