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.