San Clemente City Council Studies New Taxes and Fees : Budget: Officials say disbanding Police Department won’t be enough to offset potential $6.35-million deficit. Measures could cost each resident up to $17 a month.

Residents could pay three new local taxes and fees, costing up to $17 a month total, as the City Council searches for ways to avert a potential $6.35-million budget deficit.

The council voted Wednesday night to save money by disbanding the city Police Department and contracting for service with the county Sheriff’s Department. But saying that step won’t go far enough, the council also directed the city staff to explore new taxes.

“Quite frankly, we’re charting a whole new territory,” Councilman Scott Diehl said. “It’s a bitter, bitter pill to be foisting upon the citizens of San Clemente.”

In a series of votes late Wednesday, a council majority voted to consider a storm drain and street sweeping utility fee to raise about $970,000 annually, a street maintenance assessment district to meet about $1.4 million in yearly needs, and a utility tax to compensate for a potential loss of about $1.5 million in property tax revenue to the state.

If the measures are approved, owners of homes, businesses and industries would pay the taxes. Each would pay a different rate, but the taxes would cost an average homeowner $12 to $17 a month.

Council members said the utility tax would only be enacted if other means can’t be found to offset the expected loss of property tax revenue to the state, which is diverting funds from local governments to balance its own troubled budget.

The taxes could be enacted by a vote of the council. No public vote would be required.

“These are extremely significant steps that have been taken,” City Manager Michael W. Parness said. “They’re extremely difficult decisions but the kind of decisions that are crucial if this city is to survive and remain viable.”

Long-overdue street and storm drain repairs are among the most pressing issues, Parness said.

“The streets in this town will be powder in 20 years,” he said. “It’s not like you can ignore this and not do it.”

The three funding options were among tax and fee proposals outlined in a 300-page, long-term financial plan to deal with a deepening budget crisis in the city of 43,000. Council members indicated during the meeting that they were only interested in pursuing the three tax and fee alternatives.

Unless major steps are taken, the city, with its $20-million annual general fund budget, could face shortfalls ranging from $6.35 million to $8 million in each of the next five years, according to the financial report.

Besides the potential new taxes and fees, the council asked staff members to make more cuts and streamline services to deal with an estimated $844,000 shortfall in the budget reserve accounts that pay for such things as workers’ compensation and liability insurance.

Last year, the city cut about $2.4 million--about 12% of the general fund--and eliminated 25 positions, about 8% of the total city work force.