The city of Morro Bay is looking to spend about $35 million in the next fiscal year, a proposed budget that staff members consider tight with little room for further reductions.
At a Thursday workshop, city staff members proposed a 2014-15 budget that factors in water and sewer rate increases, along with seeking ways to increase Morro Bays revenue stream.
The budget anticipates about $29 million in revenues, leaving a $6 million funding shortfall that would need to be filled with grants or by delaying some projects for a year.
The city is moving forward with seeking a consultant for a water rate study expected to cost between $38,000 and $70,000. The study would help the council determine rate increases that could be implemented by the end of 2014.
Morro Bay hasnt increased water rates since the mid-1990s, and rates now only cover about 78 percent of the citys annual $1.125 million payment for state water.
One of our biggest concerns right now is making sure we cover our debt service, said Councilman Noah Smukler.
Sewer rate increases would help keep the city from continuing to dip into reserves to cover operational expenses and to pay for a planned wastewater treatment plant and water reclamation facility.
The council plans to formally address its 2014-15 budget at its June 24 meeting.
Some of the staffs estimated expenditures include $11.9 million for personnel, $8.8 million for services, $4.3 million for capital outlay and $1.3 million for supplies.
The council also will be interviewing for a permanent city manager position on Friday. No specific salary has been set, but former city manager Andrea Lueker was making about $152,000 per year.
Susan Slayton, the citys administrative services director, and Interim City Manager Ed Kreins wrote in a report presented Thursday that economic development is sorely needed.
To date, the city has focused on reductions and tightening of expenditures to the breaking point, they wrote. There is little room for further reductions, unless the service delivery model is changed.
In response, council members said they plan to discuss whether to pay for an update to a 2008 financial analysis report on the city by the consulting firm, Management Partners, that could help identify new growth areas for the city.
About a year ago, the firm estimated an updated study would cost about $40,000.
Mayor Jamie Irons and Johnson, along with Kreins, also will be meeting with tourism, merchant, and business leaders in the next couple of weeks to discuss whether the city should spend a requested $240,000 in partnered marketing and visitor center expenses.
The requests were made by the executive director of Morro Bays Tourism Bureau, Brent Haugen, and the chambers president-elect, John Headding. Others in local tourism organizations supported that funding as well.
But in their recommendation to the council, Slayton and Kreins said the city cant afford the spending.
Of that marketing money, the Morro Bay Chamber of Commerce specifically is requesting $24,000 some of which would go to a mobile device application that would provide a database of businesses and services in Morro Bay.
Before we make a budgetary decision, we want to sit down with them and find out what the return on investment would be, Johnson said. Then we can talk about implementation.
Haugen said he views the forthcoming meeting on potential marketing and tourism as a positive step. He cited a note in the staff report that bed taxes have increased by about 11 percent over the past year.
Our relationship with the city is evolving, Haugen said. Were really excited to sit down and evaluate. How does marketing impact Morro Bay as a whole? How does it impact economic development? It all fits into the larger picture of whats needed for the city.