As the budget deadline nears, National City officials are weighing whether to dip into reserves to offset their deficit.
The city faces an $8.2 million deficit for the upcoming fiscal year. A preliminary general fund budget proposes $81 million in spending.
At a budget workshop last week, the council debated whether the city’s reserves, which are funds set aside for future use, should be used to make up for the deficit.
National City’s total reserve balance stands at $51 million, some $9 million more than its target funding level.
Councilmember Jose Rodriguez expressed support for potentially dipping into the reserves.
“These are pretty healthy levels of reserves,” he said. “I understand that we have to be fiscally prudent, but I also understand that your community needs services, and in order to provide those services, we need to support our staff.”
Mayor Ron Morrison seemed more apprehensive, describing the reserves as “one-time” money that could easily be depleted.
“This year alone, we could take it right down to our target level only,” he said. “And after that, we’re gonna have to start eating into our targets just to have operating money.”
City officials are also discussing ways to generate new revenue. During a meeting last month, Director of Community Development Carlos Aguirre presented the council with a list of potential tax and fee changes, including raising taxes for sales and hotel stays.
Aguirre also discussed new vacant property fees, which received support from the mayor and all members of the council. The proposed fee would include a roughly $1,000 annual registration fee and an additional $3,400 annual fee to recover what the city spends on monitoring the properties and addressing blight. Right now, the city charges a $60 vacant structure fee.
Councilmember Luz Molina said the vacancy fees could be helpful as an economic development tool rather than a means of revenue generation.
“The projected revenue wouldn’t necessarily scratch the surface of our deficit, but it would solve the problem of activating those businesses that we don’t want to see abandoned,” she said.
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