IT WAS ALL smiles and back pats after the Santa Cruz City Council threaded a delicate needle between angering local charities and crippling the city's tourism outreach at last Tuesday's meeting. By voting unanimously to slash the city's donations to local nonprofits by 25 percent while leaving its $400,000 annual contributions to the County Conference and Visitors Council untouched, city leaders gambled that its ad men and women are too valuable to cut.

Tensions had mounted in the days prior to the hearing after Councilmember Katherine Beiers (not Don Lane, as reported by the Sentinel) proposed cutting funding to the CVC by 10 percent as a way of staying true to the "across the board" reductions in city spending that had been promised, and mostly delivered, by city leaders.

"I'd just feel better if everyone was taking their share of the cuts," Beiers said at the meeting. "The tradition of this council is for everyone to chip in and do their part."

In the end, however, Beiers' suggestion died without further support, delivering music to the ears of the crowd of tourism supporters that packed the council chambers. But the council gave the nonprofits a slight reprieve by reducing their cuts from about 30 percent to an even 25 percent. Now representatives on both sides are calling the move a "win-win."

"You have to be prepared in this business. We don't put a lot of stock in government funding, because it can always disappear tomorrow," says Alex Fey, director of the local Boys and Girls Club. "I understand and accept why they are funding the CVC. We stood to lose even more money, so I'm happy it ended like it did."

The council's decision not to cut CVC funding will put the city's deficit at more than $600,000 and will be made up for by raising parking and building permit fees, according to Vice Mayor Mike Rotkin. The move is supported by a 2000 study that shows a nine-to-one return on investment for dollars forked over to the CVC. By publishing glossy fliers and magazine ads and maintaining a snazzy one-stop-tourism-shop website, the CVC peddles Santa Cruz County's image to potential tourists around the country. And though some at the meeting even argued to increase to city's allotment to the tourism sponsors, the study provides no guarantee that the nine-to-one ratio will hold when the capital is increased, and councilmembers were loathe to push the envelope.

"There's a big difference between an expenditure and an investment," says Rotkin. "There's nothing crazy about people arguing for equity. In this case, it would just be silly to cut funds to the CVC. At some point, though, all these cuts are going to be felt. City employees have done an unbelievable job in stepping up and doing more with less, but eventually services will suffer."

Meanwhile, Fey and other nonprofit leaders are projecting a gracious "we'll take what we can get" attitude toward the city's decision. Most of the groups, however, already took a 10 percent cut from the city in January and a 20 percent cut from the county last month, leaving them inevitably headed toward reductions in staff and services.

Sam Storey, CEO of Community Bridges, which runs the local Meals on Wheels program as well as several child-care centers, depends on more than $100,000 in annual funding from the city of Santa Cruz and represents the biggest nonprofit recipient of city funds. He says his group will have to solicit more money from private donors as well as dig into its reserves, and even then, it will likely have to close some child-care centers on holidays in the coming year.

"We think we'll be able to survive next year," says Storey. "But I think this year will be a tipping point. If the bleeding doesn't stop, by next year you're going to see many more agencies that won't survive. And the effects on the community will be felt, undoubtedly."

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