$700,000 Revenue Drop Expected in San Juan Capistrano

City officials are bracing for an unanticipated $700,000 decrease in annual revenue, according to the mid-fiscal-year budget figures released this week.

The figures mark the second year in a row that San Juan Capistrano has faced a revenue shortfall. Last year, a shortfall of nearly $1 million forced the cutting of three full-time staff positions, but city officials do not foresee a need for such measures this year.

However, the shortfall does have city officials slashing expenditures wherever possible from the $11-million operating budget.

“The basic services of the city are being met, but we’re having to cut and trim every way we can,” said City Councilman Gary L. Hausdorfer, who joined his fellow council members Tuesday night in unanimously adopting a series of budget revisions resulting in eliminating all but $45,868 of the shortfall.

The largest cut of $426,020 came in what the city calls its non-personnel expenditures, which are largely consultant services.

The city also cut back $112,131 in personnel expenditures, primarily by eliminating overtime and slicing salaries and benefits for positions that are unfilled. A significant savings came from the vacancy in the post of assistant to the city manager, which Jeff Parker left last year.

The poor economy was blamed for the largest of the anticipated losses of revenue, a $300,000 decrease in sales tax for the year. Fees from new development will be down about $205,000 from what was anticipated for the year, and revenue from the state is off $112,000, according to the report.

In addition, officials are budgeting for an extra $200,000 in legal fees over the $470,000 already estimated for the year, said George Scarborough, assistant city manager.

On the plus side, the city received revenue of $286,000 this year from the sale of a house on Calle San Remo that it had purchased and rented to City Manager Stephen B. Julian. Julian has since bought a home.

The report indicated that the loss of revenue would eliminate all but two of the city’s anticipated capital improvement projects. Those remaining are a $300,000 traffic signal at the intersection of Rancho Viejo and Village roads and the city’s $117,000 annual share to the recently completed Stonehill Drive extension project.

Because none of the cuts were made in basic city services, Scarborough said, the public will not notice the revisions made this week. But the city was forced to defer maintenance in some areas, adding to the risk of further problems in the future.

“You might say we are walking a little closer to the margin for potential problems,” Scarborough said.

In addition to cutting its own budget, the city is requiring its Community Redevelopment Agency to trim $193,500 from its $824,420 in annual expenditures, according to a report released by Cassandra Walker, community development manager.