Ventura Officials Predict $740,000 Shortfall in Bid to Balance Budget

Comparing it to an unhealthy addiction, city officials warn that Ventura has become dependent on income from large reserves to pay for city services over the past decade--and faces a $740,000 budget shortfall this year as a result.

This is just one of the issues that City Council members will have to grapple with in coming months as they hammer out the final details of the 1997-98 city budget.

Council members received this year’s comprehensive, 4-inch budget proposal near midnight Monday. They will hold several budget study sessions over the next month, and must approve a final spending plan by the end of June.

In presenting next year’s budget proposal, Marilyn Leuck, director of human resources, told the council that the city has balanced its spending plan on a year-to-year basis--for 1996-97 and 1997-98--but will face a loss in interest earnings in coming years.

The city has become accustomed to receiving $3.1 million a year in interest earnings, which it has used to balance its budget. But as the city dips into its reserves to fund long-planned capital projects, the interest earnings drop.

“This interest-earnings addiction has served to create a ‘false’ revenue base for over a decade,” City Manager Donna Landeros wrote in an executive summary for the 1997-98 budget. “We must now experience the pain of curing the dependency.”

Leuck said fixing the problem will take years.

“The council is going to need to deliberate and come up with a game plan that over time can correct this problem,” Leuck said. “It took us 10 to 12 years to get here. We can’t walk away from that in a year.”

Councilman Gary Tuttle was puzzled by Landeros’ characterization of the budget as balanced despite the shortfall.

“I hear balanced budget, balanced budget, balanced budget--except for a $740,000 shortfall,” he said. “What does it mean?”

Landeros explained that the city can use reserves to balance its finances this year, if necessary. However, she opted to present the spending plan without the reserves, hoping that the city can come up with ways to cut costs. She said a city’s budget is balanced as long as its total resources meet its total expenditures.

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But Tuttle was not satisfied with her answer.

“It’s like saying the roof’s not leaking, but we have a hole in the roof,” he said Tuesday.

Tuttle also expressed concern that if budget cuts are going to have to be made, he wants the council to make them.

“I know it’s politically tough, but I want to make those decisions,” he said.

Landeros assured him that the council will do so.

“This is only a proposal,” she said. “Everything from A to Z is indeed a council decision.”

In leading the council through the budget highlights, Leuck also warned that Ventura is now a mature community that needs to come up with a long-term revenue strategy.

Through the 1980s, Ventura developed quickly, and that growth helped ensure the city’s fiscal security. But today, Ventura is largely built out, which means that it can no longer rely on development as a revenue source.

Posing a further challenge, a new state law requires that any future tax increases be taken to the ballot box.

In fiscal 1996-97, Ventura’s major revenue sources--which include sales taxes, property taxes and motor vehicle fees--grew 4.2%. But in her executive summary, Landeros cautioned that a minimum of 5% to 7% revenue growth annually is necessary to sustain present levels of service.

And that is only half the equation, Leuck added.

“It’s a couplet that has to also include making every effort to contain costs,” she said.

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The budget includes predictions of $300,000 in new sales taxes when new auto mall dealers open for business in June, and a renegotiated golf lease should generate an additional $125,000.

Although the city has poured millions of dollars into downtown redevelopment, Leuck said the city cannot expect to see increased revenue there until next year, when the planned theater complex opens.

“We are still ahead of the curve on that,” she said.

Leuck said past Ventura budgets have been cryptic even to accountants, but “there should be no mystery in a budget.”

“Even a trained professional could not pick up our budget and easily understand what the city was paying for,” she said.

Under Landeros’ direction, Ventura is one of 40 California cities undergoing a pilot program to track municipal service costs and benefits. The results will be used to compare costs and services delivered with other medium-sized California cities.