Hemet City Council reviews budget adjustments amid projected $13.4M deficit

Hemet City Council tackled a significant budget deficit during its recent meeting, revealing a projected shortfall of $13.4 million for the upcoming fiscal year. The council discussed various strategies to address this financial challenge, including adjustments to revenue projections and expenditure cuts.

Key highlights from the meeting included a detailed breakdown of revenue sources. The city anticipates an increase in motor vehicle tax revenue by $335,000, thanks to a revised estimate from a conservative 3% to a more optimistic 6.2%. Property tax projections were similarly adjusted, with an expected increase of $255,000 based on a shift from a 3% to a 5.75% estimate. Additionally, the city is hopeful about generating around $200,000 from cannabis revenue as it seeks to attract more businesses in this sector.

The council also discussed the transient occupancy tax, with an expected recovery of $180,000 from audit findings related to underreported revenues from local motels. Other revenue enhancements include a $155,000 increase in sales tax and a $20,000 boost from raising the hotel tax from 10% to 12%.

On the expenditure side, the council is implementing cuts across various departments, including a $250,000 reduction in police operations and a $50,000 cut in fire department expenses. The city is also deferring equipment replacements, which could save approximately $860,000, although this may impact long-term operational efficiency.

The meeting underscored the city's ongoing struggle with rising pension costs, which have surged from $6.7 million to an anticipated $17.4 million over the past decade. This increase is largely attributed to changes in investment performance and discount rates set by CalPERS, the state's pension fund.

As the council navigates these financial hurdles, it remains focused on maintaining essential services while seeking innovative solutions to stabilize the budget. The discussions highlighted the importance of community feedback in shaping future budgetary decisions, with council members encouraging public input on proposed allocations and adjustments. The next steps will involve further refining the budget as the city prepares for the upcoming fiscal year.