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Grass Valley eyes layoffs, budget shake up amid revenue losses

John Orona
Staff Writer

Attend Remotely

The Grass Valley City Council will meet at 7 p.m. Tuesday. The council will convene remotely.

People can access the Tuesday Grass Valley City Council meeting online at http://www.cityofgrassvalley.com/agendas-minutes-meetings.

In order to maintain essential services amid the economic crisis caused by the COVID-19 pandemic, the Grass Valley City Council will consider adopting a resolution proclaiming a local financial emergency and the need to layoff multiple city employees during its Tuesday meeting.

According to the meeting staff report, the city will freeze seven unfilled positions — including one police officer and three firefighters — and layoff four others should the resolution move forward.

“We’re adapting,” Grass Valley Mayor Lisa Swarthout said. “We have a responsibility to provide essential services and we need to operate. We’re going to do what we need to do to keep the lights on moving forward.”

A mid-year budget update focused on the likely fiscal impacts of the pandemic projects the city will lose out on about $290,500 in general fund revenue this fiscal year and another $650,000 in the 2020-21 fiscal year before the recovery is estimated to take hold over a two-year period. The drop in revenue is largely due to losses in sales and transient occupancy taxes, which are projected to take a combined $250,000 hit this year. In the next fiscal year, sales tax losses are expected to balloon to $450,000.

The projections are preliminary, based on incomplete data, and their accuracy will depend on when the shelter-in-place order is lifted, allowing businesses to open and tax revenues to flow.

Unable to simply weather the nearly $300,000 drop in general fund revenue, the city’s budget update calls for scaling back on non-essential services, re-prioritizing funding to and dipping into previous years’ surplus to make ends meet. The update recommends decreasing revenue projections for the year by $22,000, largely coming from the loss of sales tax, and increasing expenditures by more than $300,000, which include $160,000 in police personnel services.

According to Swarthout, while some federal funds are being made available to local jurisdictions, the move was necessary since the city does not expect to be among the first in line for those funds as the state looks to allocate to areas with the largest populations.

“It’s not great right now, but we’re lucky the city is in pretty good financial shape,” Swarthout said. “Because we’re going to take such a big financial hit with the loss of the sales tax and tax from the hotels, which are the biggest contributors to our general fund, we have to be prepared for what’s going to happen.”

To contact Staff Writer John Orona, email jorona@theunion.com or call 530-477-4229.

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