Local property owners may get a break on their property taxes if the county assessor’s predictions pan out, but it sure would put a crimp in the city’s revenue, already hurt by the economy.
General fund revenues for 2010-11 are predicted in the preliminary budget to be $44.7 million. Expenses are estimated at $45.9 million.
The difference will come out of the reserve fund, which is almost $2 million above the mandated 10% of the city budget, backed up by a $2.5 million Recession Smoothing fund, which could be tapped if property tax revenue tanks.
“We are expecting to beat the assessor’s estimate,” city Finance Director Gavin Curran said in his report to the council Tuesday at the annual budget workshop.
City officials won’t know until late June or early July if Laguna will be one of the Orange County cities that the assessor expects will see a decline in taxes, but the 2010-11 budget prepared by City Manager Ken Frank is based on no changes. The city has a record of exceeding the assessor’s estimates, including last year when the property tax receipts increased by 3.8% when the assessor estimated a countywide percent increase of minus-one to plus-one.
“I suspect we are the envy of other Orange County cities [due to] our famous city manager and his way of making a dollar stretch,” Mayor Pro Tem Toni Iseman said.
Every 1% increase or decrease in the property tax is worth about $200,000, a significant sum in the current economic climate when city revenue from sales and hotel bed taxes took a nose dive.
Escalating costs of about $1.2 million to run the city — increases in employee health insurance and pension benefits and operating the homeless shelter, for examples — exacerbate the problem.
“I told department heads not to ask of dime more than they got this [2009-2010] fiscal year,” said Frank, who is required by law to submit a balanced budget to the City Council by May 1 of each year.
Balancing Laguna’s budget this year was relatively painless compared to the state, counties and other cities, Frank reported to the council.
“There are no layoffs, only minor reductions in service and no mandatory furloughs,” Frank said.
Expenditures have been held to 2009-10 levels, by some judicious juggling.
Frank ordered departments to absorb unavoidable costs by savings elsewhere in their budgets.
He pared worker compensation costs by $200,000 and eliminated exceptional performance pay in the Fire Department, which saved $71,000 and lowered it in other departments at a savings of $100,000.
At Frank’s recommendation, the council refinanced the money owned the Public Employees Retirement System for retroactive increases for safety personnel, reducing the payment by $115,000.
Sacrifices by part-time lifeguards and the Municipal Employees Assn. who relinquished 5 percent salary increases due to start July 1 were commended. They helped balance the budget and prevent layoffs, Frank said.
“The problem is not this year,” Frank said. “That starts next year and will get worse in the following two years.
“By 2014, we will be $2.7 million in the hole and that can’t happen.”
He said there are three options: Eliminate some positions, reduce paychecks or increase revenue.
Frank is recommending that another $800,000 be transferred from the required 10% reserve to the Recession Smoothing Fund the council established at the mid-year budget review on Dec. 9, 2008.
Requests and suggestions
About a dozen members of the public attended the budget workshop, a definite improvement from previous years.
They had some suggestions on how the city should spend its money.
Recreation Committee Chairwoman Rebecca Meekma applauded the plans to renovate the Main Beach Playground, which is included in the Capital Improvement budget for the upcoming year.
John Latta, representing the Laguna Beach Firefighters Assn., said the city could save money by joining the Orange County Fire Authority. He said the authority is in good financial shape, when questioned by Iseman about reports of substantial reductions in revenue.
“I haven’t heard that,” Latta said.
The issue has been raised before and opposed by previous councils and vocal residents.
Three Arch Bay resident John Buck requested the council consider extending the South Route summer trolley service to his neighborhood. He said the service would increase patronage at downtown stores, restaurants and the festivals, as shown in a pilot program run for two weekends last summer when 136 riders per day rode the trolleys.
Buck said his neighbors would settle for one bus an hour.
Frank advised the council that the buses would have to go to Monarch Bay Plaza to make a turnaround, taking extra time that would eliminate three or four bus trips.
“I don’t recommend any option that diminishes service to the rest of the city,” Frank said.
Traffic consultant Dan Boyle said 84% of the riders on the South Route get on or off north of the Montage Resort & Spa.
Other options include continuing Main Line bus service after 6 p.m. and on Sundays during the summer, renting another trolley or buying a van to ferry riders from Three Arch Bay to the hospital bus terminus.
Hospital neighbor Larry Gibney would prefer the city stop using the hospital parking lot and Fouad Havalla recommended moving the terminus to Monarch Bay.
Design Review Board member Ken Sadler asked the council to add staff support for the board, as recommended by the Design Review Task Force.
Fewer projects are being reviewed and the workload for board members has decreased, Sadler said, but staff-assisted projects are labor intensive.
“DRB staffing has been stolen from the Planning Commission,” Frank said. “But we could look at building and zoning fees to see if they should be raised.”
Laguna Beach Animal Shelter volunteer Elizabeth Bauer urged the council to approve the renovation of the shelter, which was an item on the agenda for the regular meeting, which began at 6 p.m.