City bracing for 10-year budget hit

Two fire stations among possible cuts

Eureka is facing a 15% cut to its general fund for the upcoming 2020-21 fiscal year.

The decrease is “maybe the largest decline” the city has seen in the last 20 to 30 years, according to Finance Director Lane Millar, who said it may take the city up to 10 years to recover and return to where it was just a year ago.

On Tuesday Millar made a presentation to the Eureka City Council detailing the proposed 2020-21 budget.

The city is anticipating a 10% drop in its general fund revenue, equivalent to about $3 million less than the $29 million it brought in during the 2019-20 fiscal year.

At the beginning of the 201920 fiscal year the city’s general fund had a $6.3 million reserve. Over the course of the year the fund’s reserves were drained by $5.3 million due to decreased revenue and related to the coronavirus pandemic and other unforeseen expenditures according to Millar, who said the city expects to have less then $400,000 of reserve money left in the general fund by the end of the 2020-21 fiscal year.

The city is expecting its tax revenue to take a severe hit in the upcoming fiscal year. The proposed budget accounts for a 24% drop in transient occupancy tax (the tax on hotels and other shortterm housing business) and 11% decreases in both sales tax and property tax revenue.

The Eureka Police Department, which consumed 49% of the general fund during the 2019-20 fiscal year, will lose 6% of its funding for the upcoming fiscal year if the budget is adopted as is, resulting in reductions in officers and other EPD personnel.

Humboldt Bay Fire, which accounts for 23% of the general fund budget, will have to cut around $1 million in the upcoming year, most of which will come straight from its reserve fund. The cuts, according to Chief Sean Robertson who spoke Tuesday, may force the department to shutter two firehouses.

“I am really concerned about next year,” Mayor Susan Seaman

said. “What is our strategy for addressing this? Do we have anything we are doing to prepare?”

Overall the city is projecting a 15% decrease in overall revenue, a drop from $77.2 million in 2019-20 to a projected $66.6 million in 2020-21. That sum includes the city’s four main funds:

general, water, wastewater and internal service.

“A 15 percent drop from one fiscal year to another is serious,” Millar said Tuesday. “The purpose of these cuts are to get us sustainable … . The might be more pain (in the future), furloughs may be the next step … . Clarity in terms of looking forward is just not there right now.”

The council will convene July 7 to potentially adopt the 2020-21 budget.