Revenue was $2.8M higher than expected

The City Council has more money to spend than it figured on this year.

City Manager Ken Frank reported in his midyear budget update Tuesday that revenue was $2.8 million higher than anticipated and expenses totaled $1,660,000 less than expected in fiscal year 2006-07.

“In general, the news is extremely good,” Frank said. “The balance was substantially higher on July 1 [when the new fiscal year began] than we predicted. The expenses were lower — unfortunately particularly low in the police department because of unfilled vacancies.”

The windfall was quickly spent.

Frank’s recommendation to increase the city’s reserve fund from 10% of the general fund to 15% was unanimously approved by the council. That still left plenty of money to fund his 15 other recommendations, including more planners.

“Because we are desperately behind in processing zoning applications and also lagging in handling planning submittals, I authorized the director of community development to hire two new assistant planner in midyear,” Frank reported.

The hires required City Council approval.

Among other funding recommended and unanimously approved:

 Increases in Planning Commission and Design Review Board stipends

 South Coast Water District harvesting program

 A subscription to Dow Theory Letter and a new safe for the city treasurer

 Bike racks in city parking lots and at Main Beach

 A third code-enforcement work station

 Replacement of computer equipment used to review internal and external documents in the city clerk’s office

Big-ticket items included:

 $1,400,000 to replenish the Lifeguard Headquarters renovation fund, from which $200,000 was borrowed for a skateboard facility ($1,200,000 had already been restored)

 $200,000, the estimated cost of a consulting planner for the Athens Group project in Aliso Canyon, who also is working on other projects, all to be eventually funded by the applicants.

 $73,000 for a part-time, temporary fire prevention specialist to encourage property owners to reduce foliage near their homes

 $40,000 to offset skyrocketing gasoline, diesel and propane costs

Approved 4-0: $112,000 to reimburse South Coast Medical Center for new diagnostic monitors and $68,000 to lease hospital parking spaces next summer.

Councilwoman Elizabeth Schneider recused herself because she is employed at the hospital.

The approved modifications reduced the general fund balance by $1,654,300, with a reserve fund of about $7 million, approximately 15% of the expenses for the year. Frank recommended keeping at that level.

Frank’s report was not all good news. He said the city has spent $18 million on Bluebird Canyon that has not yet been reimbursed and is drawing down revenue. The preponderance of the shortfall is expected to be reimbursed by the Federal Emergency Management Agency.

“We are not recommending any appropriations, until after we hear from FEMA, and go to the Oversight Committee for a recommendation on Measure A money,” Frank said.

Measure A was one-half-cent, temporary increase in sales tax approved by the voters to help offset costs of restoring the canyon.

Other bad new for the future: fewer property transfers, which indicate that sales are down about 40% from two years ago, boding a reduction in property taxes next year, and increased benefits for fire department personnel, with an annual cost of $560,000.

Back to the good news: property taxes for the current fiscal year are reported by the county assessor to be 1.9% higher than the estimated 8%, making Laguna’s increase one of the highest in the county. Each 1% is worth $170,000 to the city.

The report is available for review on the city’s website, www.lagunabeachcity.net, or in the City Clerks Office in City hall, 505 Forest Ave.

For more information, call (940 497-0705.