California Tax: In Pleasant Hill, sales tax revenue down, anxiety up
PLEASANT HILL — After three years of falling sales tax revenue, Pleasant Hill faces a projected $1.7 million deficit by June 2012, according to the city's draft two-year budget.
Sales tax revenue came in about $458,000 below expectations in fiscal year 2008-09. For the fiscal year ending June 30, the city expects to receive $6.2 million in sales tax revenue — about $1.1 million less than projected.
A consultant is projecting another drop, to $5.9 million, in fiscal year 2010-11 and a slight uptick to $6.1 million in fiscal year 2011-12, according to the draft budget.
Sales tax dollars make up a third of Pleasant Hill's general fund.
City Manager June Catalano described the revenue projections in the preliminary budget as "extremely conservative." But Councilwoman Terri Williamson believes the city is being too bullish.
"I think those are unwarranted assumptions. I know that we can make it through this year. But if things continue to go down, we're not going to make it next year or the year after," Williamson said during a meeting this week.
The city's finances are "too darn iffy," she added, to warrant blanket approval of a two-year budget.
Councilman David Durant, while acknowledging the gravity of the situation, insisted it's not quite time to sound the alarm. Next April, the city will have a good idea of how much money it actually collected, he said.
"If our sales tax revenue is appreciably lower, then we'll know we're in trouble," he said.
Salaries and benefits make up nearly three-quarters of the general fund expenditures, but Pleasant Hill has avoided layoffs so far. The draft budget calls for eliminating three part-time jobs for a savings of $70,000 per year, freezing 22 vacant positions, transferring money between funds and deferring computer and vehicle purchases, finance manager Mary McCarthy said.
The council is scheduled to adopt the final budget June 21.
Last year, the city cut back on street sweeping to save about $20,000 per year. And the council approved a two-year contract with the police officers' union with no pay increase in the first year and a future 2 percent raise tied to sales and property tax revenue.
The city's other revenue sources are also down.
Property taxes are expected to remain flat at about $2.2 million for fiscal year 2010-11 and increase to about $2.3 million the following year. Business license fees came in about $206,000 lower than projected in the current fiscal year and city staffers expect it to remain flat next year and increase slightly in 2011-12.
Hotel taxes this year are down $265,266 from projections, and the draft budget includes only small increases in each of the next two years.
On a brighter note, the Pleasant Hill engineering department has secured $15 million in grants. The five-year capital improvement plan includes street resurfacing, sidewalk construction and storm-drain maintenance work. But the list of unfunded projects grew to 19, including the long-planned $1.2 million City Hall stage. And although the Redevelopment Agency will pay to replace the tiles and pond plumbing at City Hall, a plan to spruce up Monument Boulevard was postponed because the state is taking nearly $2.3 million in redevelopment funds.