Local News in Brief : City Has $1.38-Million Shortfall

The city of Lawndale spent about $1.38 million more than it received in General Fund revenues in the 1987-88 fiscal year, according to a report by Arthur Young & Co.

The bulk of the $1.38-million shortfall is made up of a $629,166 investment loss and $285,314 spent on land acquisition.

The balance--about $465,000--was council-authorized spending on day-to-day city operations.

The $629,166 investment loss in fiscal 1987-88 is part of $1.68 million the city lost in a speculative securities investment that originated the previous fiscal year. Lawndale and several other cities and municipal organizations have filed suit in an effort to recover $8.4 million in losses and $16 million in punitive damages from two brokerage companies that handled the investments.

The Arthur Young report, presented to the City Council Thursday night, showed that the city’s 1987-88 General Fund expenditures of $6.4 million exceeded its $4.9 million General Fund revenues by more than $1.5 million. The city was able to fund about $143,000 in costs from other revenue sources.

When Councilman Harold E. Hofmann questioned the overspending, Terry White of Arthur Young replied: “Obviously this is a situation that can’t continue indefinitely.”

White pointed out that Lawndale has a balanced budget for 1988-89, but that with remaining General Fund reserves of $413,992 the city could not afford to incur a large deficit as it did in the 1987-88 fiscal year.

City Manager Daniel P. Joseph, who was hired in June, 1988, said that it is within the council’s authority to spend from reserves, but that such spending must be done with caution. “It’s like spending out of your savings account,” he said. “It may not leave you a lot for a rainy day.”

He noted that the 1988-89 budget of about $7 million is balanced, with spending not exceeding income.