City of Scotts Valley budget begins to rebound

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On Wednesday, Scotts Valley city leaders outlined a revived budget in part thanks to a voter-approved municipal sales tax hike in 2020. Police have hired four officers and a sergeant in 2021. (Kara Meyberg Guzman – Local Santa Cruz)

SCOTTS VALLEY >> After several years of city budget problems, Scotts Valley’s general fund has achieved “delicate stability,” Casey Estorga, the city’s director of administrative services, said at a city council meeting Wednesday night.

“The last two years have been a challenge,” Estorga said. City leaders haven’t had enough money to hire enough city staff in recent years, Estorga said, in part because of the COVID-19 pandemic and issues with the CZU Lightning complex fire in 2020. Revenue from a municipal sales tax hike approved by Scotts Valley voters in 2020 helped turn the tide.

“Revenues started to recover faster than expected – we are grateful for that – and expenses were lower than expected,” Estorga said.

Proposal General fund budget of $19.7 million for the fiscal year beginning July 1 is significantly higher than the General Fund budget of $14.1 million approved Last year. The council considered the proposal but did not vote on Wednesday.

Scotts Valley’s finances have started to rebound from a budget emergency in 2020, city leaders said. The proposed budget for 2022-23 proposes more spending due to years of deferred maintenance, staff said. (City of Scotts Valley).

The proposed budget includes:

  • A relaunch of many of the city’s recreation programs, additional services and new staff through a recreation assessment and restoration plan. In the spring of 2020, most parks and recreation employees were laid off, city leaders said. Many services, including facility rentals and aquatic programs, have been suspended.
  • Road works, including previously deferred pavement maintenance and rehabilitation on Bean Creek Road and Mount Hermon Road.
  • Skypark Playground Improvements, and fixes at Vine Hill Daycare.
  • Wastewater treatment plant work approximately $13.7 million over the next five years. The work should be funded by increased sewage bills approved last year. About $1.3 million in road improvements over the next five years will be funded through Measure D, a sales tax approved by Santa Cruz County voters in 2016 to fund transportation projects.
  • Scotts Valley Branch Library Improvements, including seismic safety upgrades and heating, ventilation and air conditioning improvements. Improvements are funded by Measuresa requirement approved by Santa Cruz County voters in 2016. The library is expected to reopen this summer.

The city is also using San Rafael-based financial advisory firm NHA Advisors to help the city develop employee pension funding plans. The consultants are expected to present a plan this fall.

A proposed Scotts Valley budget projects a general fund shortfall of about $100,000, which would bring reserves down to about $5 million. (City of Scotts Valley)

Estorga, director of administrative services for Scotts Valley, attributed the city’s improved economic outlook to Measure Z.

Measure Z was a sales tax increase approved by city voters in March 2020 after the city declared a tax emergency. Sales tax revenue “represented more than 30% of all General Fund revenue,” in the years since it was passed, Estorga said.

“We are currently seeing a spike in sales tax revenues, in part due to inflation. So everything costs an extra dollar and with the sales tax percentage of that transaction, the city benefits from additional revenue,” he said. Estorga added that predictions of a coming recession mean the tax could bring in less money in the future.

The city’s revenue from the city’s hotel tax has also improved to near pre-pandemic levels as the city’s hotels have had more visitors. The 11% supplement is charged to hotel guests.

Although long-term economic forecasts predict continued stability in the years to come, Estorga said the city will have to find a new source of revenue when Measure Z expires in 2031.

Vice Mayor Jim Reed said the council had previously discussed trying to renew the tax in 2028 at the same time as the presidential election.

“In the event that there is some kind of catastrophic failure with this measure in 2028, we will come back with some kind of other more refined measure in 2030,” Reed said. “The good news is that we have plenty of time.”

The final budget is expected to be presented to city council for approval on June 15.

The Scotts Valley City Council has only met online since the COVID-19 pandemic began in 2020. The council chambers are empty this week. (Kara Meyberg Guzman – Santa Cruz Local)

Reported crimes decrease

According to Scotts Valley Police Annual Report.

“Almost all serious crime in our city has dropped dramatically,” Scotts Valley Police Chief Steve Walpole said. All other reported crimes were up 24% from 2020. Arrests in the city were up 14% and officers wrote 65% more tickets in 2021, according to the report.

Police received around 6,000 calls for service in 2021. The average response time to emergency calls for service was 2.4 minutes, according to the report.

Scotts Valley Police also hired four officers, a police sergeant and two dispatchers. Scotts Valley Police plan to continue hiring over the coming year, Walpole said. The report described staffing shortages, particularly in early 2021.

Scotts Valley Police have scheduled a Junior Police Academy program from June 13 to 17 and from July 11 to 15 for students entering sixth, seventh and eighth grade. The academy includes first aid training, crime investigation simulations and community service.

Approved Pride Flag

The Scotts Valley City Council has approved a policy that will allow a pride flag to be flown at City Hall during LGBT Pride Month in June. The cities of Santa Cruz and Watsonville also have policies that allow the flag to be flown at these town halls.

The new flag policy allows commemorative flags that are non-political and aligned with the city’s strategic goals to be flown with the majority approval of the city council. Council members Randy Johnson and Vice Mayor Reed advised against the policy, saying the rule could expose the city to litigation if the council denies other groups the ability to fly flags.

“You associated the rainbow flag with this policy,” Johnson said. “But will you feel the same if Citizens for Second Amendment Rights want to come forward and fly their flag?”

Reed offered an alternative policy that would have allowed the pride flag to fly, but it would not create a process for other commemorative flags to be considered. This proposal was defeated by the board in a 2-3 vote, with Reed and Johnson in support. Mayor Donna Lind and council members Jack Dilles and Derek Timm objected.

Timm said the policy would send a message of support to young LGBT people facing discrimination. “I think of those high school kids who maybe hide who they are out of fear, and I think as civic leaders, it’s our responsibility, it’s our duty not to stay silent,” Timm said.

Several community members have spoken out in favor of a policy allowing the LGBT flag. “I believe Scotts Valley is a welcoming and safe place for the LGBTQI community and tonight you have a chance to tell others like me that it is,” Monica Martinez said. Santa Cruz City Council member Donna Meyers and Watsonville City Council member Jimmy Dutra have both spoken out in favor of the policy.

The original flag policy passed by a 3-2 vote, with Reed and Johnson opposed. After the policy was adopted, the council voted unanimously to fly the Pride flag in June.

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