Pasadena Lists Ways to Offset Funding Gap : Budget: The city manager’s list of possible cuts because of a $5-million budget shortfall includes trimming new planning programs, adding business taxes or imposing a hiring freeze.

City Manager Donald McIntyre is drawing up a list of budget cuts--possibly targeting newly implemented planning programs and human service staff positions--in order to offset an anticipated $5-million city budget gap.

New business taxes are also being considered to help the city meet the difference between proposed expenditures next year of $125 million and estimated operating revenues of only $120 million, said Norman Carter, deputy finance director. Another option would be to impose a freeze on filling more than 150 staff vacancies.

Although McIntyre won’t present his suggestions to city directors until mid-April, the coming cuts have made some directors and the Chamber of Commerce uneasy.

Bruce Ackerman, the chamber’s executive vice president, is concerned that for the first time the city may require business licenses for financial institutions and owners of commercial property. Meanwhile, City Director Rick Cole said he fears that McIntyre may scale back recently instituted human services and planning programs.

City Director Kathryn Nack recently sent McIntyre a memo asking for in-depth information on staffing and funding levels, and on how a hiring freeze would affect the city.

“We’ve had water increases and sewer increases,” said Nack, who believes a freeze might be a “reasonable source of budget reductions.”

“When you’re asking citizens to pay new taxes, you have to make every effort to cut down on the cost so there’s not so much for them to pay for,” she said.

Because McIntyre is retiring July 1 after 17 years, city directors asked him to begin the budget process early so that the budget would be completed by the time a new city manager comes on board.

McIntyre complied and promptly notified the Board of Directors that a budget crunch exists. He blamed the directors, saying they want a balanced budget but continually add new programs.

“You can’t have it both ways,” McIntyre told city directors during a recent board meeting. “Yet that’s what’s happened in the past few years. . . . The board is so ambitious and wants to do so much.”

Although a gap exists every year at the start of budget deliberations, McIntyre said the amounts are usually smaller, between $2 million and $3 million. With the larger gap this year, the cuts will be deeper, he said.

McIntyre said all city departments will be affected, but he decided against across-the-board reductions. Instead, city staff members looked for cuts by examining expenditures for the past five years and identifying departments with the largest personnel increases during that time. Although budget cutbacks are expected in all departments, larger cuts will likely occur in the newest programs, Carter said.

“Many of the older, more traditional expenses tend to be basic services,” such as street maintenance and sewer repairs, Carter said. “The board has tended to add things considered a luxury.”

McIntyre said he has not yet decided which cuts he will present to city directors later this month. But recent programs added by the board include planning measures such as the City of Gardens Ordinance, which sets interior patio landscaping requirements for certain developments, and the designation of the Bungalow Heaven Landmark District, which requires city review of new construction in a north Pasadena neighborhood.

“We’re going to have a debate about that, I know,” McIntyre said. “There are some board members who say they don’t want new programs cut. It’s a typical philosophical debate at budget time.”

The city has also expanded its human services staff during the past five years, and Cole is afraid some of the newer employees will lose their jobs. The expanded staff works in areas that include child care and youth programs. Cole added that other budget-cutting targets may be city employees recently hired to work for Pasadena’s various citizen boards and commissions.

“It’s an ambitious city board,” Cole said, “but it’s a board that’s decided to set priorities. Among those priorities are planning and human services.”

The Pasadena Chamber of Commerce, meanwhile, is examining proposals now before the City Finance Committee. These proposals, if adopted by the Board of Directors, could help reduce the gap by adding more than $700,000 annually to city revenues.

One proposal would end the exemption from business license taxes that has been granted for years to owners of commercial property. Landlords renting out residential property are required to obtain business licenses, but landlords renting office, industrial or retail space are exempt. If commercial owners were required to obtain licenses, the city could add $400,000 annually to the General Fund, according to a Finance Committee report.

Another $248,200 could be added annually by requiring a first-time processing fee of $30 for business licenses and a non-compliance inspection fee of $45 charged to businesses that fail to obtain such a license.

Finally, according to the report, the city could gain $65,700 by requiring banks, savings and loan associations, and finance and insurance companies to obtain city business licenses. Those institutions formerly were exempted from such fees by state law. However, a recent state Court of Appeal ruling struck down the law, and Pasadena officials now want to add the companies to the business license tax rolls.

Ackerman, however, is skeptical of new requirements that would drive up the cost of doing business in Pasadena.

“These are new business license fees that never existed before,” Ackerman said. Rather than add new taxes, he said the chamber believes the city should cut costs by not filling 168 existing staff vacancies.

“If they could get along last year without filling them, why can’t they get along next year without filling them?” he said.

The city already has a temporary hiring freeze that will be in effect until the end of June, Human Resources Director Ramon Curiel said. The city is recruiting to fill 101 of the vacancies, he said, but with the freeze in effect, McIntyre must personally approve all new hiring.

All of the various cutback proposals will be aired during budget deliberations in May, McIntyre said.

Yet, as this year’s budget tussle looms, city finance employees look to the future. The annual budget gap could diminish or disappear entirely in another two years, Carter said. Once the One Colorado Project, the Ritz-Carlton Huntington Hotel and the Plaza Las Fuentes are completed and begin generating increased sales and hotel room taxes for the city, he said, Pasadena could find itself facing a surplus instead of a gap.