‘Extraordinary times’: $7 million in additional revenue expected in Cathedral City

In a report delivered Thursday, staff wrote that the city should see much better tax revenue than earlier expected. They proposed spending it in a way that will improve customer service at City Hall.
Spending habits of Cathedral City consumers have helped lead to an increase in sales and other taxes, wiping out projections of a budget deficit in the city.

Rosier revenues could lead to better customer service if a plan reviewed by the Cathedral City Council leads to revisions to the city’s budget.

Driving the news: During a special meeting Thursday afternoon, councilmembers heard from Deputy Finance Director Kevin Biersak, who informed them the city is on pace to see roughly $7 million more revenue than expected in the current fiscal year. The increase is due primarily to shifting spending habits among city residents, including increased online shopping habits picked up during the pandemic.

  • In a report prepared for the meeting, staff wrote that the city was experiencing “extraordinary times” and would see sales tax and transactions and use tax (TUT) revenue of nearly $23.7 million during the current fiscal period; $17 million in those taxes was initially forecasted.

  • “What does this mean – Good news for the City!” the report reads. “Where we expected extreme volatility, and had projected more than a $5M deficit, we expect to have an operational surplus …”

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Zoom in: During a 90-meeting presentation, Biersak laid out a fairly conservative strategy for what the city might do with the surplus, promising, “It’s not the floodgates. It’s six or seven items.”

  • Like many jurisdictions across the nation, Cathedral City cut back on replacing staff during the pandemic. In fact, current staffing levels are below 2010 levels.

  • Because of this, adding eight city staff members in key departments should be the top priority, Biersak said, with the goal of upping the level of customer service for both residents and those who want to do business with the city.

  • For example: Delaying street resurfacing projects because of a lack of engineering project managers leads to further street degradation and increased costs for repair and maintenance. That’s both frustrating for drivers and costly to taxpayers.

What they’re saying: Councilmembers and Mayor Ernesto Gutierrez were generally supportive of the proposals they saw, and praised the approach. Still, they want more specifics before making any votes.

  • “It gets too easy when you’re doing a list of eight people to just lump them in there,” said Councilmember Raymond Gregory. “We need to be able to explain to public why we did it.”

  • Still, Gregory added later, “I’m an optimist. I really believe Cathedral City is going to keep on growing. (T)he future looks bright.”

Next up: Thursday’s meeting was designed specifically to introduce the topic. City staff plan to bring back a more detailed and thorough reports to support the proposals later this month, with votes on those proposals expected to follow soon afterward.

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