FULLERTON : Budget Includes Reserve Fund Cut

With an economic slowdown expected to decrease sales taxes and with spending levels on the rise, the city’s budget for the next fiscal year includes a smaller-than-usual reserve fund.

Fullerton’s $96-million spending plan for 1990-91, which the City Council tentatively approved Tuesday night, includes only $1.6 million for emergency spending, about $1.1 million less than the city should set aside, City Manager William C. Winter said.

A disappointing Christmas shopping season and an expected statewide economic slowdown have cut into the city’s expected sales tax revenue, which generates about a quarter of the city’s income.

The decrease in sales tax chopped $1.9 million from expected revenues for the next fiscal year, which begins July 1. And with the costs of employee health insurance skyrocketing along with other costs, the city has increasingly been dipping into its reserve fund to make ends meet, Winter said.

Over the next few months, city administrators will be looking for ways to cut costs to keep this year’s budget in the black, he said.

“We’ll have to make a recommendation to the council on how to proceed with this because we can’t keep dipping into our reserves,” he said.

Departments were asked to keep spending for the next 12 months within 4% of last year’s levels. Exceptions approved by the council Tuesday include paying about $190,000 toward a new fire engine and ladder truck. The total cost of the truck will be spread out over five years.

Sales taxes for the next fiscal year are expected to fall well below earlier projections, city budget director Jackie Lewis said. The shortfall seems mostly due to lower-than-normal automobile sales, Lewis said.

During the last three months of 1989, sales tax revenue generated in the city dropped $260,000 from the same period last year, she said.

Sales tax revenues might drop even more in the coming months as some of the automobile dealers contemplate leaving the city to relocate to an auto mall under construction in Cypress. One dealer is in the process of moving from the city and another has indicated that he will probably move to the Cypress mall.