SEAL BEACH : City Budget Woes Keep Getting Worse

After three years of painful budget cuts made necessary by large funding shortfalls, some officials have concluded that the city’s continuing fiscal woes have brought it to a troubling crossroad.

Faced with a budget gap likely to be more than $1 million this year, both city staffers and some council members question whether there is any more fat to be trimmed from Seal Beach’s budget.

That leaves officials with two equally bitter prospects: make radical cuts that would reduce city services or raise taxes on residents and businesses.

So far, discussion has centered on some sort of utility-users tax increase. Right now, the city levies a 5% tax on telephone, electric and gas bills.

Though no formal proposal has been made, some officials have suggested nearly doubling the tax as a way of closing the budget gap.

Such a tax hike might spare City Hall from more cuts.

Over the last two years, the city staff has been reduced by 22% and operating expenses have seen similar reductions. At the same time, spending has dropped as the city continues to reel from deep cuts in state funding. In the 1990-91 fiscal year, the city spent $13 million. In the 1992-93 fiscal year, it is expected to spend $10.6 million.

“The city has already been subjected to two consecutive years of absorbing (revenue shortfalls) through cost-cutting,” City Manager Jerry L. Bankston said. Noting the size of this year’s projected shortfall, he added: “I don’t see how simply eliminating a position or two will be sufficient.”

To some, a tax increase makes sense because the most likely alternative--massive cuts in services--could prove unpopular with many residents.

When last year’s budget shortfall prompted officials to discuss the possibility of turning over control of the city’s beaches to the state, many residents expressed strong opposition to the idea.

Nor is Seal Beach likely to eliminate its Police Department in an effort to cut costs. This approach is now being considered by San Clemente, which might disband its department and hire the Sheriff’s Department to provide police services.

“I would rather raise the utility tax than contract out for police service,” Councilman William J. Doane said. “I think one thing nice about the city and one reason we don’t have the gang problems and graffiti of other places is because we have our own Police Department.”

Added Councilman George Brown: “The Police Department would be the last to go as far as I am concerned. We have a good Police Department that is concerned with local people. I question how much money we would save in the long run.”

None of this means that the idea of a utility tax increase is at all popular.

If approved, it would mark the third tax or fee increase in a year. Last fall, the City Council approved an increase in water rates. And next month, trash-collection fees will be increased by about $1 per month.

Several council members vowed to keep any utility-tax increase as small as possible. And Brown, a retired accountant, said he would consider voting for an increase only after personally combing through the city’s budget in search of items to cut.

Brown also expressed concern that any utility tax be fair to residents with low incomes.

“For some elderly people, retirement income is very limited. (Some of them) can’t afford another tax,” he said.