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Mountain View faces $1.5M deficit amid prolonged COVID-19 recovery

COVID-19 is taking a toll on Mountain View's city budget, with deficit spending expected through at least 2022. Photo by Sammy Dallal

Years of economic prosperity and hefty surpluses have come to an end in Mountain View, with the latest projections showing the city will be $1.5 million in the red this year. And it's not expected to get better any time soon.

The gloomy economic forecast shows that the drawn out recovery from the coronavirus pandemic and ongoing public health restrictions will outweigh the city's efforts to cut costs. City officials say they aren't expecting a rebound to begin until this summer, and even that is shrouded in uncertainty amid a slow vaccine rollout.

The latest update shows Mountain View's general fund revenue sinking to $140.5 million, about $3.7 million lower than anticipated. The budget was premised on the idea that the shelter-in-place orders -- which have crippled the economy -- would end in June 2020. Some public health restrictions have been lifted since then, but a surge in winter cases forced another regional shutdown in the Bay Area that ended on Jan. 25.

Sales taxes are projected to decline to $18.9 million for the 2020-21 fiscal year, worse than previously thought and far below the $22.6 million that was anticipated prior to the pandemic. Taking the biggest hit is the city's hotel tax, which is now expected to generate $1.4 million -- less than one-fifth the revenue projected prior to the pandemic.

The bright spot is property taxes, which have been robust and exceeded expectations at $58.4 million.

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The city, for its part, has scrimped and saved over the same period, and is expected to spend $5.5 million less than budgeted for the 2020-21 fiscal year, which ends June 30. Staff turnover and unfilled positions have led to 86 vacancies, and events and recreation programs canceled due to COVID-19 will save an estimated $1.4 million in hourly wages.

Though anything but good news, the budget shows that Mountain View is faring better than others. The city was able to balance the 2019-20 budget without deep cuts to services -- unlike the $40 million deficit faced by the city of Palo Alto -- and has yet to go on a firing spree in order to stave off deficit spending.

Much of the city's spending related to the COVID-19 response have been paid for without dipping into the general fund. City Council members insisted that rent relief money come from other sources if possible, prompting city officials to drain affordable housing funds to pay for emergency rent checks.

Council members and council candidates on the campaign trail last year pitched that the city should avoid deep cuts to any department, even if it means using reserve funds to offset the deficit. Many advocated for surgical spending cuts as a last resort.

Also burning a hole in the city's budget are the wildfires from last year, at least temporarily. The Mountain View Fire Department racked up $2 million in overtime pay fighting regional fires including the CZU Lightning Complex -- which scorched more than 86,000 acres across San Mateo and Santa Cruz counties -- along with the Glass Fire in the North Bay and the Creek Fire in Fresno County.

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All of the mutual aid costs are expected to be reimbursed this year by the state, but the city has yet to receive the money.

City Council members are scheduled to review the updated budget on Tuesday, Feb. 9. The full agenda is available online.

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Mountain View faces $1.5M deficit amid prolonged COVID-19 recovery

by / Mountain View Voice

Uploaded: Mon, Feb 8, 2021, 12:29 pm

Years of economic prosperity and hefty surpluses have come to an end in Mountain View, with the latest projections showing the city will be $1.5 million in the red this year. And it's not expected to get better any time soon.

The gloomy economic forecast shows that the drawn out recovery from the coronavirus pandemic and ongoing public health restrictions will outweigh the city's efforts to cut costs. City officials say they aren't expecting a rebound to begin until this summer, and even that is shrouded in uncertainty amid a slow vaccine rollout.

The latest update shows Mountain View's general fund revenue sinking to $140.5 million, about $3.7 million lower than anticipated. The budget was premised on the idea that the shelter-in-place orders -- which have crippled the economy -- would end in June 2020. Some public health restrictions have been lifted since then, but a surge in winter cases forced another regional shutdown in the Bay Area that ended on Jan. 25.

Sales taxes are projected to decline to $18.9 million for the 2020-21 fiscal year, worse than previously thought and far below the $22.6 million that was anticipated prior to the pandemic. Taking the biggest hit is the city's hotel tax, which is now expected to generate $1.4 million -- less than one-fifth the revenue projected prior to the pandemic.

The bright spot is property taxes, which have been robust and exceeded expectations at $58.4 million.

The city, for its part, has scrimped and saved over the same period, and is expected to spend $5.5 million less than budgeted for the 2020-21 fiscal year, which ends June 30. Staff turnover and unfilled positions have led to 86 vacancies, and events and recreation programs canceled due to COVID-19 will save an estimated $1.4 million in hourly wages.

Though anything but good news, the budget shows that Mountain View is faring better than others. The city was able to balance the 2019-20 budget without deep cuts to services -- unlike the $40 million deficit faced by the city of Palo Alto -- and has yet to go on a firing spree in order to stave off deficit spending.

Much of the city's spending related to the COVID-19 response have been paid for without dipping into the general fund. City Council members insisted that rent relief money come from other sources if possible, prompting city officials to drain affordable housing funds to pay for emergency rent checks.

Council members and council candidates on the campaign trail last year pitched that the city should avoid deep cuts to any department, even if it means using reserve funds to offset the deficit. Many advocated for surgical spending cuts as a last resort.

Also burning a hole in the city's budget are the wildfires from last year, at least temporarily. The Mountain View Fire Department racked up $2 million in overtime pay fighting regional fires including the CZU Lightning Complex -- which scorched more than 86,000 acres across San Mateo and Santa Cruz counties -- along with the Glass Fire in the North Bay and the Creek Fire in Fresno County.

All of the mutual aid costs are expected to be reimbursed this year by the state, but the city has yet to receive the money.

City Council members are scheduled to review the updated budget on Tuesday, Feb. 9. The full agenda is available online.

Comments

[email protected]
Registered user
Cuernavaca
on Feb 8, 2021 at 2:28 pm
[email protected], Cuernavaca
Registered user
on Feb 8, 2021 at 2:28 pm

I see that the City is declaring a significant budget shortfall a week after it was announced that the City intends to spend over $3 Million on the Crestview Hotel. Was that in the budget, or will other programs be cut to pay for the Crestview decision?


Dan Waylonis
Registered user
Jackson Park
on Feb 8, 2021 at 3:13 pm
Dan Waylonis, Jackson Park
Registered user
on Feb 8, 2021 at 3:13 pm

I hope that the city will examine its largest expenditures first and make cuts there. Rather than closing down small programs and projects.


Lucas Ramirez
Registered user
Another Mountain View Neighborhood
on Feb 8, 2021 at 3:58 pm
Lucas Ramirez, Another Mountain View Neighborhood
Registered user
on Feb 8, 2021 at 3:58 pm

@blewis245 - should the County decide to acquire the hotel, the City would contribute Community Development Block Grant (CDBG) and HOME Investment Partnership (HOME) funds, which are federal funds for capital projects benefiting low-income communities. The staff report is available here: tinyurl.com/2gtfhtba
The money would not come from the general fund, and it would have no impact on the status of the budget.

Lucas Ramirez
Greater San Antonio Area


CineCal
Registered user
Blossom Valley
on Feb 8, 2021 at 5:51 pm
CineCal , Blossom Valley
Registered user
on Feb 8, 2021 at 5:51 pm

What did they do with all the money they got from Google, and all the apartment developers. They should be in a surplus, not a deficit.


JustAWorkingStiff
Registered user
Another Mountain View Neighborhood
on Feb 9, 2021 at 10:28 pm
JustAWorkingStiff, Another Mountain View Neighborhood
Registered user
on Feb 9, 2021 at 10:28 pm

Perhaps Council should reconsider spending $1 Million on RV signage.


gcoladon
Registered user
Slater
on Feb 11, 2021 at 12:16 pm
gcoladon, Slater
Registered user
on Feb 11, 2021 at 12:16 pm

I think it's worth recalling this news from after the pandemic started:

Mountain View is handing out pay raises despite recession
Web Link


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