The Scotts Valley City Council discussed the city's new budget at their meeting on Wednesday night, as the city faces a major deficit due to lagging city revenue and the city still waiting on reimbursement from FEMA for road repairs in 2023, now waiting on 2.2 million dollars that Scotts Valley doesn't expect to actually receive until 2026.

In all, the budget sees the city spending 5 million dollars more than it's bringing in as revenue, eating into the city's reserve fund. This would bring the city's general fund below 2.5 million dollars, which is below the recommended minimum amount.

This deficit is expected to continue into the coming decade as well. City officials now suggesting cost saving measures like delaying new hires for city staff, which won't be difficult due to only 3 vacancies on the staff as of Wednesday night, and raising the city's hotel tax with input from local business owners.

Another factor are lower local taxes that see the city losing out on revenue that many of its neighbors have consistently. One example that was discussed during the meeting was the city's property tax, which is currently at about 6%, while some of its neighbors can see the tax rise as high as 12% to 14%.