Newly Incorporated City Faces $400,000 Budget Deficit : Finances: The city manager says the shortfall is due, in part, to state budget problems and a city-imposed building moratorium.

Malibu’s city manager warned the City Council this week that the newly incorporated city will finish the fiscal year next June with a $400,000 deficit unless it cuts services or finds a way to increase revenues.

The budget approved earlier in the year anticipated general fund revenue of $6.4 million. On Tuesday night, however, City Manager Ray Taylor said revised figures indicate that income will fall slightly below $6 million.

Taylor said the shortfall was caused by state budget problems, a city-imposed building moratorium and the fact that “our budget was put together quickly.” He recommended an assortment of service cuts and tax increases.

Council members decided that further study was necessary and said a public hearing would be scheduled for sometime next month.

Taylor said the deficit was especially worrisome considering that the city does not yet provide many services that other cities regard as basic, including recreation, senior citizen or Neighborhood Watch programs. It also does not contain a reserve of from 5% to 10% of the total budget for use in an emergency or unforeseen budget crisis.

Taylor suggested that the city could save money by making less use of Willdan Associates, a firm that provides planning and engineering services, and by scaling back slightly on the law enforcement service Malibu receives from the Los Angeles County Sheriff’s Department.

By shifting some work to the city’s own planning staff, Taylor said the city could significantly reduce its reliance on Willdan and could save an estimated $144,000 for the fiscal year if the shift were implemented by January.

Similarly, eliminating a patrol car used by the Sheriff’s Department to control traffic on Pacific Coast Highway during peak hours would save $60,000. Taylor said he did not think that such cuts would have a negative impact on the community.

On the revenue side, Taylor advocated an increase in the utility users tax from 5% to 8%, to raise $350,000. He also recommended a variety of lesser revenue-raising tactics, including an increase in building permit fees, that would bring in nearly $200,000.

Together, the cutbacks would result in a saving of $183,000, while the taxes would add $546,500, putting the city in the black.