Budget workshop set for Saturday
Barbara Diamond
The city’s previously rosy financial picture has some thorny problems
this year.
“After enjoying several years of a booming economy, which allowed
the city to augment its services and staffing, we are approaching the
2003-04 fiscal year in a relatively austere condition,” City Manager
Ken Frank said.
The City Council will hold a public workshop at 9 a.m. Saturday in
the City Council chambers to clarify, justify and discuss the
proposed budget.
Copies of the 206-page, $55.5-million budget -- more than half of
it spent at the council’s discretion -- are available for review at
City Hall, the public library and on the city’s Web site.
A second budget hearing will be held at the June 17 council
meeting, at which time the budget could be approved. The city must
adopt a budget by June 30.
Factors that contributed to Frank’s “astringent fiscal projection”
include state cuts in revenue, an “ominous” escalation in retirement
costs because of losses in the state investments, soaring employee
health and workers compensation and a decline in the return on city
investments due to “abnormally depressed” interest rates.
“Departmental requests for capital outlay have been slashed to
balance the budget,” Frank said.
And that is the good news.
The bad news is Frank’s prognostication of possible staff
reductions and diminished services in the 2004-05 budget, which
prompted him to eliminate any new staff positions or projects that
require funding from the 2003-04 budget -- except for sewers, now
part of the new Water Quality Department.
Sewer improvements, debt service for treatment facilities, sewage
treatment and collection system operations are estimated to cost $9.9
million, not including $715,000 in salaries.
Expenditures are partially funded by fees of $32.67 per month for
single-family homes, commercial rates that will increase by 10% in
July, grants and by a state loan that enables the city to accelerate
capital projects.
General fund revenue is expected to be $31,550,300, bumped up to
$32,250,300 if $700,000 is transferred from the city’s Parking Fund,
as has been the practice for the past decade.
Expenditures are projected to be $32,246,500, about $3,800 less
than the anticipated revenue.
However, the fiscal year will begin with a general fund starting
balance of $3,705,298, substantially higher than forecast and
$480,000 above the 10% reserve required by the municipal code.
Estimated funding for the cost of all operations, capital
projects, insurance, and vehicle replacement totals $50,515,600, with
only general fund spending at the discretion of the council.
The biggest slice of the general fund pie is allocated to the
Police Department. The Public Works Department narrowly aces out the
Fire Department for the second largest allocation. The Community
Development Department is a distant fourth and is expected to
increase fees to stay solvent.
“Fees are anticipated to rise substantially to ensure full cost
recovery where legally feasible,” Frank said. “If the fee increases
are not approved, approximately $130,000 will need to be excised from
the preliminary budget,” Frank said.
The city’s major source of revenue for the general fund is
property taxes, accounting for 42.3%.
Permanent declines in the taxes would present a major set back for
the city, but that is not likely to happen, City Councilman Steven
Dicterow said.
Frank based the 2003-04 general fund-revenue expectations and
allocations on several indicators.
* Property taxes are expected to rise by 7%.
* Sales and hotel taxes are projected to be stable, although a
slight increase in sales tax revenue is expected from Montage Resort
and Spa.
* A $1.3 million allocation from the Motor Vehicle In-lieu Fund,
which assumes the state will honor its commitment to local
governments (not something that Frank is counting on. A reduction in
the revenue would force the city to make substantial revisions to the
budget that would reduce staffing and decrease services, he said.)
* Fee increases for building, planning and zoning services, as
mentioned above.
* Festival of Arts revenue will diminish as a result of the new
lease terms, now $174,000 a year, all of which is allocated to
community agencies.
* State plans to pare about $300,000 in revenue from the city next
year.
* A decline in city investments of $300,000.
* Increased employee health and workers compensation estimated at
$3.3 million -- almost 10% of the city’s general fund and almost
equal to the predicted bed tax from Montage, which was supposed to be
a windfall.
Estimated general fund expenditures are about 2.4 percent higher
that this year.
Copies of the proposed budget can be reviewed at
www.lagunabeachcity.net, the front counter at City Hall and at the
Laguna Beach Library, 363 Glenneyre St.
All the latest on Orange County from Orange County.
Get our free TimesOC newsletter.
You may occasionally receive promotional content from the Daily Pilot.