Culver City Sorts Through Ideas to Balance Budget : Finances: A projected $3.5-million deficit has forced the city to leave some jobs vacant. It is also studying tax increases and fees for police services.

Worn desks in City Hall will not be replaced, job vacancies may go unfilled, and property owners could be charged for police services and upkeep of street lights as Culver City grapples with a projected $3.5-million deficit for the coming fiscal year.

A year ago, the deficit had been projected at less than $1 million, but that was before the recession and the Gulf War delivered a one-two punch. People are buying less, and sales tax money--the single largest revenue source to the city--will probably increase only 5% next year to $12 million, compared to a 14% increase two years ago, according to city officials.

Real estate sales and commercial and industrial construction also are sluggish, and city revenues from those sources are sharply lower.

Obliged by law to balance its budget, the city will have to find ways to cut spending or raise its revenues to close the gap.

The city is feeling the brunt now, as well, of a midyear analysis showing that it faces a $1.5-million shortfall in its $43.3-million budget for the current fiscal year, which ends in June. It has found ways to make up about $800,000, however, by a partial hiring freeze implemented in late January, by putting off purchases of furniture and by postponing other projects, said Bob Norquist, a city budget and finance assistant. The remaining $700,000 will be made up by continuing the hiring freeze and by using reserves, he said.

The problem is not unique to Culver City. “All cities, all governments that rely on tax revenues that are derived from a healthy economy,” are feeling financially pinched, Norquist said. Neighboring Beverly Hills, for instance, is projecting a $1.5-million deficit this fiscal year.

Culver City, like other cities, is also saddled with unexpected costs, such as county charges for collecting and distributing property tax revenues, and having to start programs mandated by law, such as recycling.

In the long run, the city is looking to several large commercial developments to improve its financial health--the proposed Marina Place shopping center, the renovation and construction of the Columbia Studios lot, completion of the Corporate Pointe office complex in Fox Hills and renovation of the aging Culver Center mall.

“We have an economic downturn, but we can look forward and see some light at the end of the tunnel, which is more than other cities can do, because we know these projects are on the drawing board,” Norquist said.

Marina Place, a $160-million regional mall at the western tip of the city, would house a Nordstrom, Bullock’s, 150 other shops, restaurants and a movie theater and would add an estimated $15 million to city coffers over 10 years. But the project is being held up by lawsuits.

Columbia Pictures Entertainment Inc. has estimated that by 2003, when it finishes renovation of its studio lot, it will generate $12 million a year for the city, Norquist said. About 55% of that will go directly from Columbia to the Redevelopment Agency, with the rest being generated by utility, business license and sales taxes and other fees, he said.

Until then, however, deficits are projected for every year through fiscal 1994-95. “We’ve really got to hunker down,” Norquist said. Next year’s $3.5-million shortfall is out of a total budget of $45.6 million.

“It’s too big a gap to cover with cuts, without having a dramatic impact on services and service levels,” but it’s also “too big a gap to cover by (increasing taxes and) revenues . . . at a time when we’re all feeling the pinch of the recession,” Norquist said.

About 75% of the budget is for personnel, with police and fire protection receiving the largest chunk. The Police and Fire departments combined have been allocated about $23 million this year and $24.4 million next year.

For now, the city is leaving unfilled all jobs that are not deemed “absolutely essential to the health, welfare or effectiveness of city services to the public.” Chief Administrative Officer Dale Jones is scrutinizing each hiring request.

Norquist declined to say whether the city may need to lay off employees or offer early retirement incentives, saying that “it’s very, very early to talk about any kind of specifics.” But in December, Mayor Steven Gourley had warned about the city’s tight budget when he voted against 5.5% pay increases for city management employees for 1991, saying the raises may lead to layoffs in the spring.

Department heads have been ordered to come up with priority lists of possible cuts and other ways to operate, such as contracting out work, using volunteers, filling full-time posts with part-time employees and reducing the qualification and classification levels of jobs so the city can hire people at lower pay.

Officials are also looking into benefit assessment districts, in which property owners would be charged for certain city services, such as paramedics and ambulance transport, tree trimming and park maintenance. The districts would be approved by the City Council after public hearings. Inglewood has two such districts in which property owners are charged for street light and landscape maintenance and police benefits.

Other possibilities are to increase utility, business or other taxes. A property tax increase would have to be put to an election and approved by two-thirds of the voters. A levy of 5 cents per $100 of a property’s assessed valuation would yield about $1.4 million, according to city officials.

City staff is to investigate all the solutions to the budget crunch by late April and present them to the City Council in May, Norquist said. The budget for the coming year is to be adopted in June.