Costa Mesa : City Expects Surplus in ‘86-87 Funds of $34,000

The city may raise about $34,000 more in 1986-87 revenues than it is allowed to spend under limits set up by the 1979 Proposition 4 voter initiative, and the figure could jump to $3.2 million by 1990, City Manager Allan Roeder said Tuesday.

Roeder told a luncheon meeting of the Costa Mesa Civic Assn. that in the unlikely event that expenditures and revenues remain constant, “we would estimate at the present time that we would have about $34,000 surplus revenue over and above our legal limit for expenditures.”

“That jumps, if you will, to $3.1 million to $3.2 million in excess revenues by 1989-1990,” he said. But Roeder was quick to add that the legislation, as was the case with the Proposition 13 tax-limitation initiative of 1978, “will undoubtedly come back for long and lengthy legal review to find out exactly what revenues will be affected.”

Irvine, another Orange County city that was expected to exceed the Proposition 4 spending limit this year, will fall well within the initiative’s guidelines because sales tax revenues were less than anticipated, Jeffrey Niven, manager of fiscal operations, said Tuesday. He added, however, that the city is holding fast to its prediction that by 1990, the city will exceed Proposition 4 limits by $11 million.

The initiative requires that cities with revenues exceeding the spending limit return the excess to taxpayers in the form of refund checks or cuts in sales or property taxes. Cities would have two years to decide what to do with excess funds and voters can approve ballot initiatives enabling municipalities to keep the surplus money for up to four years.

The initiative is based on 1978-79 budgets and the limits can be increased through a complicated formula allowing for changes in population and the U.S. consumer price index.

Roeder said that Costa Mesa’s city staff is putting together a four- to five-year forecast on revenues and expenditures that should be completed by this spring. Kenneth Emanuels, legislative director for the California League of Cities, said representatives from about 25 municipalities that have exceeded or almost exceeded Proposition 4 limits have expressed interest in forming a task force to investigate the legislation.