The View From Harbor Street
By David Buckingham

Over the next several years, volatile revenues, spending needs, mounting debts, and inadequate infrastructures present significant hurdles for cities throughout California.
Even worse, some California citizens may not be aware of those dilemmas due to low levels of transparency, public disclosure, and civic engagement.
The City of Morro Bay has embraced the fundamental need for change, and to be an example of a city that provides clear and accurate information to its citizens through full transparency, civic engagement, and public disclosure of important issues.
One source says: “the goal of community sustainability is to establish local economies that are economically viable, environmentally sound and socially responsible.”  
While we have not yet slipped under the waves, the City of Morro Bay — from a government finance perspective — is likely not sustainable without significant change.
While remaining environmentally sound and socially responsible, we must become more economically viable.
As the City continues to wrestle with those significant issues in the months ahead your participation is vital. City governments don’t create economic vitality — people do. People in business, people in service organizations, people in non-profit groups, people from all walks of life and all futures — working together to build a more vibrant, economically diversified, and more sustainable community.

Our challenges are not small. Consider this:
• Our water rates have not increased in 20 years and we are now faced with doubling billing rates over the next five years to meet legal requirements.

• Improving our streets is a top goal for many residents, yet the current half-cent sales tax dedicated in large part to fixing our streets does not generate enough revenue to even maintain our streets in their current poor condition.

• Technology helps a city improve customer service, efficiency and transparency, but our City’s investment in technology over the past 10 years has been and remains far below the norm for similar cities.

• Payroll costs are increasing dramatically. Whether we like it or not, the City has participated in the California Public Employees Retirement System for decades. Due to a number of local decisions, and statewide factors beyond our control, required contribution rates are increasing substantially over the next five years, causing City payroll costs to increase over 20% between now and 2020.
We are working hard to increase efficiency and cut costs and some tough decisions have already been made. As an example, the City has 20% fewer general fund-supported City staff than 10 years ago. That is a huge cut.
There is no way to balance our budget only by cutting costs. We must improve the City’s financial sustainability through economic diversification, while still paying close attention to controlling the costs of doing government.
Like the tough requirement to raise water rates, the City will be making other hard choices in the months ahead.
How can the City improve revenue without increasing taxes? Two approaches include appropriately collecting all existing taxes and ensuring that fees for City services are set appropriately to cover costs.
The ongoing audit of business licenses, a tax that has been in place for many years, should improve our revenues somewhat and shows our commitment to the City’s financial stability.
However, the City must also reassess our fee schedule. Current development and building permit fees, for example, cover only about 30% of the cost of providing those services.
Putting it differently, Morro Bay citizens subsidize about 70% of the cost of permits for development and building. But, just fixing those fees is not enough to improve the revenue required to maintain fiscal responsibility and ensure adequate maintenance of services to sustain our City in the future.
The City’s Local Economic Action Plan is a first step toward markedly improving our economic vitality.
Next steps may include lessening our over-reliance on the transit occupancy tax by diversifying our economy to include some relatively small, green businesses that offer multiple, head-of-household jobs and modest redevelopment of our business districts to provide more shopping and dining opportunities for both residents and visitors.
Those new business opportunities will help to attract families and singles to live and work right here in Morro Bay; and the broader range of retail opportunities would lessen our dependence on TOT.
The future of Morro Bay’s City Government can be as bright as our wonderful local environment. It will take all of us working hard together to address the community’s fiscal issues.
We need your input and help in the weeks and months ahead. In the near-term, the City Council is having a special study session at 6 p.m. Tuesday, March 31 to review our 10-year budget forecast.
That will provide additional transparency regarding our finances and provide our citizens with more information regarding how you can be a part of the change needed to sustain our beautiful home.
Lastly, the City’s General Plan/Local Coastal Plan rewrite over the next several years will set the stage for economic revitalization and diversification that is essential to our long term sustainability.
Plan to participate in the joint City Council/Planning Commission meeting on March 24 to discuss the general plan rewrite.

David Buckingham is City Manager of Morro Bay. The View From Harbor Street is a regular feature of The Bay News.