WATSONVILLE — The 2024-25 fiscal year budget is set to go before the Watsonville City Council for final adoption at its June 25 meeting, but the council got to look it over and discuss it in a study session Tuesday.
The total budget appropriations requested are more than $267 million, according to a presentation by Finance Director Marissa Duran. One of the biggest sources of revenue is the city’s General Fund, which saw an increase in revenues for the past fiscal year but also a $2.3 million in operating costs, which has required city staff to review expenditures and identify savings to propose a balanced budget.
“We have very much a budget hole to solve,” said Duran. “The original budget showed our revenues exceeding our expenditures, but when we look at this budget revise, it’s going the other way. Some of those increases include CalPERS unfunded liability, some increases to our employees and then insurance, insurance, insurance.”
To achieve a balanced budget, Duran said the goals are keeping certain vacant positions unfilled until the midyear budget — a move she said would save the city $800,000, continue funding four positions with American Rescue Plan Act funds for the entire fiscal year and eliminating two positions created at midyear that remain unfilled: a redevelopment manager and parking control officer.
Duran identified six capital improvement projects in the proposed budget: a new switchgear at the Watsonville Wastewater Treatment Plant, sewer projects, street repairs, a new Water Well No. 4 at Roache Road and Airport Boulevard, 1.75 miles of replacing materials and the Ramsay Park Renaissance Project.
Among the risks Duran identified in her presentation were potentially volatile General Fund revenues, projected unfunded liability increases and overtime costs for the police and fire departments.
“Our public safety overtime, as you can see over the years, we don’t budget enough and it always comes in over,” she said.
However, Duran said the budget presented new opportunities, such as working with consultants on economic development to bring in businesses and increase sales tax revenues, working on hotel development projects, infill housing to add to the property tax base and using the police and fire overtime costs to explore alternatives in the hiring and scheduling processes.
“It’s a threat, but it’s also an opportunity to look to see where we can get some savings,” she said.
Mayor Pro Tempore Maria Orozco emphasized a need for the budget to include council priorities and how to fund them.
“That’s a bigger conversation, obviously, but I’m a planner so I like to plan ahead,” she said. “There’s things that I think we all want to accomplish up here that may not be directly related to staffing levels and that sort of thing. I hope that’s part of a bigger conversation that you’re having.”
Interim City Manager Tamara Vides assured those conversations were taking place and could be brought back if the city identifies a future potential funding source.
“The budget is just as good as the moment that it’s being adopted, and the next minute things could change,” she said.
One topic looming over the budget was a measure by the California Business Roundtable that has qualified for the November ballot and, if approved by voters, would not only raise the voter approval threshold for tax initiatives to two-thirds rather than a simple majority but would also force tax measures that did not meet these threshold requirements retroactive to Jan. 1, 2022, to go back to voters for reapproval. This includes Measure R, an initiative approved by Watsonville voters in November 2022 that remains a major source of funding for projects.
Councilwoman Kristal Salcido asked if Measure R was included in the budget. Duran said it was but was not being bonded.
“We don’t want to commit to future what we don’t know, but in the budget, we’re expecting it to pass,” she said.
Salcido also said public safety staffing was important and asked what could be done to increase it. Vides said hiring, recruiting and addressing overtime are high priorities for both department chiefs.
Other priorities raised by council members included building more hotels, investing more in the library and attracting more businesses.
“We have to find creative ways to do that with partnerships,” said Mayor Vanessa Quiroz-Carter. “We also have to pat ourselves on the back when we have some wins, like Vallarta (Supermarkets) is really exciting. I think that’s gonna be really great for our community, but we also have to try to focus on what’s gonna work for our community because there are businesses out there that are excited and they want to be here, so we’re really gonna have to work on getting them here and building up those partnerships.”
The budget proposal can be viewed at Watsonville.gov/DocumentCenter/View/23447/Budget-FY-24-25-Draft-.