Draft budget ready

City Manager Ken Frank’s draft budget for 2006-2007 is ready for review by the public and the council prior to a budget workshop at 4 p.m., May 16, in the Council Chambers.

In his annual budget message to the council, Frank said: “With the passage of Measure 1A, the state can no longer purloin resources from cities, counties and special districts to support its profligate spending habit. Therefore starting next year, the city will have $700,000 more for local services.”

Continuing property sales that trigger reappraisals have increased property taxes and the hotels and restaurants in town generally are doing fine, Frank said, adding that this feeds sales- and bed-tax revenue.

Early in the fiscal year, bed taxes from Montage Resort & Spa will be sufficient to retire the city’s construction debt for Treasure Island Park and an estimated $2.7 million increase in bed taxes will be available for appropriation.

Half the city’s revenue comes from property taxes. Charges for services brings in 16.5% ; sales tax, 11.3% and bed taxes, 10.5%.

The general fund revenues for 2006-07 are estimated at $40,007,000, with an ending balance of $4,164,312, approximately $170,000 above the mandated 10% reserve, which can only be tapped with four council votes.

“Hence the City Council could increase appropriations by about $153,000 and still maintain the reserve,” Frank said.

However, Frank warned, public and private agencies are reeling from unprecedented increases in construction costs, which will drain city resources just to complete capital campaign projects already on the drawing board.

“Next year’s capital improvement program is virtually devoid of new initiatives; it merely attempts to locate sufficient funding for projects which are already in planning and design phase,” Frank said.

Higher retirement benefits for firefighters, which take effect July 1, also will affect the city budget.

The city’s contribution to the retirement fund will increase by approximately $450,000 a year. Looking further down the road, Frank said the police officers’ retirement system will cost the city roughly $520,000 a year, when an upgrade kicks in July 1, 2008.

The council at the March 28 meeting directed the city manager to produce a list of 10 functions for which private contractors are available and consider funding for an independent consultant to weigh the benefits and disadvantages of contracting, as part of the upcoming budget deliberation

A second workshop will be held June 20, when the budget is expected to be adopted.

The draft budget can be reviewed at the Laguna Beach Library, 363 Glenneyre St., on the city’s web site www.lagunabeachcity.net in the City Clerk’s Office in City Hall, 515 Forest Ave. For more information, call (494) 497-0705.