FOUNTAIN VALLEY : City Budget Includes More Belt-Tightening

A preliminary 1992-93 budget of $21.9 million presented to the Fountain Valley City Council this week includes more of the same belt-tightening measures, including a hiring freeze, that the city has undertaken during the last year.

As with most cities, Fountain Valley still faces a revenue shortfall because of the economy. For the first time in at least 10 years, officials have projected a revenue decline for the coming year.

“There are no new services, no new positions, no new capital,” said Finance Director Elizabeth Fox. “Every new budget we’ve always estimated that we’d get more (in revenue). This is the first year that we’re estimating it will not be up.”

A hiring freeze that began one year ago, creating six vacancies as employees retired or moved on to other jobs, will continue this year, Fox said. There have been no layoffs.

In addition to the hiring freeze, the city will continue to reduce its spending, rather than cut back on city services. Because of these belt-tightening measures, current expenditures are estimated to be under budget by $500,000.

Also, the city will feel the economic effects from the state and county governments passing on expenses and fines to the cities.

Despite the bleak economic picture, Fox said Fountain Valley is better off than most cities and less vulnerable to economic downturns because, with no shopping malls or auto dealers, it is not dependent on declining sales tax.

“We’ve really been pretty fortunate here because we don’t get the tremendous swings that other cities get. When all of a sudden the economy comes to a screeching halt, they’re counting on that money,” she said.

She added that the city is 97% built out.

“We know we’re not going to get new development and horrendous surges in our property tax or sales tax because we’re just not going to get that kind of a change, which does make it a little easier because we’re not so volatile,” Fox said.

The projected 1992-93 general fund revenue of $21.3 million is estimated to be $755,729 less than the revenue in the current year’s budget.

Personnel costs account for 67% of the budget and will cost $609,469 more in the upcoming year. Operating expenses account for 19% of budget and have decreased by $77,578, or 1.8%.

Fox recommends the city dip into its contingency reserves to balance the budget. This year, she estimates that the current budget picture will force the city to use $500,000 in reserves for that purpose.

Sales tax projections, which already include all proposed development, have been kept at the 1991-92 budget level. That may be optimistic, Fox said, because the city this year has received between $70,000 and $90,000 less than estimated for sales tax each quarter.

Unless the economic picture improves, Fox said, “the city will have to continue to deplete its reserves, consider new fees and charges and consider the possibility of service-level decreases.”

The City Council will take up the budget issue again at its next meeting June 2 at 7 p.m., and is scheduled to adopt it June 16.