The budget includes several key projects:

• $13 million to finish renovations at Ramsay Park and Watsonville City Plaza.
• $10 million for sewer improvements at Pajaro Dunes and a replacement generator system at the city’s wastewater treatment plant.  
• $10 million for water testing and replacement of corroded water mains throughout the city. 
• A $10 million grant to reconfigure bike lanes and build a footbridge over Highway 1 at Harkins Slough.
• $2.6 million to upgrade the roof at Watsonville Public Library.
• $1.9 million for city streetlights.

The city is expected to raise $12 million in bond money to help finish Ramsay Park and the Watsonville City Plaza. Some funds from the $7.9 million American Rescue Plan Act relief grant will also be used to finish the park.

Some money sources include:

• The city’s General Fund is expected to pay for $18 million for the above projects,
• $19 million from special revenue funds for department-specific investments including library and traffic improvements
• $23 million from enterprise funds such as water and wastewater, which are primarily funded by user fees in the city.
• Sales tax revenue from Measure R, a half cent sales tax adopted by Watsonville voters in 2022 to fund community investment projects.

“This proposed budget reflects months of collaboration and careful analysis, and aligns with city council goals, maintains essential services, invests in our community and ensures fiscal responsibility,” said Watsonville Administrative Services Director Marissa Duran, at Tuesday’s city council meeting.

Watsonville’s budget is drafted every two years, but each year’s expenditures are approved by the council each June. Last year, the city implemented a hiring pause to help deal with “structural shortfalls” in its budget driven by increasing pension costs.

To achieve a balanced budget, city staff cut 11 vacant city positions and three vacant grant-funded positions.

The budget document noted that city revenues are growing but “growth is outpaced by rising costs, particularly in the areas of salaries, employee benefits and contractual services.”

More than 60% of General Fund spending goes to city staff salaries and benefits, including police. 

While city staff proposed to cut two vacant police officer positions, a recent consultant’s report on Watsonville Police recommended hiring seven more police officers. 

Watsonville City Councilmember Ari Parker asked whether the city had adequate funds for unexpected budget holes in the General Fund.

“In the school district, we’re always preparing to have issues. So there’s got to be a backup,” Parker said.

The city is required to maintain a 20% General Fund expenditure reserve. Duran said the city had about $12 million in reserves.

The Watsonville Police Department is the largest single item in the city’s General Fund, excluding Fiscal Year 2025’s uncharacteristically large capital expenditures. (City of Watsonville)

More than half the city’s revenue comes from property tax, sales tax, and hotel room taxes. (City of Watsonville)

Questions or comments? Email [email protected]. Santa Cruz Local is supported by members, major donors, sponsors and grants for the general support of our newsroom. Our news judgments are made independently and not on the basis of donor support. Learn more about Santa Cruz Local and how we are funded.