Remember that round of cuts Chula Vista just went on? The one that City Manager David Garcia warned was necessary for the city to stay solvent?
Apparently it wasn’t enough.
In a phone interview, Garcia said that Chula Vista had just received a call from the County Assessor’s Office warning that its residents were asking for devaluations of their properties in droves in order to lessen their property taxes in light of the housing market’s collapse. My colleague over at Survival in San Diego noticed the phenomenon as well.
In light of the property devaluation, Chula Vista decided to lower its expected income from property taxes this year, Garcia said. He said that the city had been expecting a 14 percent jump in property taxes this year compared to last. Now, the city will expect a 10 percent increase.
“We may go lower but we’re going to try to hold it at 9 or 10 percent,” Garcia said.
What’s more, Garcia shared a graph illustrating how cities across the region are reporting revenue from sales taxes as low as 20 percent less than last year. Again, Kelly Bennett was all over that phenomenon too. (Click here to see the graph and read Chula Vista’s projections.)
Anyway, Garcia’s staff added up the trouble and decided that another $3.5 million needs to be cut from the $153 million budget immediately.
He said that the city’s reserves are too far gone to help. If the city were to continue to spend at its current rate, by the end of the year, the city’s reserves would be down to 4 percent of the total budget. Regardless, even with the cuts, to make ends meet the city has had to rely on a series of 30-day loans.
“We’re having to do that basically because the revenue we have coming in is so irregular whereas our money going out is very steady. In the past, with reserves that doesn’t really matter because you can use them to flatten it out and then replenish the reserves when you get all your property taxes,” Garcia said.