Monterey County entered the Orange Tier on April 7, allowing more flexibility for indoor activities. However, the doors to the public library in the city of Monterey are still closed and will remain that way for the foreseeable future. The issue is not public health, says Assistant City Manager Nat Rojanasathira, but public funds.
The county, state and country appear to be turning a corner in the battle against the coronavirus but the scars left by its financial blows to Monterey are likely to outlast the virus. The city, gearing up for its biennial budget sessions, is looking at $30-$34 million in revenue losses compared to the previous fiscal year, says Rojanasathira – more than one-third of its $80.4 million revenue balance heading into fiscal year 2020-21.
“This is most certainly the most volatile and uncertain budget I think that local governments have experienced, because of the pandemic,” Rojanasathira says. “That certainly applies to the city of Monterey because we rely so much on travel and tourism-related revenue.”
The city is expecting an 80-percent drop in revenue from its transient-occupancy tax – a tax levied on hotel stays that accounts for about 29 percent of the city’s budget, its largest revenue source – as well as decreases in sales tax revenue. Residents voted to increase both taxes in 2020 to milk more money from its tourism economy.
Weekend travelers have slowly returned to the city; however, weekday and business travel have not, and the future of such tourism, which carries a large portion of the local industry’s economic impact, remains uncertain in a post-pandemic world.
“Business conference [tourism] is going to be impacted for the foreseeable future, we have to keep that in mind,” Monterey City Councilmember Tyller Williamson says. “Our residents might start seeing a lot of people coming back into town, but it does not equal the same revenue we were seeing pre-Covid.”
Many cities rely more heavily on the stability of property tax, such as Salinas, where property tax drives a quarter of the city’s general fund revenue. Property tax in Monterey, a city which is mostly built out and limited on new builds because of water restrictions, only accounts for about 15 percent of the general fund revenue.
The city’s reliance on tourism has also hurt its ability to reap much benefit from the American Rescue Plan. The plan is injecting $8.4 billion into California cities to help make up for pandemic-related losses; however, the allocations are on a per-capita basis. Much of Monterey’s losses are due to the absence of out-of-town visitors. The $6.5 million the city is receiving will only account for roughly 19 percent of its losses.
“Despite headlines that say the American Rescue Plan Act is helping city governments, it is not helping city governments equally,” Rojanasathira said.
A year ago, on April 29, 2020, Monterey City Council voted to lay off 83 people mostly at the Monterey Conference Center, parks and recreation, parking and its library.
The library continues to offer curbside pick-up, but plans to reopen the facility to the public remain vague. “We could open the library under health guidelines, but it’s about making sure we have a balanced budget to do so,” Williamson says.