Making ends meet

The state budget crisis has dominated most of the California public policy headlines in recent months, but local officials in city halls and county seats from Yreka to San Ysidro are struggling with a gathering financial storm. Sonoma County is no exception. The dual demons of declining local tax revenues and rising employee costs, particularly for police and fire services, are forcing hard decisions and notable reductions in public services.

CASH CRUNCH

Economic woes strike cities where it hurts most:

Sales tax revenues are in a two-year-decline

Housing doldrums mean lower home values, which means less property tax and real estate transfer fee revenues

A residential and commercial construction industry on life support means sharp declines in development fee revenues

State budget crisis means cutbacks in traditional revenue sources.

RISING COSTS

An inflation rate that has jumped to 4.5 percent in 2008

Escalating labor costs, led by police and fire departments.

Petaluma has laid off 7.5 percent of its general fund work force. Santa Rosa is mulling 65 layoffs and turning off 8,000 streetlights.

The trend is likely to continue because local governments rely so heavily on sales and property taxes and related real estate taxes and fees. All are down sharply.

Here's a snapshot of municipal and county budget conditions:

Sonoma County

Since May, Sonoma County government has been under a partial hiring freeze and has limited travel and equipment purchases in an effort to cope with what administrators fear could be an $8 million shortfall in funds from the state. In August, supervisors approved a $1.2 billion budget, but the flow of dollars from the state has been difficult to rely upon because Sacramento has slowed payments in order to cope with its own budget problems.

County supervisors worry that their budget shortfall could double, depending upon how badly property tax revenues are off because of declines in assessed values of houses. Officials have drafted contingency plans to cut staff by 10 percent.

Santa Rosa

Having cut $5 million from the budget that went into effect this summer, the City Council now intends to cut another $10.5 million, beginning next month. On the table are 90 proposals, including elimination of more than 65 jobs, street-sweeping services, and all city-sponsored adult and youth sports programs. The city might turn off half its 16,000 streetlights, close a homeless shelter, cut police positions and shut fire stations on a rotating basis. Tax measures, if future polls show there is enough voter support, may be put to voters.

City Manager Jeff Kolin said the good news is that Santa Rosa doesn't have any investments in the stock market. The bad news is the state could come knocking. "If they (state officials) declare a fiscal emergency, they could borrow (property tax) money from local government," Kolin said.

Petaluma

The city has made more drastic cuts than any other entity in Sonoma County. In recent weeks, it has laid off 27 of 362 full-time employees and cut a number of programs to help balance a $36.8 million general fund budget that was 15 percent smaller than the previous year. Half the Community Development Department has been eliminated, the community swimming pool hours have been slashed and city street maintenance jobs have disappeared.

City Manager John Brown, who said there is no immediate relief in sight, has proposed selling surplus city property to rebuild the depleted reserve fund.

"We may have to come back and do more of this (cutting)," Brown said.

Rohnert Park

The City Council balanced its $34.2 million budget this year by trimming 10 percent in spending and selling excess city lands, valued at $5.8 million. The city expects to make reductions again next year as sales and property tax revenues continue to decline.

Cotati

The city has chosen to draw down its reserves by $420,000 to balance a $4.8 million general fund budget, officials said. The city restructured several departments in January, eliminating positions and converting some to part time for a savings of about $320,000 annually, said Jone Hayes, administrative services director.

Now, reserves are down to about 5 percent, she said. An amended spending plan will come to the council in November. Although a tax revenue increase is not forecast, the council has set a goal to raise surpluses to 20 percent and avoid any cuts in services, Hayes said.

Sebastopol

Sebastopol used reserves to balance its budget, thus avoiding layoffs and program cuts.

City voters Nov. 4 will decide whether to approve a 4 percent utility tax, with the funds to be used for streets, parks, police, firefighting and as a safeguard against future cuts linked to the state's gloomy fiscal outlook.

"It'll be worse next year, I guarantee it," said City Manager David Brennan.

Sonoma

The city has a $10.3 million budget this year, which it was able to balance without making cutbacks. City staff is beginning an analysis of next year's budget and preparing to propose saving money by not filling vacant positions.

Cloverdale

The budget was balanced this year by eliminating several jobs, including that of the city clerk and public works superintendent, and by freezing a vacant police officer position. Still, the city is walking a thin line because it has drawn down its reserves for the $7.7 million general fund to almost nothing.

City Manager Nina Regor said property tax valuations are down by 2.5 percent, which means there will probably be a decrease in revenues. City officials are still awaiting word from the county to find out how much.

Healdsburg

City officials expect the $8 million general fund, almost all of which goes to fund police and fire services, to operate at a $550,000 deficit this budget year despite cuts made to the police and fire departments. The city will tap its $2 million reserve to cover the difference.

It could have been worse. What had been expected to be a $300,000 deficit from the budget year that ended June 30 turned out to be a $37,000 surplus because of higher-than-expected property and bed tax revenues.

The City Council might make more cuts during a midyear budget review in January, said Assistant City Manger Marjie Pettus.

Windsor

No layoffs yet, but the city saved $2 million this year by cutting spending for park maintenance, professional consultants, equipment acquisitions and by leaving positions unfilled. The town has a general fund of about $15 million and healthy reserves of almost $5 million.

"We're not done with this trend of lower revenues," said Town Manager Matt Mullan, adding that it is likely town staff will propose more cuts when the budget is reviewed in February.