Culver City Studies Tax Increase, Audits to Avoid Budget Shortfall

To avoid a $2-million shortfall in the $54.5-million 1989-90 budget, Culver City Chief Adminstrative Officer H. Dale Jones has proposed an increase in some taxes and fees, an audit to recoup back taxes and the use of about $528,000 in treasury reserves.

Jones said the nearly 10% increase in expenditures over last year’s operating budget is attributed to the addition of 20 city employees--including four police officers--a 20% increase in liability and workers compensation insurance premiums, a 19% increase in health care premiums and salary increases totaling $851,000.

The budget also includes $71,000 to finance a new quarterly city newsletter, various brochures and an annual report to the community.

Budget study sessions will be held May 31 and June 3. The City Council will hold a public hearing June 26 to adopt the budget. The budget must be adopted by the beginning of the fiscal year, which begins July 1.

This is the second consecutive year in which proposed expenditures exceeded expected revenues.

Last year, the budget was about $400,000 short in revenues. To make up the difference, the city increased the tax on local telephone calls from 9.5% to 11% and imposed an 11% tax on long-distance calls.

But the council reduced both taxes to 10% after the Culver City Chamber of Commerce and the city’s four largest employers complained that the tax on long-distance calls was too high and unfairly burdened large companies. The council also placed a $15,000-per-year maximum on any one taxpayer.

Jones is proposing that the tax be restored to 11%, which is expected to generate an additional $250,000.

City officials also believe an audit of state records will find an additional $400,000 in sales tax money that was not properly credited. The city hired an auditor to review state records to ensure that the city was receiving its share of the 6.5% sales tax collected in the county. Cities statewide receive revenues equal to 1% of all taxable sales.

An audit of the city’s utility taxes is expected to produce about $30,000 in back taxes owed the city.

A proposed increase in business-license taxes would produce $550,000. About $255,000 would come from an increase in street-sweeping fees, and an increase in parking fines from $15 to $28 would produce an additional $155,000. Installation of 1,400 new parking meters could yield $317,000.

In addition to using $528,869 from treasury reserves--leaving a balance of more than $4.5-million--the city is proposing the use of $155,740 of remaining federal revenue sharing funds for general fund expenditures. The revenue sharing program, which provided local governments with federal funds, was discontinued in 1986.

City department heads were also asked to submit budget cuts of 5% from last year’s level to give the City Council flexibility in balancing the budget. The budget also includes $7.6-million for capital improvements, including $2 million in new projects.