City boosts road repair budget
November 15, 2005
Stinging from a $1.3 million increase in employee health care and retirement plans, the South Lake Tahoe City Council unanimously adopted a $81.9 million budget Tuesday that cuts marketing funding but increases the allocation for street improvements.
The city reserves – the city fund earmarked for emergencies – got a $1.7 million bump that raised the total to $4.3 million for the budget that started Oct. 1.
“We’re moving to a position to strengthen our reserves,” city Finance Director Christine Vuletich said.
“If we have a pandemic, road closure or if something horrible happens, we want to have enough money to run this city,” Cole said. He served on the budget committee with Mayor Kathay Lovell. The council aims to have 25 percent of the $26.9 million general fund earmarked for reserves.
About 63 percent of the city’s core account goes toward salaries and benefits. The city is facing an 18 percent rise in health care costs and $800,000 more for retirement payouts than prior year.
Department heads wanted $1.2 million in staffing increases – some for positions that have been frozen for three years. They ended up getting $478,000 – a school resources officer, traffic cop, two assistants to the city manager and attorney going full time instead of half, an administrative assistant in the City Clerk’s office and an accounting technician in the Parks and Recreation Department.
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In $1.1 million in equipment requests, parks got the OK to buy a loader, mowers and snowblower valued at $160,000. The council also approved two trucks for public works, but the fire department found a grant to fund an $800,000 ladder truck.
The road repair budget received $600,544, almost double the amount requested. And if the city pays $850,000 to move its offices to the Lake Tahoe Airport it hopes to recover that cost five to six years (by saving money from its current $130,000 lease). It will also fund a study to determine the feasibility of a long-term government center for $70,000.
Still, progress comes at a price as the recommendations and requests far outweigh the allocations.
“I could list a hundred things I’d like to fund,” Cole said.
The Lake Tahoe Visitors Authority asked for $500,000 and got $225,000 – the same amount as last year.
“And we’re also recommending this be the final year (of funding for the LTVA),” Vuletich said, speaking for the committee.
Executive Director Patrick Kaler said the agency’s plans, which operate on the same budget year, haven’t changed for this year. But next year could be a different story. The tourism agency will meet Dec. 15 to discuss the matter at Harveys Resort Casino.
And the $70,000 the city agreed to chip in for the dissolving Tourism Promotion Business Improvement District will go toward marketing, earmarked to fund city efforts like those the Recreation Department puts into promoting its Ice Arena.
The South Lake Tahoe Chamber of Commerce also received the same amount in subsidies as the prior year – $101,474. Executive Director Duane Wallace said his business group will be forced to make some internal changes.
“It’s ironic we’re the ones that helped pass Measure Q,” Wallace said, referring to the quarter-percent hike in the sales tax to stack the general fund. The initiative went into effect in April.
The city has been in this position before. A few years ago, it was facing a $2 million deficit and was forced to make cuts.
Transient occupancy tax has shown an average half-percent decline over 10 years. TOT makes up the less stable revenue source for the general fund compared to property taxes. That’s been on a steady increase averaging 5.4 percent over the last three years. In the redevelopment zone, it’s gone up 64.4 percent.
Sales tax has increased 1.2 percent over the last three years.
But beyond this year’s budget, Vuletich gave the council a grim picture of the next five years.
If the city continues with rising employee benefit costs and on a flat revenue schedule in sales and motel-room taxes, it will be facing a $400,000 deficit by 2006-07 and $1.5 million by 2009-10.
“It’s not a pretty picture,” she said. “Growing the revenue is critically important as well as containing those costs.”
All the more reason the city needs to revisit how to diversify its economy as well as retain and attract businesses to gain a better tax base, City Manager Dave Jinkens pointed out. This is especially true as it ponders how to replace the $1.1 million it put away in the general fund from Measure Z. The initiative, which passed in 2002, expires next October.
“As it ceases to exist, it’s essential we stabilize our operations,” he said.