City faces consequences of lagging fishing industry

By David Sneed and Sona Patel

San Luis Obispo Tribune

Morro Bay is facing a crisis as its once-thriving fishing industry teeters on the brink of extinction.

Ever-increasing regulations and restrictions, coupled with soaring fuel prices, have reduced the amount of fish caught locally by nearly 91% since 1990.

So few fish are being caught that ice vendors, marine fuel businesses and tackle shops are closing. That threatens the very infrastructure needed to support the fishing industry.

"Our backs are against the wall," said Mark Tognazzini, a fisherman, fish buyer and seafood restaurateur in Morro Bay.

As the industry has suffered, so have city finances.

Morro Bay has long depended on fishing to help pay for city services. And if the commercial fishing boats lining the Embarcadero are lost for good, part of the community's allure also will fade.

Earlier this year, city officials hired government consulting firm Management Partners Inc. of San Jose to re-evaluate operations.

In a report, the firm wrote: "The city of Morro Bay is in a difficult financial position and is unable to continue with status quo operations. Many tough budgetary choices have already been made -- and yet the financial picture continues to grow bleaker."

Indeed, the city's financial picture has worsened steadily since 2002-03. Despite budget cuts, the city has spent more than it has taken into its general fund every year except one.

That was in 2005-06 after the city received an increase in property and hotel tax revenue along with a large one-time payment for its outfall lease for the Morro Bay Power Plant with then-owner Duke Energy.

But the budget gap is projected to widen. A recent economic consultant's report predicts that by fiscal year 2017-18, the city's spending would exceed revenue by nearly 15% if it continues its current service levels and if revenue keeps up with the pace of inflation.

The gloomy forecast has prompted city officials to evaluate operations -- and look for new ways to generate revenue or further reduce services.

Already, Morro Bay officials have reduced staff by 13% since 2002-03 -- to about 107.

Of that, general-fund staffing -- which excludes self-sufficient departments such as water, sewer and the harbor -- is down 19%, to about 79 budgeted full-time equivalent positions.

The hard times come after a period of prosperity. From 2000 to 2001, the city experienced a surge in revenue from the power plant during the state's electricity crisis. City spending rose about 64% between 1998 and 2002.

Though spending dropped slightly immediately after 2002 and has stabilized in recent years, it's still 58% higher than a decade ago.

The city has been forced to start balancing its budget by using its reserves, and by reducing expenses, including eliminating several positions.