New City OKs a ‘Don’t Know’ Budget

Malibu’s City Council unanimously adopted a $7.5-million budget Tuesday night for the fiscal year starting July 1, even though key questions about how the new city’s finances will work remain unanswered.

“We still don’t know what our real income and expenditures are going to be during the first year,” interim City Manager Bruce Spragg told the council. But he urged adoption of the budget “to give the city a financial framework to operate in.”

Since June of last year, the city has been financed by community donations, a trickle of tax revenue and volunteer help. Spragg, City Atty. Michael Jenkins and other consultants agreed last year to defer their salaries until the city obtained money to pay them.

But passing the budget doesn’t mean there is money in the bank. Because Los Angeles County delayed the city’s official incorporation until March, the flow of more than $4.2 million in tax revenue into the city treasury was blocked.

Had it been able to incorporate before the end of 1990, Malibu would have $1 million in property taxes on hand. Two weeks ago, Gov. Pete Wilson signed special legislation to make Malibu eligible to get the money, but not until next January.

The delay in incorporation has also postponed the arrival of $3.2 million in sales, motor vehicle and other taxes the city would have received from the state.

The new budget shows the cost of running the city to be 46% higher than orginally projected in 1987. The bulk of the increase is due to the $3.3 million it will cost to pay the county Sheriff’s Department for law enforcement.

However, state law allows a new city to defer paying for county services such as law enforcement for up to five years, a provision the city will take advantage of until it gets on its feet.

“But I’m an optimist,” Spragg said. He said the rise in Malibu’s property values since 1987 will “put the city in very good shape for the next fiscal year.”