Santa Paula’s Spending Guideline Projects Growing Deficit by Turn of Century

City officials are poised to adopt Santa Paula’s first five-year financial plan although it forecasts an anticipated annual deficit of $1.2 million by the turn of the century.

The plan provides a nonbinding spending guideline for the city of nearly 27,000 through June 2001. It suggests budget forecasts for municipal departments, including police, fire, planning and public works, and considers such additional revenue sources as a utility tax and additional property taxes generated from the construction of up to 1,000 new homes.

Council members offered few specific suggestions during a two-hour study session Monday night on their preferred methods for dealing with the projected financial shortfall.

“We are looking at some dismal numbers here, but also the potential to make this a brighter future,” Councilwoman Laura Flores Espinosa said during the meeting. After the session, she conceded that the council produced few concrete ideas for solving the looming financial crisis.

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“I think the council has to get a little more specific,” Espinosa added. “I intend to force the issue. I will bring back a plan, in particular for job development, that will address the budget problems.”

An ambitious residential and commercial building plan seeks to create projects valued at more than $200 million during the next five years. Such development is contingent upon a yet-to-be-completed update of the city’s General Plan, which envisions annexing thousands of acres of adjacent county land.

Planning Director Joan Kus acknowledged after the meeting that the scope and timing of the proposed new home construction are little more than a “wild guess.”

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Yet Mayor Robin Sullivan said she doesn’t believe that the optimistic development assumptions undermine the validity of the advisory financial plan, even though few homes have been built in Santa Paula in recent years.

“I’m comfortable with staff that they’re not going to give us figures that are so far out they’re not in reality,” Sullivan said, adding that the plan’s intent is not to stake the city’s financial stability solely on home building.

“I don’t think we’re necessarily going to focus on one revenue source to solve the problem. . . . We need to diversify.”

Most of Monday’s session was spent on a page-by-page review of the budgetary analysis contained within the 127-page document. It states that Santa Paula expects to spend more than $20 million this fiscal year, and about $27.2 million to provide municipal services in the fiscal year ending June 30, 2001.

The plan projects a shortfall in the city’s discretionary budget of about $112,000 by June 1998, progressively worsening to $1.2 million by 2001. But using a $1-million reserve could soften the impact of the financial crunch.

“Even if we use the reserve and don’t change the revenue stream, we’re still in trouble somewhere down the line,” interim City Manager Murray Warden warned.

Moreover, the city’s street maintenance budget is expected to be almost $100,000 in the red in the fiscal year that begins July 1.

A detailed department-by-department financial analysis includes everything from building a $1-million gym in conjunction with the Santa Paula Elementary School District to hiring 10 additional police officers to handle the anticipated growth.

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The document also includes three options for reducing the shortfall, which Sullivan said will be examined in greater detail later. The options all call for various spending cuts and increased taxes. One proposal suggests establishing a 5% utility tax in November 1998--a move that would require voter approval.

“We’re going to have to have another workshop to deal with the options, otherwise it’s just a document hanging out there without serving any purpose,” Sullivan said. “This is also a precursor to our budgeting process that starts in the next month or so as well.”

The financial plan could be adopted as soon as Feb. 18, Warden said.