South Lake Tahoe, Ca – On June 17, 2014, the City Council held a workshop regarding the City’s five-year financial forecast and the overall economic forecast for the local community. While the forecast has improved, we need to attract substantial capital investment over the next ten years to grow the economy, meet the community’s needs and fund projects protecting the natural environment.

Like most state and local government agencies, the City’s revenues are dependent upon a thriving local economy and upon the housing market (property taxes) to fund essential public services. Additional services and capital investment require additional revenues. As a result of the Great Recession the City’s revenues dropped sharply in 2008. By 2010, the City’s five-year forecast projected $3M deficit annually, whichwould have drained the City’s reserves within few years and could have driven the City into bankruptcy.

It is July of 2014 and that did not happen. The City is solvent, mid-way through its first balanced budget in more than five years and closed out last year with positive cash flow.

How did such a transformation in the City’s finances occur in a few short years? In 2010, the City Council changed its course and set sail to establish a local government living within its means. To reduce the majority of expenses, the City eliminated 30% of its workforce and focused on delivering Quality Core Services to the community. Since 2011, the City has held the line on expenses to the best of its ability, with the exception of skyrocketing pension and health care costs. City employees agreed to changes in health care benefits and reductions in pay ranging from seven to nine percent.

Simultaneously, the City Council began heavily investing in streets, roads and infrastructure such as Harrison Avenue project, local street improvements, Bijou stormwater project, Linear Park and more.

Although these capital investments create a strain on the City’s limited financial resources, the community investment is worth the risk. Locals and visitors alike expect the built environment to more closely mirror Tahoe’s world class natural environment. Yet much of the built environment lags far behind the pristine natural beauty of Lake Tahoe.

The City Council’s decision in 2010 to change course by significantly reducing expenses while concurrently investing in capital was a risk worth taking. If those difficult decisions during very tough economic times had not been made, Harrison Avenue and other projects would not be underway today.

Capital investment makes a difference. We need $15 million in public and private capital investment for the next ten to fifteen years to construct the improvements necessary to grow the economy and protect the environment. At first thought, setting a goal of $150 million may seem unattainable. However, we are already 20% toward that goal in this year alone: Over $32 million in public and private capital is being invested in the community through the Harrison Avenue, the Bijou Project, and Chateau project. Another $5-10M in private projects are also under construction in the City.

Clearly, we can attract capital investment. What we need is to more adequately welcome and assist those who want to invest their capital in the community. Government must remove regulations impeding redevelopment of antiquated buildings to encourage modernization, which will benefit the environment and the economy. Growing the economy and protecting the environment are not exclusive goals, but there is a delicate balance. We cannot pursue economic development at the expense of the environment and we cannot protect the environment at the cost of suffocating the economy. When one fails, both fail.  Government agencies are the primary funding source of environmental projects. In order to fund those projects, the economy must be thriving beyond the revenues needed for essential public services.

Working together we can develop solutions to welcome capital investment, which will raise the top line across all sectors. As revenues increase, investment in the community will provide long term sustainability for the next generation. Lakeview Commons was originally just an idea advanced through strategic and visionary leadership. When combined with community engagement and capital investment, we now have a wonderful public facility enjoyed by all.

What’s next? How can we attract community investment and retain and support local businesses? Your voice is important to the discussion, as are the ideas of your friends, neighbors, and those from a generation behind you because it’s their future we are planning for and what we invest in, they will inherit.

~Nancy Kerry

City Manager, City of South Lake Tahoe

Executive Director, Successor Agency of the STRA