Tahoe City PUD cuts spending before summer
A probable property tax grab by the state is causing a local utility district to enact cuts to programs and services.
The Tahoe City Public Utility District is enacting a 4 percent spending cut during this budget year and planning for an 8 percent cut in 2009, according to an agency memorandum written by district General Manager Cindy Gustafson.
During a board meeting on March 21, staff recommended and the directors approved mid-year budget cuts equaling $207,716. That money will be shaved from all departments ” utilities, parks, and recreation.
The district operates under a calendar year budget cycle, causing utility officials to execute mid-year cuts while other agencies, operating on a fiscal year, July 1 to June 30, have more wiggle room to plan as the situation unfolds at the state level.
“We are going to implement these cost reductions,” said district Treasurer Jim Dykstra. “A lot of our costs are in the summer, so we have to take these measures [now].”
The utility is anticipating a move by the governor and legislature to take 8 percent of property tax revenue from local government agencies to help balance the state’s budget. The district proposed a 4 percent cut this year since it is already halfway through its budget cycle.
Ironically, the money reallocation is allowed by Proposition 1A, legislation enacted to protect local governmental agencies from state money grabs. The bill passed with overwhelming support by California voters in the 2004 general elections with support from both houses of the state legislature, and Governor Schwarzenegger.
The protection of property tax revenues has a caveat, allowing the tax revenue to be taken if the governor declares a budgetary emergency to suspend the provision.
Governor Schwarzenegger declared a fiscal emergency on January 10.
The law allows borrowing a maximum 8 percent of property tax revenues, for two years within a 10-year period. The money must be paid back with interest within three years, according to the text of the law.
Forty-nine percent of the Tahoe City utility district’s total revenue is gathered from property taxes, Dykstra said.
To increase revenue in the face of reduced tax income, staff also recommended raising the rent on a facility used by North Tahoe Arts and the North Lake Tahoe Resort Association. But the board asked staff to wait on that decision until June, Gustafson said.
The board also deferred a proposal for the engineering department to consider increasing fees for miscellaneous services, possibly boosting revenue by $45,000.
Although no interruption in water or sewer services are planned, utility staffing and operations will be affected, according to a district memorandum.
Some of the items being cut out of parks and recreation include $10,000 from the outdoor concert budget at Commons Beach and a reduction in the length of some summer recreational programs. The district will attempt to partner with other local agencies to provide the funding for the concerts, Dykstra said.