City's deficit projected to decrease

COSTA MESA — Projected revenues will decrease the city's deficit by $6.6 million, according to the mid-year budget review.

The amount of sales tax Costa Mesa received in the first six months of this fiscal year increased by about 9.7% when compared to the last fiscal year. Analysis of that trend by Hinderliter de Llamas, a financial firm the city consults, indicates Costa Mesa is expecting an increase in revenue by about $4.4 million, the budget review stated.

"This is simply a measure of recent economic activities," said City Manager Allan Roeder. "I think it would be wrong to take this as an assumption that the city's budget problems are over. Those are two different things."

Hotel visits in Costa Mesa are also showing improvements. The visits are raising the revenue the city receives from the transient occupancy tax, or bed tax. Collections from that tax, added to overnight guests' bills, are also expected to increase following the passage of Measure L in November, which called for a 2% increase in the bed tax. City staff is adjusting the amount by more than $1 million, according to the budget review.

"It's good that we have an increase in revenue," said Councilman Jim Righeimer.

He added that the community should still remember that Costa Mesa needs to get on the right track and start finding ways to increase its savings and have enough funds to fix its infrastructure.

There are other sources of savings, including the projected savings of $1.1 million resulting from the suspension of the employee Retirement Health Savings, which was agreed upon during contract negotiations. The city is also saving money by reducing recreation programs and adjusting salary accounts.

Righeimer said the city must start developing a five-year plan for its budget.

"Clearly, we need to get on bringing more revenue with economic development," he said. "In addition, the city manager is going to need to look at every department in the city, down to every individual, and see what we have to reconfigure to right-size the city, so that we can pay for the infrastructure we need."

The city started out this fiscal year with about $16 million in deficit. After suspending several programs, cutting department costs and eliminating 44 positions through layoffs, the deficit remained at about $9.4 million. The city also achieved other savings through renegotiating employee contracts.

This year's budget deficit is now at $1.4 million.

The City Council is scheduled to review the mid-year budget report during its 4:30 p.m. study session Tuesday, and provide directions to staff on how to proceed.

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