Unhappy New Fiscal Year for O.C.’s Strapped Cities : Recession: Budget-balancing acts get trickier as hard times linger for most of the county’s 29 municipalities.

As the new fiscal year begins, Orange County cities are trying to make the best of the financial woes that have left most towns bruised or bleeding.

And they are still haunted by the shadow of state government in Sacramento, which could lower the ax again when it sorts out its own budgetary troubles.

Each of Orange County’s 29 cities faced the unpleasant task of having to balance its budget in a recession-plagued economy. Most had to give up something--eliminate jobs, reduce services or raise fees. Some towns sacrificed more than others. Few ended up happy.

“The fact that we’re not cutting people’s jobs here doesn’t mean things aren’t tight,” said Laguna Beach City Manager Kenneth C. Frank.

Laguna Beach increased a host of city fees, including those for building and planning and for holding weddings in local parks. City officials estimate those increases will add $200,000 worth of breathing room to their annual $31-million budget.

This seaside town fared relatively well because it has a weak sales tax base, so it didn’t have to suffer a major whack as sales taxes declined in a recessionary economy, Frank said. Because Laguna Beach’s economy has relied more on property taxes, the town was hit hard by Proposition 13 in 1978, but has learned to cope with that damage since then, Frank said.

Cities that depend heavily on sales taxes for revenue, such as Anaheim and Santa Ana, have found themselves hurting in the recession as wallet-conscious consumers spend less, said Ron Bates, president of the Orange County division of the League of California Cities. But he said all cities have felt the pinch.

“All of them are belt-tightening, no question about it,” Bates said.

Los Alamitos, where Bates is a councilman, grappled with a projected $800,000 shortfall by imposing a hiring freeze and a 6% utility tax, along with a 5% increase in business license fees. Office supplies and travel budgets for city employees were trimmed and the city has delayed buying new police cars.

Tustin has eliminated 10 jobs through attrition and hopes to save another $300,000 by delaying replacement of big-ticket items such as police cars and street sweepers, said City Manager William A. Huston. Another $35,000 will be carved out of the budget by reducing phone and electricity use, encouraging car-pooling and having city employees double up on local trips, Huston said.

Solving the recession-induced problems can demand a healthy dose of creativity, Huston said. But city managers worry about crossing the fine line between lean efficiency and real starvation.

Tough times “can give you the chance to do things to enhance your productivity, but you can only stretch so far before you have an effect on people and affect the quality of your services,” he said.

Despite the lean times, Tustin doesn’t want to halt its progress, Huston said. It will proceed with plans for a multimillion-dollar reservoir and it still intends to finish new roads with stripes, traffic lights and new median strips, but it must keep an eye over one shoulder, Huston said.

“We are still watching what happens in Sacramento,” he said. “If the state gets wacko on us, all hell could still break loose here.”

Don Benninghoven, executive director of the League of California Cities, said municipalities fear that when the state adopts its own budget, it could “unbalance” all the local budgets. One proposal that alarmed cities, for instance, would have upped the state’s share of vehicle licensing fees, robbing local city coffers of millions, Benninghoven said.

Until recently, Benninghoven said, the cities faring the best were those with shopping centers and auto malls that produced a strong, expanding sales tax revenue base. Once the recession hit and sales taxes began dropping in those cities, the newer communities came out ahead, Benninghoven said.

“They may not have to bear the institutional costs of older cities, like longstanding salary schedules,” he said. “A growing city has more flexibility and may not have (to fund) as broad a range of services as an older one.”

That formula may have helped three youngster cities in South County--Mission Viejo, Dana Point and Laguna Niguel--who find themselves in financial clover.

But most of the county’s other towns have suffered a bit more.

In Westminster, city employees had to forgo a raise. Garden Grove workers took a 3% pay cut, and the city raised business license fees for the first time in almost 20 years and increased a tax on hotel rooms and street lighting.

Anaheim, facing a $10-million budget crunch, inaugurated a utility tax that is expected to cost the average household $5.23 a month. City officials hope it will raise enough money to avert 90 layoffs.

Fullerton will have to dip into its reserve fund to make ends meet this year, said Mayor Chris Norby. He said the city’s sales tax base suffered when several car dealerships relocated to new auto malls in nearby cities.

“The bottom line is, money is tight,” Norby said. “People want services and it’s tough to pay for them. So we can either deliver less, raise fees or try to deliver (services) more efficiently.”

Glenn Steinbrink, Fullerton’s accounting manager, said $3.5 million--about 7% of each department’s budget--had to be trimmed. That resulted in a hiring freeze, a reduction in the library’s operating hours and a cut in travel by city staff, he said. The city’s annual employee picnic was also dropped. The city raised fees for business licenses, paramedics and other services.

With no jail of its own, Santa Ana will be particularly hard hit by the new jail booking fees, which require cities to pay $154 for each prisoner booked into County Jail. Assistant City Manager Debra Kurita said those fees are expected to account for half of Santa Ana’s projected $5-million shortfall.

In addition, the city had to eliminate 21 positions through attrition, layoffs or transfers and was forced to delay expansion of the Police Department, Kurita said. It increased the annual cap on its utility taxes from $6,000 to $7,000, infuriating the largest businesses. And that cap will increase another $1,000 each year for the next five years, Kurita said.

Considering the intertwined budget woes of the cities and the state, Benninghoven said he could find no villains in the struggle.

“There just isn’t enough money to go around, that’s all,” he said.

How O.C. Cities Balance Their Budgets ANAHEIM 1991-92 Budget: $545 million Appropriation Reductions/Projected Shortfall: $10 million Jobs Affected: None. Tax Increases: A 5% tax on utilities--including electricity, water, gas and telephone. Other Measures Taken: Expenses in all departments reduced by 5%; some planned capital improvements cut or postponed. BUENA PARK 1991-92 Budget: $32 million Appropriation Reductions/Projected Shortfall: $1.5 million Jobs Affected: Hiring freeze; more than 20 positions vacant, including two for police and one for fire. Tax Increases: None. Other Measures Taken: User fees increased for several services, from building permits to photocopies of city records. BREA 1991-92 Budget: $24 million Appropriation Reductions/Projected Shortfall: $1.5 million Jobs Affected: Hiring freeze; three in police and one in administrative services vacant. Tax Increases: None. Other Measures Taken: Water and trash rates increased. COSTA MESA 1991-92 Budget: $31.9 million Appropriation Reductions/Projected Shortfall: None. Jobs Affected: None. Tax Increases: None. Other Measures Taken: None. CYPRESS 1991-92 Budget: $17 million Appropriation Reductions/Projected Shortfall: $400,000 Jobs Affected: Hiring freeze; openings can be filled only with City Council approval. Tax Increases: None. Other Measures Taken: None. DANA POINT 1991-92 Budget: $11 million Appropriation Reductions/Projected Shortfall: None. Jobs Affected: None. Tax Increases: None. Other Measures Taken: None. FOUNTAIN VALLEY 1991-92 Budget: $22 million Appropriation Reductions/Projected Shortfall: $577,000 Jobs Affected: Hiring slowdown. Tax Increases: None. Other Measures Taken: Some capital improvements delayed; a fire inspections fee implemented. FULLERTON 1991-92 Budget: $65 million Appropriation Reductions/Projected Shortfall: $3.5 million Jobs Affected: Hiring freeze; 25 unfilled. Tax Increases: None. Other Measures Taken: Business license fees and paramedic fees increased, and user fees increased in departments that include police, fire, engineering and community services. GARDEN GROVE 1991-92 Budget: $46 million Appropriation Reductions/Projected Shortfall: $5.6 million Jobs Affected: None, but employees took 3% pay cut. Tax Increases: Hotel bed tax increased to 9% from 8%. Other Measures Taken: Increased business license fees, water rates and street lighting and park maintenance assessments. HUNTINGTON BEACH 1991-92 Budget: $189.5 million Appropriation Reductions/Projected Shortfall: $2.9 million Jobs Affected: None. Tax Increases: Imposed 5% utility tax on cable television. Other Measures Taken: Unspecified spending cutbacks in all departments except police and fire. IRVINE 1991-92 Budget: $533 million (a two-year plan) Appropriation Reductions/Projected Shortfall: $4.2 million for the two years. Jobs Affected: None. Tax Increases: None. Other Measures Taken: Reduced community center hours; delayed some street repairs. LA HABRA 1991-92 Budget: $13 million Appropriation Reductions/Projected Shortfall: $300,000 Jobs Affected: Three eliminated through attrition. Tax Increases: None. Other Measures Taken: Trash rates increased; new or increased fees for variety of services, ranging from paramedic to photocopying. LA PALMA 1991-92 Budget: $10 million Appropriation Reductions/Projected Shortfall: None. Jobs Affected: None. Tax Increases: None. Other Measures Taken: None. LAGUNA BEACH 1991-92 Budget: $31 million Appropriation Reductions/Projected Shortfall: None. Jobs Affected: None. Tax Increases: None. Other Measures Taken: Several fees increased, including those for building and planning and for holding weddings in public parks. LAGUNA NIGUEL 1991-92 Budget: $18.8 million Appropriation Reductions/Projected Shortfall: None. Jobs Affected: 12 new employees to be hired, including three planners, one deputy city clerk and one community liaison officer. Tax Increases: None. Other Measures Taken: None. LOS ALAMITOS 1991-92 Budget: $6 million Appropriation Reductions/Projected Shortfall: $800,000 Jobs Affected: Limited hiring freeze; two current vacancies. Tax Increases: 6% tax on utilities, including electricity, gas, telephone and water. Other Measures Taken: 5% increase in business license fees; purchase of some equipment delayed. MISSION VIEJO 1991-92 Budget: $27.5 million Appropriation Reductions/Projected Shortfall: None. Jobs Affected: None. Tax Increases: None. Other Measures Taken: None. NEWPORT BEACH 1991-92 Budget: $88 million Appropriation Reductions/Projected Shortfall: None. Jobs Affected: Hiring freeze; seven maintenance and operations jobs eliminated through attrition. Tax Increases: None. Other Measures Taken: Capital improvements budget decreased to $21 million from $30 million. ORANGE 1991-92 Budget: $79 million Appropriation Reductions/Projected Shortfall: $2 million Jobs Affected: Hiring freeze. Tax Increases: None. Other Measures Taken: Water rates increased, as were user fees for some library, recreation, administration and other services; developer fees increased to fund park maintenance and police and fire services. PLACENTIA 1991-92 Budget: $20.7 million Appropriation Reductions/Projected Shortfall: $146,000 Jobs Affected: Two police positions eliminated through attrition. Tax Increases: None. Other Measures Taken: Cable television programming limited to coverage of government meetings and special events. SAN CLEMENTE 1991-92 Budget: $49 million Appropriation Reductions/Projected Shortfall: $800,000 Jobs Affected: City manager must approve all hiring. Tax Increases: Transient occupancy tax increased to 10% from 8%. Other Measures Taken: Fees increased on a variety of city services, ranging from park equipment rentals to photocopies; fees increased for plan checks and other community development services. SAN JUAN CAPISTRANO 1991-92 Budget: $11.2 million Appropriation Reductions/Projected Shortfall: $715,000 Jobs Affected: Three employees laid off; hiring freeze; eight vacancies. Tax Increases: None. Other Measures Taken: Deferring some maintenance of streets, buildings and other property; delayed vehicle replacement. SANTA ANA 1991-92 Budget: $242.4 million Appropriation Reductions/Projected Shortfall: $5 million Jobs Affected: 21 eliminated through attrition. Tax Increases: Tax on utilities--including electricity, gas, telephone and water--increased to 5% from 4%; $6,000 utility tax cap to increase by $1,000 a year over next five years. Other Measures Taken: Water rates increased; delayed increases in police staffing a code enforcement unit. SEAL BEACH 1991-92 Budget: $17.1 million Appropriation Reductions/Projected Shortfall: $800,000 Jobs Affected: Undetermined number eliminated through attrition. Tax Increases: None. Other Measures Taken: None. STANTON 1991-92 Budget: $12.5 million Appropriation Reductions/Projected Shortfall: $178,000 Jobs Affected: One recreation employee laid off. Tax Increases: Transient occupancy tax increased to 11% from 8%. Other Measures Taken: Increased business license, planning services and entitlement fees. TUSTIN 1991-92 Budget: $40 million Appropriation Reductions/Projected Shortfall: None. Jobs Affected: 10 eliminated through attrition. Tax Increases: None. Other Measures Taken: Delayed purchasing police cars, street sweepers and other items; electricity and phone usage trimmed; employees encouraged to car-pool and cut travel expenses. VILLA PARK 1991-92 Budget: $3 million Appropriation Reductions/Projected Shortfall: None. Jobs Affected: None. Tax Increases: None. Other Measures Taken: None. WESTMINSTER 1991-92 Budget: $28.6 million Appropriation Reductions/Projected Shortfall: None. Jobs Affected: None. Tax Increases: None. Other Measures Taken: None. YORBA LINDA 1991-92 Budget: $30 million Appropriation Reductions/Projected Shortfall: None. Jobs Affected: None. Tax Increases: None. Other Measures Taken: None. Source: Individual cities Researched by Kathie Bozanich / Los Angeles Times