The Santa Cruz city budget has been through enough ups and downs over the last decade to qualify as a new attraction at the Boardwalk. Take the Parks and Recreation Department, for example. Department director Dannettee Shoemaker has been through the budgetary roller coaster and remembers it well.

"In the mid- to late-'90s, the City Council funded positions we didn't even ask for," she says. "We had a resource ecologist, a grant writer and others I can't remember off the top of my head. Those were back in the days when we didn't have to tighten our belt."

Then, Shoemaker recalls, in 2000 the dotcom bubble burst, and high tax-revenue generators such as Texas Instruments left, taking their money with them ($2 million a year in the case of TI). Conditions at her department changed considerably.

"We went from four rangers to one ranger to patrol our 2,000 acres, we no longer have an after-school recreation program for kids, we went from three park planners to one, and the hours of beach lifeguards have been cut," she says.

That brings the roller-coaster car to rest on the relatively rosy budget report for fiscal year 2008, which runs from July 2007 to July 2008 and which was approved July 10 by the City Council. The budget looks reasonably well balanced, with the city's projected $76 million in spending more or less in line with revenues, and no major program cuts.

But a closer look suggests the budget may owe its pleasing appearance to 85 job vacancies that City Hall is looking to fill. If the city finds the people to do those jobs--and they include necessary positions like engineers, police officers and even clerks--the picture could change, and Santa Cruz could be forced to start making tough decisions about the services it provides.

Then again, according to the city's main money man, potential employees aren't exactly beating down the city's doors. City Manager Richard Wilson says Santa Cruz is struggling to attract qualified personnel because it's falling behind other cities in salaries offered.

Wilson says both issues--the tenuous balance of the budget and the city's inability to attract qualified employees--come down to simple economics: specifically, how the city decides to balance the economic growth it has historically resisted with the amenities it has historically demanded.

"We are like a family that has acquired its dream house and is planning its dream vacation," Wilson wrote in his introduction to the budget, "but whose breadwinners are committed to working part-time; each is a fine choice, but they do not fit together very well."

Wilson's job is to provide context. He's quick to point out that his job isn't to decide how big or small the city government should be or to what extent the local economy should grow. However, as an accountant, he warns that if the city wants to continue providing services at the current level it will require substantially greater economic growth.

Santa Cruz's normal growth rate is about equal to the rate of inflation. But the cost of providing city services rises faster than that, Wilson explained in a recent interview, because gas prices, health insurance, retirement benefits and salaries all outpace inflation.

And the strain is starting to show. Last year the city budget squeaked by with revenue of about $70 million and expenditures of $69 million. This year, though, keeping up the current level of services put the city $1 million in the hole.

"There's a fundamental issue that everyone in Santa Cruz faces," Wilson says as he leans back in his chair. "We're in competition with [city governments] that want to be in economic competition in Northern California. Santa Cruz really would prefer to opt out. I think it's fair to say that. Or we would like to participate, but very selectively. That places a huge burden to stay [economically] competitive with the rest of the cities that don't want to be selective and will take any sort of economic activity at all, whether it's Wal-Mart or Burger King."

Besides competing for businesses that pay taxes, Santa Cruz must also vie for people to maintain parks, repair roads and patrol the streets. There are over 10,000 job vacancies across California just for the position of police officer. This means that each city looking for officers--almost every major city in the state--has to continually up the ante in terms of salary and benefits. Outgunned, Santa Cruz winds up relying on quality-of-life factors to attract qualified candidates. And sometimes that's not enough to keep police and other employees here.

"We end up being a training ground for people," says Wilson. "So we get people for a few years and then they leave. Most of all, we like to hire people with local roots, but there are many, many positions for which there just aren't any candidates."

City Hall is hoping to restore some of the services cut when the dotcom bubble burst, like building maintenance, which was contracted out. It has a whole wish list: $42 million worth of backlogged city street repairs, a new street crimes unit for the police department, a new recycling sorting system.

Wilson says the only alternative to chipping away at city-run programs is to add industries that increase the tax base substantially without drawing on city resources. The two industries that fit this bill are large retail outlets and hotels.

"If you brought in any team of government-savvy consultants, they would tell you you'd need a handful of strong revenue generators," Wilson says. "You don't have to have 20 of them, but you'd need five or six."

Wilson is adamant that the choice will ultimately lie with the Santa Cruz community. He just provides the context.

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