IRVINE : Recession Could Slow City Growth

Economic shadows cast by the coming recession could darken the outlook even for Irvine’s traditional growth, city officials said this week.

If the expense of running the city government and services continues to grow at the current level, Irvine would fall about $15 million short during the next two years, City Manager Paul O. Brady Jr. said Monday.

But by no means is the city in dire straits, Brady said during a budget planning workshop for City Council members and department heads. Even though the nation seems headed for a recession, taxes, fees and other income that fund city services should still grow in Irvine by about 6% annually, he said.

Six percent, though, is the smallest growth in the city’s 19-year history, Brady said. During the past two recessions, city revenue grew by 8% or more.

The biggest pinch will come in the slower growth of sales taxes, Assistant City Manager Bernard Strojny said. A recession could cut the city’s sales tax growth to 5% or 6% a year, Strojny said. It is Irvine’s largest revenue producer, bringing in about $25 million--almost half the city’s annual income.

Projections show new construction in Irvine dropping by more than 20% during the next two years, which will decrease development fees and eliminate the sales and property taxes the new buildings would have brought, Strojny said. Hotel use is expected to remain constant in the coming years, freezing the city’s income from its hotel bed tax, he said.

But despite the gloomy sound of those predictions, Irvine will be “fairly healthy compared to other Orange County cities,” Strojny said. “But nothing compared to our past.”

The economic discussion sets the stage for the coming months as Irvine officials prepare the city’s 1991-1993 two-year budget. The 1991 fiscal year begins in July.

The belt-tightening will mean that of about 60 city staff positions now vacant, only about 15 of those will be filled in the coming months, Brady said. Many of the vacancies that will be left open are in the Community Development Department, Brady said.