Ax Still Looms Over Oxnard’s Spending Plan, Forecast Says : Finances: Officials say they have already trimmed the fat from the budget, but a $2.6-million deficit is predicted for the next fiscal year.

After trimming $13 million from the city’s spending plans the last three years, Oxnard officials will have to wrestle with a $2.6-million budget deficit next year, according to a forecast by a city analyst.

Elected officials, who say they have already cut the obvious waste in the city’s budget in recent years, say further cuts appear inevitable.

“Nothing is sacred,” Mayor Manuel Lopez said. “Anything that was easy or obvious we’ve already done.”

The forecast by management analyst Dennis Scala, to be reviewed by the City Council today, predicts that the local economy will continue to shrink for another year before beginning a slow recovery by mid-1996.

The six-year forecast predicts that Oxnard will face budget deficits averaging $2 million a year through the next five years, primarily because of slow consumer spending and continuing diversion of property-tax revenues by state legislators.

Based on forecasts by UCLA and the Los Angeles-based Center for Continuing Study of the California Economy, the Oxnard report is somewhat more grim than the assessment he prepared last year, Scala said.

“Last year, we thought we would reach the end of the recession within a year,” said Scala, who prepared forecasts for the city the last three years. “But we’re not as optimistic this year as we were then.”

Scala blamed cuts in California’s defense industry, weak home sales, a decline in exports and corporate restructuring for the state’s fourth straight year of economic weakness.

“Our most optimistic view is that the economy will remain in a recession at least through the beginning of fiscal year 1995-96,” Scala said. “Most of our pessimism is based on the lingering recession and what the state will do.”

Responding to the state’s deficit crisis the last two years, legislators diverted $3 million in property taxes that would have otherwise gone to Oxnard, Scala said. City officials expect a further raid of $900,000 next year, he said.

The state partly offset the loss to Oxnard with a subsidy of $1.15 million this year, but Scala said local officials don’t expect the state to pay a subsidy next year.

“Were it not for the $3.9 million of state hits anticipated through fiscal year 1994-95, the city would show a surplus of $1.3 million” next year, Scala said.

Penny Hoffman, executive director of the Oxnard Chamber of Commerce, said the forecast accurately reflects the weak economy reported by the chamber’s members.

“I’m a real positive person, but I agree we have a few years to go before we come out of” the economic doldrums, said Hoffman, who noted that membership has dropped as companies have folded or moved from the county.

Hoffman said the top priority that Oxnard business leaders identified in a recent survey was for the city to help retain businesses and increase jobs.

While stopping short of saying how the city should further reduce its budget, several council members said Monday that the city took a step in the right direction with a reorganization approved earlier this year.

The council voted to reduce the number of city departments from 16 to 10, with personnel cuts coming mostly in middle management.

“One thing we’re trying to do is flatten the organization so it won’t be so top-heavy,” Lopez said. Additional cuts, he added, would probably be “very painful.”

The reorganization followed two rounds of budget-cutting during the current fiscal year that trimmed nearly $3 million from the city’s $59.2-million budget. Before that, the city had cut spending by $5 million each of the preceding two years, leading to closed park restrooms, closure of the city’s South Oxnard Community Center, and reduced hours at City Hall and the Oxnard Library.

“There will come a point here when we will have done all we can do without cutting services dramatically,” Councilman Tom E. Holden said. “But it would not be fair to ask the residents for other revenues like a utility tax until we prove we’re operating as efficiently as possible.”

One avenue for greater efficiency, Holden said, was to transfer more city services to the private sector.

“Nobody likes the word privatization , but we will have to look at ways to do more with what we have,” Holden said. “We won’t go in swinging a machete, though. We need to make people part of the solution.”