Administrators acknowledged last week that this city's $62.5-million budget--touted last summer as the first spending program in years to have avoided employee layoffs--actually contained a $2.9-million deficit.
In a draft financial plan to eliminate the "environment of economic instability" that has long permeated City Hall, administrators wrote that they plan to use $6.6 million from a recent redevelopment bond to erase that and another $1.3-million deficit that would have confronted them next year.
"Through comprehensive financial planning," the report predicted, "the nightmare accompanying the budgetary process" will be eliminated. By 1990, Compton will have a $2.5-million surplus--as well as $2.3 million of bond money still in reserve--without having suffered an increase in taxes or a cutback in municipal services, the report said.
"Employees no longer have to 'shiver' at the mention of the word budget ," the report continued. "For too many years, budget time meant 'layoff' time and citywide productivity suffered while employees speculated and gossiped about 'who would be cut' from this year's budget."
If city accounts are to remain in the black, even with the redevelopment money, the report recommends that leaders raise various municipal fees to more accurately reflect the cost of services, develop new guidelines for employee pay raises and generally conduct themselves in "an entrepreneurial business-like manner" when it comes to spending.
Administrators led by City Manager James C. Goins prepared the report for presentation to the City Council at a coming leadership retreat in Oxnard. Goins said last week that the financial plan, covering the next three years, is intended to provide a "long-term rather than short-term" outlook.
Council members Jane D. Robbins and Maxcy D. Filer declined last week to comment on aspects of the report, saying that they have yet to receive copies. Mayor Walter R. Tucker and Councilmen Robert L. Adams and Floyd A. James did not return calls from The Times.
Yvonne Day, president of a city employee union, expressed surprise when she learned the extent of the budget deficit. But when council members turned down the union's recommendation that a variety of administrative expenses be sharply trimmed, union leaders suspected that a financial crisis was in the wings, she said.
Plea for More Workers
Day said that some departments have one supervisor for every four employees. She said union members believe that the government would be more effective "if there were more people doing the actual work."
Goins said he made no effort to sugarcoat the city's financial condition when the budget was adopted last July. He said he told the council that new sources of income would be needed to overcome the elimination of federal revenue sharing and support the addition of 18 officers to the Compton Police Department.
The state Constitution makes it illegal for any city to spend more money than it has. But Goins said that the additional police positions listed in Compton's budget were not actually filled until the bond issue was sold last November.
Filer said Goins did warn the council that a budget deficit was possible.
"He definitely did say that there was no way we could hire the police officers without more money," Filer said.
Federal Funds Ended
For many years, Compton relied on a roughly $2-million federal revenue sharing grant to help balance its historically frail budget. But when Congress cancelled the program in 1987, a crisis developed.
"We were very dependent on external sources for our livelihood," City Controller Timothy Brown said. "Our tax base as a (then) decaying city didn't have that much."
To compensate for the loss of revenue sharing, administrators proposed a $2-million increase in the city's utility-users fee.
But when residents and business owners complained about the proposed fee increase, the council decided to sell a $40-million redevelopment bond and put $6.6 million of the proceeds into the general fund.
Goins said another major problem contributing to the city's shortfall is a $1.8-million deficit that Compton's water department has run up since 1984--$537,000 of that deficit has mounted since last July.
The reports blame that on the council: "Thus far, the Compton City Council has not demonstrated a willingness to increase water rates to break even." The only alternative to an increase, the report said, is a decrease in service.
"I don't think (the administrators) have looked at all of the alternatives," Councilwoman Robbins said. "I am not in favor of a cutback in service either. They are going to have to show me where they are losing this money."
The report also says the city is charging too little for its building permits.
Brown said the surplus he projects for 1990 is realistic if the city's current tax base growth rate of 6% to 7% continues and the council adds no substantial new programs.
More Sales Taxes
"A lot of new money is coming out of our redevelopment," Brown said. "Additional sales taxes will be coming out of the businesses that are being built and we are building new homes" that will increase the city's property tax revenue. Included in that is $1 million a year that Brown expects to come from the much-delayed hotel and convention center being built alongside the 91 Freeway.
If the council adopts this three-year plan, Goins said, it will help keep the city's priorities in focus during the year-to-year haggling associated with adoption of the budget.
Goins said that Compton is like most cities in that "there has never been any long-term financial plan."
"Having three-year goals is going to have a different effect on the budgetary process," Goins said. "We are going to be less reactive to things because we are going to have a plan of action."