Officials Want to Dip Into Reserve Fund to Cover Cost of Major Projects : Budget: The plan is to spend $7 million for completion of the arts complex, high school gym expansion and a senior citizens center.

Costly building projects, notably the new Cerritos Center for the Performing Arts, are forcing the city to dip into its hefty reserve fund for the first time in its 36-year history.

A preliminary 1992-93 city budget proposes spending $7 million in reserves to help finance completion of the arts center, construction of a senior citizens center and expansion of the gym at Cerritos High School. The redevelopment budget earmarks a total of $17 million for these projects.

The total proposed budget comes to $81.3 million--$43.9 million in city expenditures and $37.4 million for the redevelopment agency. The budget for the current fiscal year is $86.3 million.

City officials say that dipping into the $23-million reserve fund is a one-time-only action necessitated by the building projects and is not a sign of financial problems. With its lucrative regional shopping center and auto mall, Cerritos has long enjoyed a reputation as a city with money to spare.

City internal affairs director John Saunders, who prepares the budget, said he would be concerned if reserves were being tapped to cover daily government operations. But, he said, “we’re dipping into reserves for major capital projects. The projects are committed, and it’s difficult to change course.”

The proposed redevelopment budget earmarks $11 million for the arts center, which has been under construction for two years and is scheduled to open in January as the focal point of the Towne Center office and retail complex. Designed to put Cerritos on the show-business map with big-name entertainment, the ambitious complex will cost more than $46 million--the most expensive project in city history. The center also will require an annual $2-million subsidy to operate.

The $4-million senior center at Pat Nixon Park and the Cerritos High School gym improvements also will be completed next year. The gym project is being carried out in conjunction with ABC Unified School District.

Councilwoman Ann B. Joynt said she would be concerned about spending reserves if it were to become a precedent, but added: “I feel comfortable that this is an interim measure. We have these reserves, they are there to get you over an interim time, and the interest rate is down to the point where we’re not getting a lot of interest off of them.”

Councilman John F. Crawley said: “The reserves will be replaced. The thing is, we have these buildings coming in now, and we have to pay for them now. I don’t want to see them stalled.”

At the same time, Saunders said, Cerritos has not escaped the economic downturn gripping the United States. The city has seen a dip in sales tax revenue and is casting a worried eye at Sacramento, fearful that the state Legislature--facing a budget shortfall of nearly $11 billion --will divert revenue that traditionally has gone to cities.

Saunders said he assumes that the state will stop distributing cigarette-tax money to cities, and may eliminate an even bigger source of revenue--motor vehicle fees--for cities. The city received $95,850 from cigarette taxes this year, and had budgeted $2 million from motor vehicles next year, he said.

The sales tax, which is the backbone of the city’s general fund along with interest income, has dipped $3 million to $13 million this year. Next year’s budget forecasts a sales tax of $14 million, but Saunders said that could drop if the state switches to a distribution formula based on population. The current formula links the distribution of tax revenues to the location where retail sales occur.

A legislative committee is now looking at various options that would divert money from local government to the state, according to the League of California Cities, which is mounting an effort against the move.

On the other side of the revenue picture, Cerritos is expecting $3.5 million a year from a shopping center that is scheduled to open in Towne Center in mid-1993.

The City Council will hold a budget study session at 7 p.m. Monday at City Hall. The council is scheduled to hold a public hearing and adopt the budget on June 18.