Grass Valley gets updated budget outlook
The Grass Valley City Council has approved a preliminary budget that projects reducing more than $1 million in revenues over the previous fiscal year.
Due to the economic impacts of COVID-19, the city projects significant decreases in business activity and in all taxes, which make up about of 40% of its revenue.
The council heard Tuesday that sales tax and transient occupancy tax are expected to decline 11% and 39%, respectively, leading to more than $1 million in lost revenue alone. Measure E sales tax revenue is expected to drop 15%, leaving the city with $850,000 less in revenue. Revenue from business licenses and Park Department fees are expected to drop by 10% and 44%, respectively, reducing revenue by $20,000 for each.
According to interim City Clerk Andy Heath, the city will use more than $680,000 in general reserves this fiscal year and more than $266,000 next year to balance the budget. Heath said most of the reserves being used have come from savings in the last two years.
After using the reserves, the city general fund balance will be left with about $7.5 million, with nearly $6 million of that already dedicated to specific reserve funds for things like capital and deferred maintenance, CalPERS pension stabilization, and economic contingency reserve.
The city also expect to lower its spending through defunding seven vacant positions and freezing 10.75 full-time equivalent positions. The move would leave funding for 89 full-time equivalent employees next fiscal year.
Additional savings are anticipated from renegotiated pension obligation bond payments, which will help the city stabilize its budget in the future through lower interest payments. The city will also hold off on funding nonprofit contributions in its budget.
Heath said ultimately the budget only represents what is known now and is sure to fluctuate.
“We won’t know what this quarter looks like until the end of July or August,” Heath said. “We’re just now finding out some of the impacts of the transient occupancy tax and other taxes as people have had to shelter in place. As this information comes forward we’re going to update this budget.”
A final budget hearing is set for June 23.
During the meeting the council extended its moratorium on commercial tenant evictions to Aug. 31.
In April, the Judicial Council of California adopted emergency rules restricting courts from issuing residential and commercial eviction and judicial foreclosure orders until 90 days after the state’s executive order declaring a state of emergency is lifted.
To contact Staff Writer John Orona, email email@example.com or call 530-477-4229.
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