HUNTINGTON BEACH : City Reduces Debt With Bond Interest

The city has reduced this year’s $1.4-million deficit by almost two-thirds by transferring $900,000 in bond interest revenue to its general fund.

The interest, earned on $10.2 million in unused bonds, will be spent to offset this year’s debt-service payment on those bonds.

Since the city in past years has paid the bond debt from the general fund, the transfer of interest earnings will effectively shrink the city’s budget shortfall for 1991-92, City Administrator Michael T. Uberuaga said in a report to the City Council.

The deficit for the current year--now $534,000--represents a minimal part of the city’s overall financial woes, which have prompted city officials into a nine-month effort to overhaul the budget.

The city’s most significant, immediate financial concern is next year’s budget shortfall, projected to be $6.5 million.

The unused bonds--which became available when the city canceled a parking garage that had been planned north of the Municipal Pier--will figure prominently in next year’s budget-tightening.

The council is scheduled next month to decide whether to allocate the $10.2 million for deferred capital projects or to refund the bonds to holders.

A citizens panel established to propose budget reductions is recommending that the council cash in the unused bonds, which would eliminate next year’s $900,000 debt payment and therefore reduce the budget shortfall by that amount.