ECONOMIC REPORT AND RECOMMENDATIONS

Morro Bay could avoid a gloomy future

Consultants suggest consolidating basic services and finding new revenue sources

By Sona Patel

TRIBUNE FILE PHOTO BY AARON LAMBERT

A couple of boats in Morro Bay, where the fishing industry has been hurt by state and federal restrictions.

• Read a copy of the city's preliminary annual budget
• Read a copy of the economic report

Key recommendations for Morro Bay’s economy:

A list of recommendations outlined in a consultant’s report identified potential cost-saving measures for the city. Chief among the 34 recommendations are suggestions for significantly revamping three of the city’s key public services:

POLICE DEPARTMENT

• Request a proposal from the Sheriff’s Department to provide

law enforcement services to the city.

• If the city chooses to keep its own department, increase the police budget to the level of similar-sized cities.

FIRE DEPARTMENT

• Adopt an on-call fire department service model similar to that

used by some similar-sized cities.

• Request a proposal from County/Cal Fire to provide the lowest possible level of fire service to the city and build up to a desirable service level from that point.

HARBOR DEPARTMENT

• Investigate contracting daily operations of the Harbor

Department to a professional harbor management company.

• Reduce the department to one or two officers charged with enforcement duties only.

A new economic analysis of Morro Bay operations could result in an overhaul of basic services — including police and fire protection— and higher taxes as the coastal city continues to wade through financial hardship.

The 133-page report outlines 34 recommendations for controlling expenses and increasing revenue. The City Council commissioned the report early this year.

Consultants from San Jose-based Management Partners—who crafted the report—told the council at a budget meeting Thursday night that the city is not in a financial crisis.

But they said city leaders will have to address growing expenditures and sluggish revenue predicted in the next decade.

“This is a very important finding, and it is a basis for many of the recommendations that follow,” according to the report. “The (city) must make fundamental changes in the way it does business.”

The decline of the local fishing industry has hurt Morro Bay’s economy.

If the city does not adopt any changes, its general fund expenses in the 2017-18 fiscal year are expected to reach nearly $14 million while revenue would reach about $12 million, according to the report.

“The city of Morro Bay is in a difficult financial position and is unable to continue with status quo operations,” according to the report. “Many tough budgetary choices have already been made — and yet the financial picture continues to grow bleaker.”

The loss of revenue caused by state and federal restrictions on fishing along the coast has severely affected Morro Bay. Sales tax revenue has dropped as fewer fishermen buy less fuel and equipment.

City leaders have taken steps to boost revenue, including a half-cent sales tax increase and a surge in developer fees. Still, council members may look to consolidate city services and possibly further increase taxes.

And while the City Council will ultimately decide which recommendations to adopt, the report signals that the city must make some changes.

“It’s going to be a team effort,” Mayor Janice Peters said at Thursday’s meeting. “This is a beginning tool. It’s going to be a long-term discussion.”

Changing services

The study recommends saving money by restructuring the city’s police and fire services by contracting with County/ Cal Fire and the Sheriff’s Department.

Contracting those services has already become a contentious issue among city leaders and residents. A committee of city officials and local residents has begun looking into contracting for fire services.

But those decisions would require careful consideration and comment from residents, Peters said.

“Do you want reduced service times or do you want to pay more for services that we have? That will all have to be worked out,” Peters said.

Among the significant changes recommended by the consultant are contracting daily operations of the Harbor Department with a harbor management company.

But some city residents spoke against the idea.

“The Harbor Department is the best I’ve ever found on both coasts,” said commercial fisherman Jeremiah O’Brien. “Our department is talked about up and down the coast.”

Imposing taxes

While much of the report centers on reorganizing operations, city leaders are also expected to discuss the creation of new fees.

The report suggests ways to increase revenue, including a citywide vote to raise about $360,000 for street lighting and maintenance.

A proposed user’s tax tacked onto utility bills and a general or special parcel tax could pump almost a $1 million into the city’s coffers annually. Both would require voter approval.

A consultant urged the City Council on Thursday night to consider which taxes it may want to include on the ballot in November.

The study suggests that the city consider increasing its hotel tax from 10 percent to 12 percent. That would result in an annual gain of about $364,000 annually starting in January 2010.

Peters said asking residents for money would be among the hardest decisions the city will face.

“I hate to impose more stuff on our citizens,” Peters said. “They’re suffering the same costs as the city.”

Some of the long-range goals identified in the report include creating a redevelopment agency and planning to redevelop city-owned harbor property, the power plant and Chevron properties.