Hollister council delays fiscal reserve policy to bridge projected $6 million deficit

Lea este artículo en español aquí.

Amid budget discussions that could result in layoffs, the Hollister City Council in a special meeting on June 8 opted to forgo its policy of maintaining a 20% financial reserve. Instead, the city will look to replenish the reserve fund as part of a proposed eight-year plan. 

The city is projecting a $6 million deficit and has identified as many as 25 position cuts.

Meanwhile, in a bombshell announcement during the special meeting, Councilmember Rolan Resendiz announced he will not seek reelection in November. He represents District 2, which covers the west side of Hollister.

Resendiz, who was first elected to the council in 2018, said he will not support laying off unionized city employees. 

Councilmember Rudy Picha also said the goal should be to save jobs. 

“As uncomfortable as 0% [in reserves] is, losing employees and that harsh potential reality sounds a lot worse,” Picha said.

City Manager Ana Cortez said the move comes as Hollister, like other jurisdictions, deals with the increased cost of providing services, including labor and construction.

“Right now, I have to go back to the fundamentals of public administration,” she said. “Municipal governments are about three things, police, fire, potholes.” 

She added the city needs to fund public safety “to the degree that we can” and that it needs to prioritize creating a new countywide fire district while also addressing roads.

“All other things have to be jumped,” she said. 

Hollister, San Juan Bautista and San Benito County are working on a fire district feasibility study, and a new district has been touted as the solution to funding fire services. Fire services are currently operated by Hollister and provided by contract to the county and San Juan Bautista. 

Cortez said that meeting the goal of a 20% reserve in eight years would protect Hollister against an economic downturn, allow it to respond to emergencies and natural disasters, improve financial credibility with investors and lenders and provide stability for city services and staffing. 

According to the eight-year plan, the city would have to make cuts for the next three fiscal years in order to match projected revenues and, after the fourth year, the city would be able to start saving.

“We’ll be saving every day, just about, to get us to that point,” she said. “I am not saying we need to change the policy, I’m simply saying we need more time to get us there.”

Cortez said her budget forecast assumes that revenues will increase 2.2% annually and that costs will rise by just 1.8% after the third year of her proposal.

In her forecast, Cortez showed the city is projected to spend about $6 million more than expected revenues for the 2026-27 fiscal year. She noted her numbers are based on unaudited reports from the city.

According to the staff report, the 25 positions the city may cut include jobs in administration, non-union roles  and utilities. 

SEIU 521 representative Carolynne Roderick, whose union represents a large group of city employees, questioned Cortez’s transparency in providing numbers to justify possible layoffs.

“We haven’t gotten real numbers,” she said. “We have not seen the budget. The city is proposing takeaways without showing us the data.”

Roderick also said that while Cortez reported a $26 million overexpenditure in the water department, her team believes it’s between $4 million and $6 million, saying the union continues to ask the city for an explanation. 

“We haven’t been able to get an answer,” Roderick said. “That’s why we can’t trust what we’re seeing and we’re asking the City Council to ask the hard questions so we can work together.”

The staff report also identifies potential furloughs and voluntary resignation incentives, reductions in benefits and cost of living adjustments, a deferral of equipment replacements and forgoing economic development and beautification efforts. 

Councilmember Dolores Morales requested a timeline showing when the city expects to complete its long-delayed financial audits, saying it was critical to have the most accurate numbers in order to make decisions.

Hollister’s books have not been audited since the 2022-23 fiscal year.

Last year, though the city avoided layoffs and pay cuts, it did eliminate 31 vacant positions and made cuts across several departments to address a projected $10 million deficit. 

The council is expected to discuss the city budget again on June 15.

We need your help. Support local, nonprofit news! BenitoLink is a nonprofit news website that reports on San Benito County. Our team is committed to this community and providing essential, accurate information to our fellow residents. Producing local news is expensive, and community support keeps the news flowing. Please consider supporting BenitoLink, San Benito County’s public service nonprofit news.