El Segundo Seeks Ways to Cover Deficit

Although the budget passed by the City Council this week is 1.9% higher than last year’s, city spending--and services--may actually be reduced if the city does not find new revenue sources to cover a projected deficit, officials said.

City Manager Arthur E. Jones directed all department heads Wednesday to scale back their operating budgets by 4%, which could result in reducing such services as street and building maintenance, he said.

Those services, however, might remain at current levels if the council follows Jones’ recommendation and imposes a sewer fee for residential, industrial and commercial property owners west of Sepulveda Boulevard, who currently pay no sewage fees.

Jones has proposed a sewer fee of $4 to $5 a month that could reap as much as $400,000 per year and offset some of the projected $691,000 deficit in the $24.8-million budget approved this week.

The City Council will vote on the sewer tax within a month. The three-man majority that approved the budget Tuesday said they favor the tax, noting that the city has seen a constant decrease in revenue during the last four years. Last year, it took $200,000 from reserves and raised the employee head tax to balance the budget.

A slowdown in the aerospace industry, falling oil prices and other factors are expected to reduce sales and employee tax revenue. Adding to the problem is the loss of about $300,000 in federal general revenue sharing funds eliminated earlier this year and a significant decrease in interest earned by the city’s $18-million reserve fund. At Jones’ recommendation the council chose not to reach into the reserves because there is “no foreseeable opportunity” to replace the funds.

Business licensing fees and employee and sales tax from the Chevron USA refinery and the other giant industries east of Sepulveda Boulevard have picked up most of the cost of several services for property owners on the west side of the boulevard, including tree trimming, refuse collection, parks and recreation programs, sidewalk and sewer maintenance.

Among Lowest Fees

As a result, El Segundo residents--virtually all of whom live west of Sepulveda--have paid among the lowest fees for city services in the South Bay, but officials expect that to change in the coming years.

“We as homeowners in El Segundo can no longer depend on industry to foot the bill for some of the services we enjoy,” said Councilman Keith Schuldt. “We are going to have to start sharing the burden.”

Mayor Jack Siadek and Councilman Alan West, who voted against the budget, maintain that the city should dip into its reserves to balance the budget rather than levy a sewer tax or scale back services.

“I don’t understand why we have to start paying taxes when we are sitting on such a huge amount of money that is not earmarked for any particular use,” Siadek said. He suggested that the city might earn additional revenue from extending the employee tax to include businesses that use contract labor. The proposed sewer tax has also angered some residents. “It just doesn’t make sense to have the residents start paying more taxes just because these billion-dollar industries are feeling a bit pinched,” community activist Nestor Synadinos said in an interview.