Cities Now Able to Go on Spending Spree

After years of relentless budget cutting, Ventura County cities are seeing a steady stream of tax money flowing into their coffers.

For the first time in years, cities across the county are able to think about new spending, rather than trying to find fresh places to cut. They are dusting off long-neglected projects, such as trimming trees, replacing old computer systems, building parks and expanding library hours.

“Certainly, cities have had more money to work with in the last year or two than they have in the past 10 years,” said Bob Biery, former finance director and city treasurer in Thousand Oaks.

But having learned the lessons of the recession-wracked early 1990s, they are also squirreling away large amounts of cash so they won’t be caught unprepared by the next economic downturn.

Because up to half of a municipality’s budget comes from local sales taxes, the health of cities is a direct reflection on the health of the local business community. As more people go out to restaurants, redesign their patios and buy expensive jewelry for loved ones, city budgets reap the benefits.

Cities like Oxnard and Thousand Oaks, which have a strong retail base, are realizing the greatest rewards. Those with fewer commercial outlets, such as Santa Paula and Port Hueneme, are not doing as well.

For the cities that are benefiting, the first things to be funded are the staples of city government--police forces, libraries, street repairs.

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Ventura, which has the highest per capita revenue at $321 per person, is working on sprucing up the city, said Sheryl Lawanda, budget and finance manager.

“That is our big push because infrastructure was looking a bit aged,” she said. Trees are being trimmed and planted, roads repaved and old water lines replaced.

Last year, when the boom finally got going for cities, $500,000 went to trim every palm tree in the city. Some had not been shaped since 1978. This year, the city will trim close to 10,000 additional trees at a cost of about $250,000.

“Trees really set the tone. If you have ill-kept trees, it’s hard to make a city appear beautiful even with private improvements,” said Daryl Wagar, parks supervisor for Ventura. “They are the largest feature in the street and shouldn’t look like they have been neglected.”

The city is also spending $400,000 to reconstruct highway medians. The median along Telegraph Road between Five Points and Victoria Avenue will be completely redone; the gravel will be replaced with flowering shrubs and trees.

By the time all the median work is done, the cost will be around $1 million.

Those expenditures are being made without touching $12 million tucked away in reserves, a healthy 21% of the city’s general fund.

“That money is sacred,” Lawanda said.

The future looks even brighter.

Lawanda said the capital improvement plan for the next five years includes construction of a 100-acre sports park at Kimball and Telephone roads, a cultural district in the downtown area with more theaters and art galleries, and the replacement of water lines.

Reflecting the boom in local spending, sales tax revenue made up 45% of Ventura’s income in 1998, up 4% from last year and 5% from the year before.

In municipal budgets, the first to go in hard times are things like library and museum workers.

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So the fact that Oxnard will expand night hours at the city-run Carnegie Art Museum in May is an indication of how good things have gotten.

“We want people to be able to come after work on Fridays,” said Suzanne Bellah, museum director.

Oxnard has about $9 million in reserves, close to 15% of its $62.7-million general fund.

“We feel confident enough [of the city’s financial position] that we will be conducting a midyear review to see if we want to provide any increased services,” said Grace Magistrale Hoffman, deputy city manager.

The city may add children’s programs at the library, which would cost about $46,000. Another change is watering trees more frequently and removing roots that are pushing up sidewalks, at a cost of $91,000.

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Simi Valley has reserves of $7.4 million, 19% of its $38-million general fund.

“We have what we call a prudent reserve,” said Ken Schechter, the city’s budget officer. The reserve is actually a third larger than city policy calls for.

The city is financing a $2.5-million overhaul of its financial information computer system over the next two years.

This year, the city will be repaving and resurfacing major roads, including Erringer Road and Sycamore Drive, at close to the same cost.

In the future, the city will spend $3.5 million to construct storm retention basins.

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In Thousand Oaks, the general fund was up almost 5% from 1997 to 1998 and up close to 13% from 1996.

“I think we’ve done very well in this community in the last three years and we’ve been realistic about it,” said Biery, the former city treasurer. “The libraries are fully utilized and the council has been cognizant of making sure the police remain strong.”

The city has close to $8 million in reserves, 15% of its $52-million general fund.

The city is in such good financial condition that it will spend $10 million in the next few years on construction projects without dipping into its reserve fund.

Over three years, the city will spend $6 million to add 35,000 square feet to the library, increasing its size by a third.

The city is also renovating the former city hall so it can be rented out; that work will cost $4 million over two years.

“We had a good amount at the end of last fiscal year to accommodate these things,” said Candis Hong, interim finance director. “And we did very well with sales tax this fiscal year, more than we anticipated.”

The $8-million reserve is designed to provide three months of operating costs to protect against an economic downturn.

“They don’t want to spend everything they’ve got today and then cut services when things slow down,” Biery said.

Biery’s caution reflects the attitude of all Ventura County city officials, who say money now doesn’t mean money tomorrow.

And Mike Saliba, president of the Ventura County Taxpayers Assn., thinks that is the right attitude: Governments should always be conservative.

“I would say that during good times, the first thing a city should do is increase reserves because the pendulum always swings the other way,” he said.

“As soon as reserves are to the point where the city could handle a downturn,” officials can begin investing in public works projects, he said.

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While most cities aim for reserves that cover at least three months, some cities, such as Ojai, have far more than that. Ojai has $4 million in reserve, a full year’s expenses.

It has built up that bank account since 1990, when the city had only $70,000 in reserves.

“Those were scary times,” said Andrew Belknap, Ojai city manager. Reserves were low because tourism collapsed, partly due to the temporary closing of the Ojai Valley Inn.

Although there is more money now, it is important to be prudent, he said.

“It has only been the last three years that we’ve seen positive growth,” he said. “We feel somewhat vulnerable to recessions because our main industry is tourism.”

The city gets about 25% of its $4.6-million general fund from hotel taxes. “Because of that, we are subject to a great deal of variation and that leads us to be conservative,” Belknap said.

Hotel tax income grew 12% last year, from $963,856 to $1,081,444 in 1998.

The city will be constructing a one-acre park at its entrance in the next couple of years. This month, it set aside $5,000 to provide after-school sports programs and other activities for children.

The good times are not spread equally around the county.

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Santa Paula has actually seen its income fall.

“I couldn’t even buy police cars last year,” said Peter Constantini, city manager in Santa Paula, where the general fund decreased by 12% last year. “When I sit down to do the budget, vehicles falling apart are vying for money that is needed to keep programs going or to give raises to our employees.”

Santa Paula has reserves of $1 million, which is 15% of its $6.4-million yearly operating budget.

“In our situation, where our infrastructure is falling apart, having $1 million around is not unreasonable,” he said, noting that the city has not grown in services in 20 years.

The money collected from sales tax revenue has fallen in each of the last three years and Constantini said he has no idea why.

“It could be sales tax leakage,” he said, explaining that people who live in one area will shop in another, diverting tax money from the local economy.

Port Hueneme, another city with few strip malls, has turned to internal revenue sources such as user’s fees to raise money.

Utilities fees accounted for 32% of the city’s 1998 budget and are expected to increase this year, City Manager Dick Velthoen said.

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In contrast to a city like Oxnard, Port Hueneme generates only 25% of its budget from sales taxes. Velthoen said the city will need to dip into its reserves for about $500,000 to balance its budget this year.

Port Hueneme has about $2.8 million in reserves, 25% of its budget of $7.74 million.

Another reason cities are cautious these days is fear that in the next recession, the state will siphon off money obligated to the cities to balance its own budget, as it did in the early ‘90s.

“Ultimately, the state can do what they want,” said Belknap, the Ojai city manager.