A light year

Paul Clinton

A grim mood has begun to seep into City Hall as the city’s money

managers have realized they have almost $6 million less cash in the kitty

than expected.

A sales-tax report covering October through December was troubling

enough for Administrative Services Director Clay Martin to cut $3 million

out of his revenue forecast for the 2001-02 fiscal year.

Martin and other officials say the revenue losses are partly due to

the crippling effects of the Sept. 11 terrorist attacks on tourism, a

numbing state budget deficit of $24 billion and a sluggish economy.

“I do think this is a very serious matter and the council should put

this as a top priority on their agenda,” Councilman Peter Green said.

“It’s going to be worse next year.”

Budget shortfalls are occurring in several areas, as the city faces

losses of revenue and some higher costs.

In addition to the $3 million less pouring in from sales tax -- a

number Martin is now projecting to be $27 million instead of $30 million

-- city leaders also expect to be given $1 million less from state grant

programs. Gov. Gray Davis has imposed across-the-board cuts, which are

expected to hit public schools hardest but cities as well.

“I’m concerned because it’s one of a handful of things we’re dealing

with on the downside,” City Administrator Ray Silver said about the

sales-tax downdraft.

The city’s cable provider, Time Warner, has also said it will stop

paying the franchise fee and utility tax on Road Runner, a high-speed

Internet connection offered to residents. The company has said it will

stop paying the $400,000 a year because the broadband service can’t be

regulated by the city as cable.

Also of note, the city has seen the bed tax it charges on hotel and

motel rooms drop almost 18% since Sept. 11. The city pulls in $1.8

million a year from those taxes, which amounts to 1.5% of the $138 million general fund budget, Martin said.

Revenue from the hotels was down as much as 30% in the wake of the

attacks, but has steadily climbed back, officials said.

Downtown’s Hilton Waterfront Resort and the Extended Stay of America

at the Seal Beach border have been hit hardest by the Downturn in

visitors.

“There’s no question that 9/11, especially in the midst of a

recession, was damaging to all the business and social travel,” said

Steve Bone, president of Robert Mayer Corp. and co-owner of the hotel.

“Every month since then has shown a recovery, so people realize that

life does go on,” Bone added.

Hopes are high about the arrival, in January, of the Hyatt Regency

Huntington Beach Resort and Spa, a plush 519-room hotel and conference

center already materializing on the city’s coastline.

Right now, the city counts 1,192 hotel rooms and 74 higher-end suites.

The city collects a 10% “transient occupancy tax” every time someone

stays overnight in a room in Huntington Beach. In September, the city

collected $148,000 versus $210,000 from the prior year.

In addition to the revenue shortfalls, the city is also facing two

significant additional costs for the fiscal year, which runs from October

to September.

About $600,000 has been budgeted for a series of new storm-water

regulations imposed by the Santa Ana Regional Water Quality Control

Board. Additional staff time will be needed to see that the new rules are

put in place, Silver said.

Secondly, Microsoft Corp. has raised the city’s software license fee

by $400,000 to use to company’s programs. The city uses Microsoft

programs on about 500 computers.

As the city’s budget picture turns murkier, council members are sure

be be faced with tough choices about how to allocate less money.

“Any time your income is down you’re concerned,” Councilwoman Pam

Julien Houchen said. “We’re hoping it will be rebuilt.”

* PAUL CLINTON is a reporter with Times Community News. He covers City

Hall and education. He may be reached at (714) 965-7173 or by e-mail ato7 paul.clinton@latimes.comf7 .