KING CITY — King City council members reviewed and approved adjustments to the municipal budget for the 2020-21 fiscal year, which is expected to have a $3 million shortfall.

The largest contributor to the shortfall was a decrease in the expected cannabis tax revenue from businesses that would have been starting their operations this year, as well as an expected 20 percent decrease in sales tax revenue.

Of the multitude of budget cuts to make up for the loss in revenue, among the largest items were a one-year removal of cost-of-living adjustments for all city employees and the eliminations of the downtown plaza project, the city’s scheduled debt payment, the street improvement budget and planned projects, a new police officer position and new public works maintenance positions, in addition to the closure of the city’s pool for summer 2020.

“The biggest impacts from Covid-19 are a 20 percent projected reduction in sales tax and transient occupancy tax because we anticipate a drop-off in the number of visitors in hotels, as well as travelers on 101 getting off the freeway to get gas and food,” said Steve Adams, city manager for King City.

Adams noted the estimated shortfall is not the worst-case scenario, and uses conservative numbers due to the lack of monetary reserves held by the city. This means city leaders have to be especially careful to avoid incurring additional debt.

“The projections assume a recession in fiscal year 2020-21 and some additional wave of Covid-19,” Adams said. “However, the big unknown is how severe Covid-19 could be next year. Any severe spread next year could result in the need for greater budget cuts. If the economy recovers and travel returns to prior levels within the next few months, we should be in good shape.”

Mid-year budget reviews are regular with cities, and King City will be able to adjust at that time, when numbers are better known. For the time being, however, city staff had to figure out a way to balance the shortfall with budget cuts before the 2020-21 fiscal year begins on July 1.

“Despite the drastic cuts to the City’s General Fund, the City is stepping up its efforts to pursue grant funding in order to continue progress in making improvements to the community,” Adams said.

This would include the downtown plaza, listed as a savings of $800,000 by being eliminated, but the line about it in the council agenda noted grant funding would be pursued.

“In the recent citywide community opinion survey, the top priority of respondents was efforts to establish long-term financial stability,” Adams said. “We are taking that responsibility very seriously. The budget plan for the upcoming year will involve some temporary sacrifices, but we believe it has a high probability of positioning the City well to come back strong when the current crisis is over.”

Three residents spoke during the teleconferenced city council meeting to deliver public comment about the budget cuts, with the pool’s closure being one of them.

Adams said Monterey County Health Officer Dr. Edward Moreno has not specifically announced restrictions about city pools, but added, “What we do know from discussions with him is that restrictions on large gatherings will likely continue for some time, there are likely going to be a number of requirements on recreational activities, and social distancing will likely still be required. Therefore, any type of open swim will probably be infeasible.”

Adams said that while smaller groups may be possible, the lack of funding for the pool operation itself meant it would be difficult for the city to justify the funding investment for such small groups.

The city’s recreation department is still funded, and Adams said the city is looking into having it host additional activities to make up for the losses in pool activities for those who typically use the pool during summer.

“We are brainstorming ideas, but cannot make any specific plans until we get direction from the County Health Officer regarding what will be allowed and what won’t be allowed,” Adams said.

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Sean Roney is a freelance reporter for King City Rustler and Salinas Valley Tribune, a unified publication of Greenfield News, Soledad Bee and Gonzales Tribune. He covers general news for the Salinas Valley communities in South Monterey County.


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