The City Council adopted a $65 million budget for fiscal year 2010-11 in less than an hour on Tuesday, but the financial fandango is not over.
Adoption of the budget as recommended by City Manager Ken Frank was unanimous, with no major changes from the preliminary budget publicly reviewed at the May 4 council meeting, but with two caveats.
"First: We won't know where [our] budget stands until the state resolves its budget and we see if they can find a way to take any money away from us," Frank said. "And second: We get the assessed value from the county."
The assessed value is the amount property owners will pay in taxes — a percentage of which is revenue for the city — that provides 56% of the city's general fund to be spent at the discretion of the council.
Staffing cutbacks have delayed the valuation, but rolls for all cities are expected to be ready by mid-July, Frank said.
"So we adopt the budget tonight and we all sit around and wait and see if we get zero-percent increase or a cut or even a positive, but nobody expects that," Frank said.
Each a 1% change in property tax revenue shifts the general fund by $200,000, up or down.
"It is extremely likely that the City Council will need to revisit the budget early next fiscal year," Frank said.
As adopted, the city will begin the new fiscal year with an estimated General Fund balance of $6.7 million. General Fund revenues are projected to be $45 million in round numbers. Estimated expenditures are $46 million, with a projected balance of $5 million at the end of the 2010-11 fiscal year.
Frank presented a balanced budget for the next fiscal year, as required by city law, by dipping into the "Recession Smoothing Account" set up in December of 2008 for just this purpose.
No salary increases were approved for most city employees, including management. However, the Laguna Beach firefighters declined to forego their contractually agreed-upon 5% increase, effective July 1. The Municipal Employees Assn. and the Marine Safety Assn. did agree to pass on their cost-of-living raises, also scheduled to kick in on July 1.
A request by City Treasurer Laura Parisi to bump her job to full time was denied.
Total performance payments -- recognition of exceptional work -- will stay the same, but possibly be distributed differently, Frank said..
City Clerk Martha Anderson's performance pay was raised from 3% to 5% to equal Parisi's.
"I have always thought the clerk and the treasurer should have the same performance pay," Mayor Elizabeth Pearson said.
The treasurer and city clerk are elected officials, but their pay and bonuses are determined by the council.
A request by Police Assn. President Larry Bammer to hire a civilian for the detective division of the department rather than a traffic records clerk was also denied.
"The police chief believes the clerk is needed and I concur," Frank said.
Frank said the division wasn't losing personnel. The position had never been filled.
"No one is being laid off," Frank said
Frank recommended what he termed relatively minor changes from the preliminary General Fund budget that reflected up-to-date financial data and took into account council direction and requests.
Among the modifications:
*Reduced the anticipated appropriation for the emergency homeless shelter from $335,000 to $285,000.
*Appropriated $15,000 for landscaping changes at City Hall to reduce water use, as requested by Councilwoman Jane Egly.
*Appropriated $50,000 for a grant to the Chamber of Commerce for an economic development consultant, as proposed by Pearson. The appropriation was voted on separately because Egly and Councilman Kelly Boyd opposed it.
*Appropriated $25,000 for the 2011 fireworks, half of which has been promised by the Board of Realtors and will be added to city revenue.
The adopted budget also includes an appropriation of $100,000 from the Street Lighting Fund to remove several light poles from the middle of the sidewalk in front of the Sawdust Festival, $320,000 from the Capital Improvement Fund to proceed with slurry sealing city streets and $120,000 from the Capital Improvement Fund to match a federal grant for energy-efficient upgrades at City Hall and other locations.
Anticipated cuts in transit funding did not materialize and $70,000 from the windfall will be used to extend the summer trolley service to Three Arch Bay.
The adopted budget included the first payment of an internal loan used to pay off the interest accrued by retroactive increases in public safety employee's retirement benefits.
2009-10 budget changes
Modifications also were introduced for the current adopted budget:
"The most significant one is we had a $1.5 million savings in street paving and we are using it to pay back some internal loans that let us embark on a really ambitious project," Frank said.
Some of the 2008-09 Street Rehabilitation Project surplus was transferred to the Laguna Canyon Channel project and some went to the Lifeguard Headquarters project. Smaller internal loans were paid off with a $57,000 surplus in the Nyes Place sidewalk project.
Community Assistance Grants
More than $230,000 was distributed to organizations after some horse trading by council members.
Top dollars went to service groups: $20,000 each to Crosscultural Council, the Laguna Beach Community Clinic and the Laguna Relief and Resource Center. The Chamber of Commerce received $16,000, Laguna Beach Seniors Inc., $15,000. The Friends of the Laguna Beach Library was awarded $14,500. The Pacific Marine Mammal Center and Sally's Fund each received $10,000 grants.
Some preference was given to groups that were financially troubled, said Councilwoman Verna Rollinger, who served with Egly on the application review sub-committee that recommended the grant allocations. Pearson and Boyd went to bat for art groups they felt had been slighted.
Boyd suggested cutting the grants to Mission Hospital and Protecting Unwanted Pups from $5,000 to $3,000 and eliminating funding for kelp forest restoration altogether, which saved another $1,200.
"There is more kelp out there than I have seen in years," Boyd said.
And Frank noted in his weekly memo to the council that city beaches have been inundated with kelp for the past couple of weeks. Fifteen tons were removed from Main Beach on June 5 alone.
Iseman cropped another $500 off Mission's allotment.
Gallimaufry, which was the only arts group recommended to get more money this year than last, had its grant shaved from $5,000 to $4,000.
The savings from the cuts were redistributed to increase the grants to Laguna Beach Live!, No Square Theatre, and the HIV Advisory Board.
Iseman's request for ashtrays to be installed outside of restaurants and bars was not approved from the grants. However, the ashtrays, which cost about $300 each, could be substituted for the usual annual acquisition of new trash containers.
Rollinger said one criterion for the grants was that no group receive more than $20,000 from combined Community Assistance Funds and the Business Improvement District (BID) Fund, a self-imposed bed tax levied on hotels to underwrite artists or artistic organizations that bring tourists to Laguna Beach.
However, Sam Goldstein, who helped develop the BID, said that money was never meant to be lumped in with the assistance grants.
"We are fighting over thousands," said Pearson, a pittance compared to the city budget, which practically sailed though adoption.
The entire hearing can be seen on the city website http://www.lagunabeachcity.net. The preliminary budget is also on the website and the adopted budget will be posted.