New City Budget Balanced with "Help"

by Jack McCurdy

The city of Morro Bay adopted a balanced budget but to do so had to get "help" from some other funds in the budget, such as the Risk Management Reserve, which is used in pinches for money like this. Of course, if other pinches come along in 2013-14, the city could be at least a little strapped. But there are other funds in the budget that could make "contributions" if need be. The budget needed the extra money mainly because of "key infrastructure projects," as Council member Noah called them—the main one being the development of a new multi-million dollar water reclamation facility just down the road.

The Morro Bay City Council has adopted a 2014-15 budget of $35 million, an increase of about $5 million over 2013-14 due to funding of more capital improvement projects, mainly the long-awaited and crucial water reclamation facility (WRF), the Council's top goal for construction.

The site of the new plant is expected to be selected by the Council next month, if Morro Bay decides to build its own WRF, and a report from the city’s planning consultant is due in late September comparing the merits and costs of a Morro Bay WRF versus development of a regional facility at the California Men’s Colony off Highway 1 just east of Cuesta College. The soon-to-be appointed city WRF Advisory Committee composed of residents will assist in reviewing those options and make recommendations to the Council.

The budget also lists other Council goals, including plans to continue improving streets and to update the city's local coastal plan, which should open the way for new and non-industrial uses of the plant site.

Council member Noah Smukler said, "I think the most important aspects are that within our balanced budget we have continued to prioritize spending based on our adopted goals and, primarily, infrastructure."

The staff budget report said the budget is balanced "but not without help from the city's Risk Management Reserve in the amount of $135,688," borrowed from within the budget from that Reserve fund.

"While economic growth in tourism has exceeded expectations in both 2013 and 2014, as evidenced in the 11% increase in our transient occupancy tax in 2012/2013, this is a volatile revenue source on which to depend, and not something we ware comfortable in doing," the budget said "…revenues are projected to be relatively flat" near term.

"There are additional challenges ahead with long-term financial sustainability such as infrastructure needs, employee needs, CALPERS (California Public Employees' Retirement System) benefits changes, with no new revenue sources to pay for them," the budget report said. City costs for those benefits plus water, sewer and harbor needs "are spending down reserves for capital projects." Water and sewer needs "are relying on reserves for operational requirements."

"Key infrastructure projects," Smukler said, "include: continued focus on the streets throughout town, energy/water efficiency retrofits and general facility maintenance, restoration work at Del Mar and Tidelands Parks, and the required minimum City match funding for the Morro Creek Bicycle/Pedestrian Bridge, which was just awarded the final $400,000 necessary for complete funding. Construction is planned later this year. However, the city is expected to receive much more than those rate increases could produce and that in the way of huge grants and state-backed loans to build the plant.  The report said "water and sewer rates will be increased to meet mandated water bond ratios and to pay for the upcoming water reclamation facility." However, the city is expected to receive much more than those rate increases could produce and that in the way of huge grants and state-backed loans to build the plant.

A big chunk of cash owed the city by Dynegy, the owner of the 103-acre power plant site and its operator until last February, is still missing. But the city reportedly is not seeking to collect because it is negotiating with Dynegy for possible acquisition of parts of the plant property, in return for possibly not requiring Dynegy to pay part or all of it. The money is owed by Dynegy stemming from use of coastal outfall leases where pipes are located from the plant to an outfall structure near Morro Rock. There, water used to cool power plant generators was discharged for many years. Morro Bay supervises that land for the state.

Perhaps the most significant aspect of the budget is that it follows the goals adopted by the Council last year. Those goals are:

1—Develop a new water reclamation facility.
2—Improve streets.
3—Update plans for current and future land use needs (upgrade of General Plan and Local Coastal Plan).
4—Maintain core public safety services.
5—Ensure fiscal sustainability.
6—Support economic development.
7—Improve city infrastructure.
8—Enhance quality of life.
9—Boost community disaster preparedness.
10—Leverage outside resources to support city's goals

More details on those goals can be found starting on page vii of the budget at Morro-Bay.CA. More information about the budget is also there.

Smukler said the Council also created a "General Plan Maintenance Fund" with some limited funding and is exploring additional contribution options beyond the grant already attained.

He pointed out that a new firefighter position was created to ensure four fully-certified paramedics on duty at all times, which "greatly improves dual-event response ability. The move actually is projected to save us money because we'll avoid the new insurance requirements of the Affordable Care Act for part-time employees."

He said the Council also "reserved some funds in anticipation of updating the 'Management Partners' organizational efficiency study and developing an RFP for the production of an 'Economic Development Strategic Plan. We continue to fund the Visitor Center, special event grant program and a modest contribution for $10,000 to the Chamber of Commerce for their assistance in business outreach, retention and expansion program."

Smukler said some miscellaneous but important funding included: the Senior Food Program and waiver of fees for EBAC (Estero Bay Assistance Committee) Monday Night Dinners and for the 4th of July celebration.