Beverly Hills OKs Budget With Scant Margin for Error : Government: Squeezed between Civic Center and school district, revenue is a mere $503,380 over spending.

The Beverly Hills City Council adopted a budget Tuesday that leaves the city with a cushion of barely half a million dollars between income and what it expects to spend.

The 5-0 vote came after the City Council, pressed by a cash-poor school district and the demands of operating its newly expanded Civic Center, debated every line on the budget in a series of unprecedented working sessions that were aired over cable television.

“This gave us a chance to go through it an awful lot more than we have . . . in the past,” said Mark Scott, the recently appointed city manager. “I loved it, but then I’m new here.”

The new budget, which will guide spending for the fiscal year that begins on Sunday, includes a $1.5-million infusion of cash to the capital fund as well as a payment of just under $5 million to the Beverly Hills Unified School District, whose staff faces layoffs after the recent defeat of a proposed parcel tax.

The budget calls for expenditures of $78,592,950, an increase of nearly 8% from the current year, and anticipates revenues of $79,096,330.

The difference of $503,380 is unusually small for Beverly Hills. In some recent years, the spending cushion has been 10 times as much, and the city was able to channel the surpluses into a capital improvement fund. The fund, which in 1983 had assets of $31 million, is now drawn down to about $1 million, largely because of the demands of building the new Civic Center.

“The margin between expenses and revenues is slim, to say the least,” said Vice Mayor Vicki Reynolds. “We will need to be mindful of that as we deliberate on expenditures in the future.”

In earlier years the City Council generally adopted the budget after cursory debate on a spending plan that was drawn up by staff members and presented to the elected officials as a finished product.

But after outrage over multimillion-dollar cost overruns for construction of the new Civic Center forced the departure of longtime City Manager Edward S. Kreins in January, City Council members instructed Scott to get them involved earlier in the process.

They also asked staff members to plan for the spending of each department as if it were being funded for the first time.

Using the new method, known as zero-based budgeting, a committee of high-ranking staffers proposed cutting the equivalent of 20 jobs, but most of the work hours were restored in the course of the City Council budget meetings, Scott said.

“We ended up with about the same number (of city jobs), but we are opening a 300,000-square-foot Civic Center,” he said.

Delays and other problems brought the estimated cost of the new Civic Center to about $120 million, more than twice as much as originally planned. City departments now plan to move in sometime in August.

The actual cost of completing the project remains a mystery. In part, it depends on the outcome of litigation that was put off until after the job is finished.

But in any event, operating the Civic Center will add about $1.5 million a year to the cost of city government. Four new police officers, two extra librarians, a building manager and three maintenance people must be added to help run the new facilities. Utility costs also will rise significantly.

City Councilman Bernard J. Hecht said he was worried about the budget, calling it the tightest in 11 years. He recommended that department heads be required to draw up a list of further cuts in case of a possible drop in revenues.

But the council took no action on the suggestion.

“This is a very conservative budget,” said Mayor Allan L. Alexander. “Even if there is a slowdown in construction and sales taxes, I feel comfortable with that budget because of the conservative estimate of the revenue stream.”

With the capital fund down to less than $1 million, the city also faces possible charges of as much $22 million for its eventual share of upgrading the Hyperion sewage treatment plant, but plans call for the capital fund to grow by infusions of as much as $5 million a year by 1994.

The new budget allocates $4.9 million to continue renting facilities from the Beverly Hills Unified School District, a separate legal entity.

Despite the school district’s financial pinch in the wake of the narrow defeat of a parcel tax at the polls early this month, City Manager Scott said the city is not likely to increase its allocation beyond a yearly adjustment for rises in the cost of living.

The money goes to pay for the use of school buildings and playgrounds for city events such as police officer testing in the high school cafeteria, children’s theater performances in an elementary school auditorium and rehearsals for the Beverly Hills Symphony.

“We would be stretching it to go much farther,” Scott said. “You have to establish value for the lease payments, and to say ‘let’s just pay more’ would be inappropriate.”

State law bars the city from simply giving money to the school district.

The City Council did agree, however, to a request to transfer the $4.9 million at the beginning of the fiscal year, instead of four times a year as it did before.

The change will allow the school district to reap an extra $100,000 in interest, officials said.