HUNTINGTON BEACH : Council to Hear Ideas on Balancing Budget

Facing a widening budget deficit, the City Council tonight will hear recommendations for tax and user fee increases, a city hiring freeze and deferments of most capital improvements.

Under a financial package prepared by City Administrator Michael T. Uberuaga, the city would increase its business-license tax and beach parking rates while expanding a citywide phone tax.

The proposals, which council members will consider at a special meeting tonight, come as the city faces a $3.8-million spending shortfall in its $94-million budget for the current fiscal year, which runs through June. Uberuaga’s plan also includes long-range measures for coping with future budget constraints, which he projects will continue for at least another five years.

Because Uberuaga expects the business-license-tax hike to be the most controversial aspect of his plan, the council will discuss the issue tonight but will not vote on it until April 1.

As recommended, the city’s average annual business-license tax would climb to $76 from $56. The $20-per-year jump would leave the city’s license fee well below the $306 state average. The average business-license tax charged each year by Orange County cities is $96, according to a recent survey.

Among the fee increases the council will consider tonight is a $1 boost in off-street beach parking on weekends and holidays. The city now charges $5 per day for beach parking at all times. Council members will also weigh proposed hikes for seasonal parking and camping fees for beach lots, as well as increased fees at the downtown main promenade parking structure.

Another proposal would extend the city’s 5% utility tax on telephone calls made within California to include out-of-state calls. If approved, the move would increase city residents’ average monthly phone bill by 62 cents, city officials estimate.

The proposed fee hikes, along with a plan to charge the Water Department more for city services, would raise an estimated $462,000 in new city revenues this fiscal year, according to Uberuaga’s report. In subsequent years, the fee package would increase the city’s annual income by a projected $1.8 million, his report estimated.

To cover the balance of the existing budget shortfall, Uberuaga’s plan would withdraw $1.73 million from the city’s reserve account and divert $1.68 million into the general fund from the city’s capital-improvement and Redevelopment Agency accounts.

Uberuaga’s plan also would mandate a hiring freeze beginning Tuesday for all city departments. Likewise, no new city positions could be created without proof that they would generate enough new income or spending cuts to offset the cost. Both orders would remain in place at least until the council adopts next year’s budget, Uberuaga said.

Planned capital projects, such as street and storm-drain improvements, would be delayed unless contracts were affirmed by March 18.

The financial woes, which Uberuaga identified soon after becoming city administrator 13 months ago, have worsened considerably, he said.

“We still have plenty of reserves, and we still can manage the city and provide the same level of services we always have,” he said. “But we have to head this off before it becomes a budget crisis. If not, we will really have to consider a reduction in services.”

A dip in the city’s sales-tax revenue has been the main factor contributing to the city’s deepening budget crisis during the past year, Uberuaga said.

The city’s sales-tax income during 1990-91 is $1.8 million lower than officials had projected. That decline was caused mainly by the national recession and the departure from the city of two major retail firms, said Robert J. Franz, deputy city administrator of financial services.