On Feb. 14, the Morro Bay City Council voted down (3-2) a call for an emergency freeze on discretionary spending, citing the budget problem is not an emergency, and Mr. Peirce added that it is not an â€œongoing problem.â€?
A copy of the cityâ€™s 2004-05 budget is available in the library and City Hall. A review shows the city has been dipping into its reserves for the last two years to balance the budget because we have not been taking in enough revenues to pay for our expenses. The previous Council approved borrowing $1.85 million from the reserves to pay for expenses for this fiscal year (July 2004 to June 2005). This means we are using over $154,000 a month from the reserves to cover our expenses. The cityâ€™s finance director reported the city spent 48 percent of its approved budget but received revenues of 46 percent at the end of six months (June to December 2004).
Two percent may not sound like much, but 2 percent of our budget is about $225,000. If this continues, we will have to borrow more money to cover this additional shortfall. When is unstoppable bleeding not considered an emergency?