Thursday, April 22, 2010

An example for Pacifica

Half Moon Bay employees’ salaries cut

April 22, 2010, 02:28 AM By Bill Silverfarb Daily Journal staff

Half Moon Bay’s city employees agreed to salary and benefit reductions along with taking furloughs to help trim about $900,000 from its current budget.

“It was through the cooperation of the four union groups that we were able to work on the gaps in our revenue shortfall,” said Mayor Marina Fraser.

City Hall will be closed the first and third Friday of the month, Police Chief Don O’Keefe is reducing his time by 40 percent and three positions were eliminated including a planner, a police officer and an administrative position to help the city meets its shortfall.

The city’s main source of income, the hotel occupancy tax, is down dramatically by 18 percent or about $720,000. Hotel taxes make up about 35 percent of Half Moon Bay’s general fund revenue, which is projected at $9.1 million for fiscal year 2009-10.

Sales tax revenue is expected to drop 11 percent, or about $196,000 for this fiscal year, and construction-related service charges are down 50 percent or $550,084.

The city eliminated 16 positions last year and is strapped with paying more than $1 million a year to pay off a court-ordered settlement for the botched Beachwood development. The city is stuck with the Beachwood expenditure for the next 30 years.

A sales tax hike is being considered for the November ballot, Fraser said.

“With the current economic situation we have been hit hard due to Half Moon Bay being a tourist destination,” Fraser said. “Our hotel tax has suffered. The budget cuts now will help but we will still need a long-term source of revenue. No one likes to be the one to raise taxes, but we have to explore a sales tax increase.”

But Councilman Rick Kowalczyk is not supporting a sales tax increase at this time.

“Tax increases are debilitating for business,” Kowalczyk said.

The key to Half Moon Bay’s recovery, Kowalczyk and Fraser agree, is filling up the city’s hotel rooms with tourists.

“We need a return to tourism,” Kowalczyk said.

The city’s Ritz-Carlton has lost corporate clients, Fraser said, which hurts the city’s budget.

“We don’t have big retail or large office buildings. We rely on tourism,” Fraser said.

The city is looking to form some citizen advisory committees to address the poor economy and whether taxes should be raised or services cut.

The city will use about $1.2 million of its $5 million reserve to help solve this year’s budget.

The city’s preliminary fiscal year 2010-11 annual budget will be presented May 4. Half Moon Bay will save about $1 million a year going forward based on the service and salary reductions it just implemented.

“It has been painful to go through,” said Kowalczyk, who is serving his first term on the council.

Original Daily Journal story here...

Posted by Steve Sinai

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