Budget Tightening, Improving Economy Benefit Most Area Cities

Budget tightening last year and a slowly improving economy have paid off for most Westside cities, where residents are expected to be spared from cuts in services and personnel--at least until June 30, the end of the fiscal year.

Two cities are showing shortfalls--Culver City and Beverly Hills. But finance officers in Malibu, West Hollywood and Santa Monica, who are in the midst of budget reviews, say their cities are generating about 2% more in total revenues than they had expected, with expenditures at or below budgeted levels. And the story is the same in Los Angeles.

The revenue surpluses are modest, but they are an improvement over recent years, when cities had to cut capital projects and trim their budgets to avoid running deficits.

The reasons for the increased revenues vary from city to city. In West Hollywood, for example, sales tax receipts have risen as a direct result of two businesses--House of Blues and Jerry’s Famous Deli--both of which opened in the past year. In Santa Monica, hotels are booming, generating 10% more than last year in transient occupancy taxes.

“Overall, things are a little better than they used to be, but we all agree that the good old days are gone,” said John Jalili, Santa Monica city manager.

But Southern California’s slow economic turnaround has not been the budget booster that most Westside officials say they had expected, and some cities have been hurt by the lackluster recovery. Culver City’s revenues are down 3%.

Although Culver City has offset its revenue losses with a 3% savings in expenditures, city officials may have to consider cutting some capital projects and scaling back programs to keep the budget balanced, according to one of the city’s finance experts.

“To identify a reduction in revenues midyear, that’s unusual,” said Diane Hadland, assistant to the city’s chief administrative officer. “We budgeted with the idea in mind that we had hit bottom and that we are coming out of the recession in ‘94-95. But we haven’t quite dug ourselves out of the recession like we thought.”

Similarly, Beverly Hills is running about 2% short in revenues. Its sales tax receipts so far this year have been less than the city had estimated. The City Council is expected to discuss the matter during a Feb. 21 meeting.

“We think we’ll end up OK because we’ll hold back on expenditures,” said Don Oblander, finance director for Beverly Hills. “For the last couple of years we have tended to come up short.”

Still, a midyear review of other city budgets shows slight growth. The city of Los Angeles, for example, expects to be about $22 million ahead in revenues by the end of the fiscal year, which equals about 1% of the city’s general fund budget.

“We’re cautiously optimistic,” said Marc Girard, the city’s assistant administrative officer.

Caution is justified, said Edward Corser, the city’s assistant administrative officer. Although Los Angeles’ budget figures are strong, the city expects in the next six months to receive payments from other sources--a total of $197 million from the Los Angeles Department of Water and Power and $29 million from the Los Angeles Community Redevelopment Agency.

“Until we get that, we can’t close the books on this year,” Corser said.

There’s a similar contingency in Malibu. There, revenues and spending are on target, but city officials fear that more heavy rains or a wildfire could force them to alter budget predictions before the end of the year.

“Right now, the budget is going as planned,” said Mark Lorimer, Malibu’s assistant city manger for finance. “However, Malibu has sustained tremendous disasters, and that has thrown our planning off kilter in the past. If we have another disaster, we might have service-level cutbacks.”