Pacific Grove announces another budget shortfall.

Two years of dramatic cost-cutting measures have not gotten the city of Pacific Grove onto stable financial ground, according to the newest budget update.

While the current fiscal year’s budget remains balanced, city officials now project a shortfall of about $1.3 million for the 2009/10 fiscal year.

“Just like everybody else, we’re getting hit from all sides,” says Budget Director Jim Becklenberg.

In a March 4 report to the City Council, Becklenberg stated, “nearly all revenue sources are falling short of the modest expectations set for the year.” The original budget anticipated a modest recession, but the national economic downturn is turning out to be more severe, taking a toll on projected sales and hotel taxes, community development fees and golf revenues.

The good news is that the sales tax hike voters approved last June will mostly buffer the projected revenue loss of $1.5 million, reducing the revenue shortfall to about $600,000, Becklenberg reports. Expenditures are more than $200,000 below budget, which also helps.

In light of the projected budget gap, residents can expect more service reductions, salary cuts and fee increases in the coming fiscal year. The public will have a chance to weigh in at a community meeting March 25 at 6pm at the P.G. Community Center, 515 Junipero Ave., P.G.

Staff will give the City Council its recommendations for closing the projected gap on April 1.