The only way to address a deficit that size is by scaling down staffing, something the city can’t do without sacrificing public safety. Over the past four fiscal years, the City of El Cajon has cut 56 full-time positions, an overall 12 percent reduction in the city’s workforce.
A similar financial crisis is occurring in La Mesa. In last year’s six-year financial forecast an ongoing annual shortfall of $4 million was projected. The city adopted this fiscal year’s budget with an imbalance of $2.3 million.
Gary Ameling, director of administrative services, says the city’s been trying to address its structural deficit by streamlining government and eliminating dozens of nonsafety positions. Despite a growth in population, staffing is now at 1990 levels. The city implemented a new staffing model for the fire department and began contracting out city services.
Relief for both La Mesa and El Cajon came last November when residents approved increases in the sales tax: a three-quarter percent increase in La Mesa, raising the tax to 8.5 percent, and a one-half percent increase in El Cajon, where the sales tax is now 8.75 percent.
An increase in the sales tax, however, may not be enough to meet current economic challenges. Despite passing a 1 percent sales tax increase in 2006, which has brought in approximately $8.5 million annually, National City projects a $3 million deficit for this fiscal year. A decreasing demand for lumber has impacted the city’s largest single revenue generator, Dixieline Lumber, and the drop in car purchases has hurt sales tax revenues generated by National City’s Mile of Cars.
In the next fiscal year, when most city employees will have salary increases, the city’s structural deficit is expected to rise to nearly $7 million. However, the revenues from the sales tax increase have contributed to growing National City’s general fund reserves to $9 million.
“The sales tax increase has temporarily solved the structural deficit,” says Chris Zapata, city manager for National City. “But we understand that we need some new sources of revenue or we need to cut some spending, so we’re trying to do both at this time. It’s going to mean more belt-tightening for next year.”
Chula Vista, the second-largest municipality in the county, has a severe structural deficit. This fiscal year, the city used onetime funds to trim $5 million from its original $9 million deficit. But in fiscal year 2010, because of fewer development fees, the reduction in property and sales tax revenues, and 4 percent raises for city employees beginning in January 2009 and January 2010, the projected shortfall is $20 million.
“For us, it’s a structural issue,” says assistant city manager Scott Tulloch. “We expect this $20 million shortfall is going to go on for three or four years. It’s not just a onetime hiccup where we can look at a onetime solution. We need to look at restructuring government so that we can count on $20 million a year less cost, going on for several years.”
Last year, as part of the city’s restructuring effort, 165 of 1200 full-time positions were cut from the budget. This coming year another 135 positions are targeted.
“You’re talking about a fourth of the city’s workforce will be gone,” says Tulloch. “It will have a tremendous impact on the city’s ability to provide public services. Last year we didn’t touch public safety — police and fire — but this year, we think everybody’s going to have to give something.”
To avoid more cuts to essential city services, this week the Chula Vista City Council is scheduled to consider increasing the sales tax. The soonest the city could act is in early May by a mail-in ballot. For that to happen, all councilmembers need to sign off on the proposal by next Tuesday.
“There’s another issue,” says Tulloch. “A mail-in ballot would cost the city about $250,000, and, of course, that’s money we just don’t have.”