Costa Mesa’s proposed $163.7-million budget brings calls for caution about spending and fees

Though Costa Mesa’s preliminary budget for 2018-19 is only fractionally larger than the current one, some residents and officials at a pair of public meetings this week urged the city to find ways to tighten its belt.

The call for fiscal conservatism was one of the more common refrains during hearings Tuesday and Wednesday about the city’s initial $163.7-million spending plan for the next fiscal year, which begins July 1.

Staff will review the comments that residents and City Council members made during those meetings and use the feedback to further refine the budget before its expected adoption June 19.

Overall, the preliminary budget is about $568,000 more than the amount approved for 2017-18. City Manager Tom Hatch described it Tuesday as “a continuation of what we’ve been doing over the prior year” and said “there’s not a long list of changes.”

That’s not to say everything is identical, however. One difference is the upcoming election in November, which will expand the council from five members to six plus a directly elected mayor as a result of the city’s move to district-based voting. Having a larger council will mean higher related costs, Hatch said.

The city also anticipates tapping into an additional revenue stream: a 6% annual gross-receipts tax assessed on marijuana businesses under the voter-approved Measure X. Projections show Costa Mesa will collect an estimated $1.56 million in tax revenue from permitted marijuana research, processing, testing, manufacturing and distribution facilities in the next fiscal year.

Despite that additional money, Hatch said the city’s expenses are expected to grow faster than revenue over the next five years, which he attributed partly to increases in “retirement, existing contracts and utility costs.”

Mayor Sandy Genis said she thinks the preliminary budget “is a little optimistic” and that she wants to make sure the city is prepared for potential scenarios that could harm its pocketbook, such as an economic downturn or the possible repeal of recent increases to the state’s gas taxes.

“Obviously, we can’t plan for every eventuality,” she said Tuesday. “We can’t say, ‘Oh, what if a meteor hits City Hall?’ That’s ridiculous, but there are reasonably foreseeable potential outcomes … that we need to think about.”

One sticking point for the council Tuesday was whether to support budgeted fee increases for several parks, recreation and community services programs. Among them are a new $5-per-person administrative levy for trips provided through the Costa Mesa Senior Center and a proposal to start charging for the currently free Recreation on Campus for Kids, or ROCKS, summer program.

Councilwoman Katrina Foley said she opposes raising those kinds of fees because she worries doing so could price senior citizens and working families out of beneficial programs.

“It’s less than $200,000,” Foley said, referring to the estimated revenue the fees would generate, “and I don’t think we should be trying to find $200,000 on the backs of our young kids and families and seniors. Find the $200,000 in the budget.”

Councilman Jim Righeimer, however, said “this whole idea that we’re never going to raise these fees doesn’t make any sense,” and he accused Foley of political posturing, which she denied.

“I don’t want to charge a fee just to charge a fee, but I don’t want to subsidize everybody,” Righeimer said.

Potential hotel occupancy tax boost scrapped

The council nixed a recommendation from the city’s Finance & Pension Advisory Committee to raise the local transient occupancy tax — charged for motel and hotel stays — to 10% from 8%.

Placing the potential increase on November’s ballot for a public vote would require support from at least four of the five council members. However, Righeimer and Mayor Pro Tem Allan Mansoor said Tuesday that they oppose doing so, which effectively killed the proposal.

Council members said they’re interested in studying ways to assess the tax on short-term rentals — such as those booked through websites such as TurnKey and Airbnb — and possibly even sober-living homes, which typically house recovering alcoholics and drug addicts for limited periods of time.

luke.money@latimes.com

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