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Split Costa Mesa council approves $163.2-million budget

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After more than three hours of discussion, comment and debate Tuesday night, the Costa Mesa City Council approved a $163.2-million city budget for next fiscal year.

The adopted version of the spending plan for 2017-18 is about $8.2 million more than the preliminary version council members reviewed in May and roughly $18.6 million larger than the budget for the current fiscal year, which ends June 30.

Mayor Katrina Foley called the new budget “frugal but functional” and said it’s consistent with the council’s priorities.

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“Every council member up here has a project in this budget — many of our strong community activists have projects in this budget,” she said. “That’s what local government is about. That’s why I think it’s a very good, balanced budget that benefits the community as a whole.”

The council approved the budget on a 3-2 vote, with members Allan Mansoor and Jim Righeimer opposed.

Both said they worry the city isn’t doing enough to get a handle on its unfunded pension liability, which was pegged at about $246 million in 2015.

“If we don’t fix the problem — the major problem that’s right over us — all this stuff is noise,” Righeimer said.

Mansoor said he’d like the city to put more money aside now to pay increasing pension costs down the line.

During Tuesday’s meeting, several people urged the council to set aside funding to either expand the Costa Mesa Skate Park at 900 Arlington Drive or look at building another one. Additional space is needed, speakers said, because the current skate park is almost always crowded.

Others said investing in such facilities makes sense given that Costa Mesa is home to a thriving action-sports industry, including corporate headquarters for companies such as Volcom and, soon, Vans.

About $70,000 has already been earmarked for conceptual design work on a possible expansion of the skate park, according to City Manager Tom Hatch, and the city has retained a consultant for that process.

As part of a series of votes approving the budget and taking related actions, council members voted unanimously to direct staff to examine whether any funds currently budgeted for other projects could instead be used toward a skate park expansion.

Council members also suggested that staff look into partnering with a private company on that effort.

“We have such a huge skating industry and action-sports industry, and I would think there would be a bidding war over the naming rights on a new, beautiful skate park,” said Councilman John Stephens, who joined the meeting via teleconference from Chicago.

Mayor Pro Tem Sandy Genis said she supported the budget “with reservations,” as she’s concerned that its revenue projections might be overly optimistic.

“Considering that we are in good economic times, we shouldn’t just be striving for a balanced budget,” she said. “We should be striving for a budget that’s setting aside that rainy-day money and rebuilding our reserves.”

Since council members reviewed the city’s preliminary budget in May, forecasts of general fund revenue for 2017-18 increased by $564,087, largely because of a projected increase in occupancy taxes charged for motel and hotel stays, according to a staff report.

An updated projection from last month, though, showed the city could receive $1.03 million less in sales tax revenue over the next fiscal year than what is budgeted.

“It is a little concerning, but we are watching it very carefully,” interim Finance Director Stephen Dunivent told the council.

The budget also assumes the city will tap into some additional income streams — such as the voter-approved Measure X, which allows some medical marijuana businesses to open in the area north of South Coast Drive, west of Harbor Boulevard, south of MacArthur Boulevard and east of the Santa Ana River, though not in South Coast Collection.

To open, such businesses will have to pay about $49,000 in permit fees alone.

Other fee money is projected as the result of a recent council decision to have the Costa Mesa Fire & Rescue Department assume responsibility for providing all local ambulance transportation services.

The budget includes $125,000 for a state employee to operate out of City Hall as a group-home inspector.

“This will significantly assist the city of Costa Mesa with group-home inspections related to state-licensed facilities,” Hatch said.

Also in the spending plan is $100,000 for improvements at the Costa Mesa Tennis Center, which some residents lobbied for regularly throughout the budget process. Specific priorities for that money will be determined later.

The group-home inspector and tennis center improvements will be funded by reducing a planned operating transfer from the general fund, which makes up most of the city’s budget and is used for operating and discretionary purposes.

The budget also includes an almost $3.2-million transfer from general fund reserves to the city’s self-insurance fund, which accounts for workers’ compensation, general liability and unemployment insurance.

City officials say that will bring the self-insurance fund’s net balance to zero.

luke.money@latimes.com

Twitter @LukeMMoney

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