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City Anticipates Zero Budget Deficit by 2014, Discusses Priorities for Coming Year

During the annual State of the City address, Mayor Al Pinheiro discussed priorities for the coming year that include the launch of a “Prevention Initiative” that provides alternatives to criminal activity.


Gilroy is on firm financial footing heading into the next two years, according to Mayor Al Pinheiro in his annual address. Despite a loss of revenue coupled with a recession, the city has been able to "live within its means" and not spend more than is coming in.

"We have come up with creative ways to do more with less," Pinheiro said.

The city has also adopted new balanced budgets for fiscal years 2012 and ‘13.
In terms of emergency budget planning, Pinheiro said beginning in 2010, the city has set aside $9.5 million from the General Fund in a reserve that can be accessed in a financial crisis.

The city has also established a 15 percent economic stability reserve intended to help the city weather a severe economic storm. The stability reserve can only be accessed if an "economic trigger” such as the state taking away a significant amount of the city’s revenue occurs and is approved by a majority vote by the city council.

"This was put in place to ensure that councils of the future aren't put in a situation to where they are going to have to deal with stuff that we dealt with," Pinheiro said of the reserve. "At least they have a fall back [plan] now."

Pinheiro said that the city anticipates having a budget deficit of zero in the next two fiscal years. Capital expenditures will decrease by about $19 million in 2012-2013 because money was allocated toward the construction of the for the 2011-2012 fiscal year.

Pinheiro pointed out that one of the main financial accomplishments of the city has been to reduce expenditures by $13 million, which the city did by:

  • Eliminating an ongoing $4.5 million structural deficit from 2007 and 2008.
  • Eliminating an additional $8.5 million in expenses.
  • Enacting local pension reform.
  • Negotiating various employee concessions.

The mayor ended his address by enumerating the city’s priorities for the coming year. They include:

  • Launching a Prevention Initiative that incorporates community partners and city departments in creating programs and services as an alternative to criminal activity.
  • Reviewing the potential acquisition of land to expand.
  • Evaluating a community gathering space and marketplace in downtown in an effort to enhance downtown Gilroy.
  • Providing transparency in the city's operations through open governance, which Pinheiro said the city council is.


Although his outlook is positive for the city, Pinheiro said some challenges remain.

"Our main challenge is our finances," he said. "Even though [the city] has a healthy reserve, it still has challenges of unfunded liabilities such as roads, pension plans, etc. that we just don’t have the money to tackle at this time. We continue to operate with a diminished level of employees and therefore it takes time to get something done with the lack of personnel as we are approximately 71 positions down from where we were before taking such drastic cuts."

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