City makes budget cuts, closes pool on Sunday

The Crescent City Council made several budget cuts and approved some additional spending Monday as it addressed a looming shortfall for the current fiscal year.

Faced with with a shortfall of about $350,000, which is lower than originally anticipated, City Manager Rod Butler said the city had to make “much-needed cuts.”

“We sharpened our pencils and started going through everything,” he said.

City staff came up with $310,000 in proposed spending cuts. The remaining budget gap will be closed with new or increased city fees, such as rental or fingerprinting fees. Additional spending will be taken from the city’s reserve fund.

The cuts included closing Fred Endert Municipal Pool on Sundays and holding off on hiring a police officer and sergeant for the Police Department.

Pool Manager Matt Hildebrandt said Sunday is the slowest day at the pool and averages about 48 visitors. The pool makes an average of $57 on Sundays, but staff time and other costs surpass that by far, he said.

After closing the $350,000 budget gap, the city still has a projected General Fund deficit of $152,683 for the 2009-2010 fiscal year.

The deficit is partially due to contributions to the Crescent City-Del Norte County Chamber of Commerce, Visitors Bureau and the Tri-Agency Economic Development Authority, which are outside the city’s fundamental operations.

The City Council elected Tuesday to give $50,000  more to the Visitors Bureau.

The Visitors Bureau is asking that the city contribute $200,000 of its  Transient Occupancy Tax, known as TOT, for the fiscal year to market the area. The Visitors Bureau’s Board of Directors would ultimately like the City Council to establish permanent funding for its efforts that would be a percentage of TOT revenue

Tamera Leighton, director of the Visitors Bureau, said that Humboldt and Curry counties contribute 85-90 percent of their TOT revenue to their visitors bureaus.

Mayor Kelly Schellong said that the council should “act prudently” while coming up with a plan to fund the Visitors Bureau on an ongoing basis.

“Anything we allocate comes from our reserves,” she said. “I can’t say right now we can give 85 to 90 percent of our TOT.”

She suggested that the council form an ad-hoc committee at an upcoming meeting to figure out what percentage of TOT revenue would be feasible to give the Visitors Bureau.

The city is projected to receive $920,000 in TOT and $1.04 million in sales tax revenue for the 2009-2010 fiscal year.

Grant Scholes, who is on the Board of Directors for the Chamber of Commerce, likened the Visitors Bureau to the “goose that lays the golden egg.” The Visitors Bureau markets outside the area, which brings in more tourists and therefore more TOT for the city, he said.

“Marketing outside the area does help,” Gina Zottola, executive director for the chamber, told the council, explaining that more people are requesting information about Crescent City from the chamber.

Council member Charles Slert said the city needs to continue supporting the Visitors Bureau because more tourists benefit the city financially. Schellong and Council member Kathryn Murray agreed that the city would get a “return” for its investment in the Visitors Bureau.

The two votes against giving $50,000 to the Visitors Bureau came from Council members Dennis Burns and Donna Westfall.

“We don’t benefit the most,” Burns said. “I’m not in favor of it.”

Local businesses benefit more than the city, he said. He gave an example that if a family of four spends $500 over a weekend, the city only gets about $23 in sales tax and TOT. The rest of it goes to the hotel, restaurants and retail shops, he said adding those business should contribute money to the Visitors Bureau.

Westfall said that TOT revenue should help fund the Visitors Bureau, but “not to the level they’d like.” She added that she had received several phone calls from residents concerned that $50,000 was too much to give.

“What scares me,” Schellong said about her hesitation to pledge more than $50,000 on Monday, “is that we don’t know the impact” of Westfall’s recent proposal to ask voters to roll back sewer rates to 2007 levels. “We could be bankrupt.”

Westfall’s proposals for recall petitions against Murray and Slert, and the proposed sewer rate rollback, were also brought up Monday. Murray asked city staff how much those efforts were costing the city in staff time and legal fees.

“We have to keep that in mind,” she said. “That’s not a regular cost.”

Butler said the proposed recalls and sewer rate initiative could cost the city about $30,000 total.

Slert called that estimate “conservative” and requested an “official accounting” of the city’s costs for the first and second recall efforts and ballot initiative by Westfall.

Later in the meeting, Westfall asked city staff how lowering the sewer rates to the 2007 level would affect the budget. Finance Director Ken McDonald responded that the city would have to figure out a way to pay off its state loan for the sewer plant expansion.

“The state would be happy to come in and take (the wastewater treatment plant) over,” McDonald said. “They’ll still get their money.”

Westfall also asked how the city’s contracts for the wastewater treatment plant would be affected if it turned out treatment plant expansion “bid was fixed.” McDonald directed her to speak with City Attorney Bob Black, who wasn’t at the meeting.

The City Council also decided Monday to form a two-person ad hoc committee to consider the best outcome for the Monterey cypress trees in front of the Del Norte Superior Court.

Schellong selected Slert and Burns to work with the California Administrative Office of the Courts, which owns the property the courthouse sits on, and the arborists who are recommending that the trees be removed due to poor health.