Budget Report Calls Torrance ‘Solid,’ Urges Tax Increases

A report on Torrance budget proposals for 1989-91 says the city is in good financial shape but expresses concern about slow growth in revenue from sales and utility taxes and a reduction in the city’s interest-earning reserve funds.

The two-inch-thick report, released this week, urges the city to increase existing taxes or levy new taxes on hotels, sewer services, long-distance telephone calls and garbage collection. The recommendations would add more than $1 million to city revenues during the 1989-90 budget year.

Unless new revenue sources are found, the report says, the city must forgo hiring at least 19 employees in the Police, Parks and Recreation and General Services departments and the library.

Still, City Manager LeRoy Jackson, who prepared the report, called the $84.4-million 1989-90 budget “solid.”

“We think we can continue to meet priority needs with what we have,” Jackson said.

The report says the growth rate in sales taxes has dipped from 16.5% in 1983-84 to a projected 7.45% for 1989-90. Sales taxes raised about $14.5 million in 1983 and about $24 million in 1988. Jackson said the growth rate has slowed because the number of shopping centers and auto malls in the area has reached the saturation point.

Growth in revenue from the utility tax dropped from double digits in 1980-81 to a projected 6.7% for 1989-90, the report said. Dollar amounts on utility taxes were not available. In this case, the slower growth rate was attributed to changes in land use from industrial to commercial and office space.

City reserves collected interest of $2.7 million in 1980-81, while only $1.3 million is projected for 1989-90, the report said.

Major Expenditures

City officials said interest income has declined largely because of major expenditures from the reserve funds: $5.2 million to repair a landslide at Via Corona and Vista Largo, $9.7 million invested in redeveloping the downtown industrial area and $500,000 for legal advice and studies on safety at the Mobil Oil Corp. refinery.

In addition, recent federal and state legislation has forced the city to increase employees’ non-negotiated wages by more than $400,000 a year, the report said.

It recommended that the city eliminate an exemption to the transient occupancy tax that allows businesses to rent a block of hotel rooms for more than 31 days tax-free. Eliminating the exemption would increase revenue by $150,000 in the next fiscal year.

The report also suggests that the city:

Nearly double the cost of sewer services, which would increase revenue by $268,000 in 1989-90.

Levy a new 6% tax on long-distance phone calls, which would raise $400,000.

Levy a new business license tax of 5 cents per square foot for all office buildings larger than 5,000 square feet, which would raise $140,000.

Increase trash pickup fees by 50 cents per household, which would raise another $168,000.

Unless City Council members suggest additional revenue sources, Jackson said, the city won’t be able to hire a second police officer for the Drug Abuse Resistance Education program. The program has one officer who visits schools to talk to youngsters about drug abuse and gangs.

Budget restraints will also force the city to forgo hiring two groundskeepers, a police officer, a firefighter, three librarians and several clerks and secretaries, the report said.

The City Council will hold study sessions on the proposed budget Monday and May 18. Public hearings on the budget will be held May 23 and June 6.