Reduced budget approved

The City Council approved a $67-million fiscal year 2009-10 budget Tuesday. Cuts to balance the discretionary general fund expenditures with revenues included reductions in positions — one of them a vacancy in the police department. Other cuts were made to maintaining a Washington D. C. lobbyist, funding for the annual report and the Fourth of July fireworks for 2010. The city’s fiscal year runs from July 1 to June 30.

“I have had a lot of complaints and a lot of whining from city department heads and staff, but I don’t think most people in town will be affected,” City Manager Ken Frank said.

An unusually large audience attended the hearing.

“It is nice to have everyone in the room at the same time,” Frank said. “When I meet with the Fire Department or the Police Department, they always say we favor the arts.

“My goal was to gouge everybody.”

The council unanimously agreed he had succeeded. And he was applauded for his efforts.

“I want to thank Scrooge over there who has done such a good job on budgets for years,” Councilwoman Toni Iseman said.

The Laguna Beach Taxpayers Assn. praised the budget, which did not propose new taxes or any fee increases, backstopped by Frank’s prescient recommendation last year to set up a fund to tide the city over in bad economic times.

“Balancing the proposed budget with reductions in staffing, trimming selected operating expenses and using the recession smoothing account is a prudent approach when considering the current economic downturn,” said Karl Kloski on behalf of the association.

However, he warned that contracts that guarantee raises for the city’s four labor groups — fire, police, and marine safety departments, and municipal employees — and rising pension costs are a major concern, not just locally, but statewide.

All four groups are slated for 5% pay increases, previously guaranteed by multi-year contracts, to start July 1. The Municipal Employees Assn. agreed to modify their existing contract.

“I want to thank the municipal employees,” Councilwoman Verna Rollinger said. “They came to the table and gave up increases over the next two years. They were facing [job] cuts otherwise, so they had an incentive.”

Mayor Kelly Boyd called city department heads the unsung heroes in the budget process.

“Ken comes in with his whip in his hand and says, ‘I’m taking this from you,’” Boyd said.

But not everybody was pleased with the recommended cuts.

The elimination of one police position was strongly criticized by Cpl. Detective Ted Falencki, president of the Police Employees Assn.

“This is not the way to balance the budget,” he said.

He warned of dire consequences if the city approved Frank’s recommendation to eliminate one frontline position in the department.

“Crime has increased here on a daily basis,” Falencki said. “We have had four officer-involved shootings in the past four years and we had a bank robbery last year.”

He said the department is down eight officers from its full complement, with four vacancies and four officers still in training. Job openings had gone unfilled in the past, Falencki said because of salary and benefit differentials from other departments.

“We have had four vacancies for several years and the town is still here,” Frank said. “If we fill three positions, we are doing pretty good. And everybody else has a hiring freeze, so now we are getting applicants.”

A proposal to take one quarter of the cost of the city’s cultural arts manager out of the Business Improvement District Fund, which supports arts activities and groups, including the Arts Commission, also met with criticism. It was one of the 30 items on Frank’s list of recommended cuts or modifications, which reduced 2009-10 expenditures by $913,000.

“The Alliance for Arts felt we had to weigh in [on] Item 28 to raid the BID tax,” Laguna College of Art President Dennis Power said.

Further cuts possible

The estimated $44-million general fund revenues that fund the council’s discretionary spending are not set in stone. Additional cuts may have to be made, depending partially on what the state does.

“We don’t have a clue,” Frank said.

Conflicting reports have come out of Sacramento.

“First the governor said he wasn’t going to take any money from the cities, then he said he would borrow $2 billion, which means $2 million from Laguna, and now the legislature is looking at the gas tax,” Frank said. “That would take away about $300,000 or $400,000 for one or two years, but it might be unconstitutional.”

Frank said the state should adopt a budget by August.

He also warned that the Laguna’s budget is based on a 3% increase in property taxes — 3% higher than the county assessor is predicting will be announced in July. However, Laguna does have a history of outperforming the county average.

“Each 1% is worth $200,000,” Frank said. “If the increase is zero, we will have to cut another $600,000.”

Also, if hotel and sales taxes continue to decline, further reductions will be necessary, Frank said.

And the financial picture will not improve in the near future, unless the economy makes a spectacular recovery, Frank said.

“Over the next several years, unless the economy improves dramatically, the council will need to pare another $2 million to $3 million from future budgets,” Frank said. Further staffing reductions will be absolutely mandatory.

The draft budget submitted in May is posted on www.lagunabeachcity.net.

The agenda for Tuesday’s meeting can also be viewed on the website by clicking on the June 16 meeting, Agenda Item 13.