Scotts Valley city leaders on Wednesday described a revived budget due in part to a city sales tax hike approved by voters in 2020. Police hired four officers and a sergeant in 2021. (Kara Meyberg Guzman — Santa Cruz Local)

SCOTTS VALLEY >>  After several years of city budget problems, Scotts Valley’s General Fund has reached a “delicate stability,” said Casey Estorga, the city’s administrative services director, during a city council meeting Wednesday evening. 

“The past couple years have been a challenge,” Estorga said. City leaders have not had enough money to hire enough city staff in recent years, Estorga said, in part because of the COVID-19 pandemic and problems related to the CZU Lightning Complex Fire in 2020. Revenue from a city sales tax hike approved by Scotts Valley voters in 2020 has helped turn the tide.

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“The revenues have started to recover faster than projected— we are grateful for that— and expenditures were lower than projected,” Estorga said.

The proposed $19.7 million General Fund budget for the fiscal year that starts July 1 is significantly larger than the $14.1 million General Fund budget approved last year. The council reviewed the proposal but did not vote on it Wednesday.

Scotts Valley’s finances have started to rebound from a fiscal emergency in 2020, city leaders said. The proposed 2022-23 budget proposes more spending because of years of deferred maintenance, staff said. (City of Scotts Valley).

The proposed budget includes:

  • A relaunch of many city recreation programs, added services and new staff through a Recreation Assessment and Restoration Plan. In spring 2020, most Parks and Recreation staff were laid off, city leaders said. Many services, including facilities rentals and aquatic programs, were paused.
  • Road work, including previously deferred pavement maintenance and rehabilitation on Bean Creek Road and Mount Hermon Road.
  • Skypark playground improvements, and fixes at Vine Hill child care facility.
  • Wastewater treatment plant work of about $13.7 million over the next five years. THe work is expected to be funded by increases to wastewater bills approved last year. About $1.3 million in road improvements over the next five years will be funded with Measure D, a sales tax approved by Santa Cruz County voters in 2016 to fund transportation projects. 
  • Improvements to the Scotts Valley Branch Library, including earthquake safety upgrades and improvements to heating, ventilation and air conditioning.  The improvements are funded through Measure S, a bond approved by Santa Cruz County voters in 2016. The library is expected to reopen this summer.

The city is also using the San Rafael-based financial consultant firm NHA Advisors to help the city with plans to fund employee pensions. The consultants are expected to present a plan this fall. 

A proposed Scotts Valley budget calls for a roughly $100,000 General Fund deficit, which would draw reserves down to about $5 million. (City of Scotts Valley)

Estorga, Scotts Valley’s administrative services director, credited the city’s improved economic outlook to Measure Z. 

Measure Z was a sales tax increase approved by city voters in March 2020 after the city declared a fiscal emergency. Sales tax revenue “has accounted for over 30% of all General Fund revenues,” in the years since its adoption, Estorga said. 

“We are seeing sales tax revenues spike right now, partially as a result of inflation. So everything costs an extra dollar more and with sales tax percent of that transaction, the city is enjoying additional revenues,” he said. Estorga added that predictions of a coming recession mean the tax could bring in less money in the future.

The city’s revenue from the city hotel tax has also improved to near pre-pandemic levels as city hotels have had more visitors. The 11% surcharge is billed to hotel guests.

Although long-term economic forecasts predict continued stability in the coming years, Estorga said the city will have to find a new source of revenue when Measure Z expires in 2031.

Vice Mayor Jim Reed said the council had previously discussed trying to renew the tax in 2028 at the same time as the presidential election. 

“In the event that there was some sort of a catastrophic failure with that measure in 2028, we’d come back with some sort of another more refined measure in 2030,” Reed said. “The good news is, we’ve got a lot of time.”

The final budget is expected to be presented to the city council for approval on June 15.

Scotts Valley City Council has met online only since the start of the COVID-19 pandemic in 2020. The council chamber sits empty this week. (Kara Meyberg Guzman — Santa Cruz Local) 

Reported crime declines

Reports to Scotts Valley police of the city’s most severe crimes, including rape, robbery and auto theft, decreased by 11% in 2021, according to the Scotts Valley Police annual report

“Almost all serious crimes in our city decreased dramatically,” said Scotts Valley Police Chief Steve Walpole.  All other reported crimes increased by 24% relative to 2020. Arrests in the city increased by 14% and officers wrote 65% more tickets in 2021, the report stated.

Police received about 6,000 calls for service in 2021. Average response time to emergency calls for service was 2.4 minutes, according to the report.

Scotts Valley police also hired four police officers, a police sergeant, and two dispatchers. Scotts Valley police plan to continue hiring in the coming year, said Walpole. The report described staff shortages, especially at the beginning of 2021.

Scotts Valley police have planned a Junior Police Academy program for June 13-17 and July 11-15 for students entering sixth, seventh and eighth grades. The academy includes first aid training, mock crime investigations and community service.

Pride flag approved

The Scotts Valley City Council approved a policy that will allow a pride flag to be flown at city hall during LGBT Pride Month in June. The cities of Santa Cruz and Watsonville also have policies that allow the flag to be flown at those city halls.

The new flag policy allows for commemorative flags that are non-political and aligned with the city’s strategic goals to be flown with a majority approval from city council. Councilmembers Randy Johnson and Vice Mayor Reed advised against the policy, saying that the rule could expose the city to litigation if the council denies other groups the opportunity to fly flags.

“You’ve coupled the rainbow flag with this policy,” said Johnson. “But will you feel the same way if citizens for Second Amendment rights want to come forward and fly their flag?”

Reed proposed an alternative policy that would have allowed the pride flag to be flown, but it would not create a process for other commemorative flags to be considered. That proposal was rejected by the council in a 2-3 vote, with Reed and Johnson in support. Mayor Donna Lind and Councilmembers Jack Dilles and Derek Timm opposed.

Timm said the policy would send a message of support to LGBT youth who face discrimination. “I think of those high school students who may be hiding who they are out of fear, and I think as civic leaders it’s our responsibility, it’s our duty, to not be silent,” Timm said. 

Several community members spoke in support of a policy that allowed the LGBT flag. “I believe that Scotts Valley is a welcoming and safe place for the LGBTQI community and tonight you have a chance to tell others like me, that that’s the case,” said Monica Martinez. Santa Cruz City Councilmember Donna Meyers and Watsonville City Councilmember Jimmy Dutra both spoke in support of the policy.

The original flag policy passed with a 3-2 vote, with Reed and Johnson opposed. After the policy was adopted, the council voted unanimously to fly the pride flag during June.

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Reporter / California Local News Fellow

Jesse Kathan is a staff reporter for Santa Cruz Local through the California Local News Fellowship. They hold a master's degree in science communications from UC Santa Cruz.