The city will host a public budget workshop and hearing at 6 p.m. Tuesday during the City Council meeting, with a second hearing set for June 21, when the council is expected to approve the 2011-12 budget.
Laguna Beach is in better financial shape than most cities in California, but city officials shouldn't be jumping for joy, City Manager John Pietig wrote in the introduction to the draft budget he sent to the City Council on April 29.
The city has not laid off any employees or made significant reductions in services in the past two years and doesn't plan to this coming fiscal year, but the nearly $66-million 2011-12 draft budget is based on tight purse strings, staff reductions through attrition, no state incursions and no local disasters, Pietig wrote.
Mayor Toni Iseman said the budget is responsible while Councilwoman Elizabeth Pearson called it cautious.
Pietig estimated that revenues in the coming fiscal year would be up by $885,200, or 2%, over 2010-11, for an estimated total of almost $64 million. Expenditures are expected to reach nearly $66 million.
Minor rebounds in property, sales and bed taxes, which account for the increase, are offset by employee health care and pension costs, among other increases, Pietig wrote.
The city will ask two employee unions to accept terms to reduce costs when their contracts expire June 30, and they will be asked to accept terms that would reduce costs to reflect the economy.
The bottom line is a $718,100 operating deficit in the estimated $46-million general fund.
The city will continue to cover its deficits with transfers from the parking fund, fees that subsidize the transit system, pay for any service expansion, and repairs and construction of new parking.
With transfers and revenue, the city can meet its expenditures without dipping into the Recession Smoothing Account, established by the council in 2008 under the guidance of former City Manager Ken Frank, or the mandated 10% reserve.
The general fund has a balance of $1.6 million over the reserve.
No new services are included in the draft, even items specifically requested by council members. If the state cuts off the Citizens on Patrol grant to supplement police services, the amount will have to be eliminated from the department budget.
Pietig suggested eliminating open positions for a savings of $255,000 a year, reducing two full-time jobs to part time to save $100,000, and not adding or replacing capital equipment funding except for swimming pool improvements.
No new funding source has been identified
Net impact of the changes: Expenditures have increased by $408,100, Pietig told the council.
"Although the budget is balanced, future actions are necessary to manage cost increases and maintain a prudent financial plan for the city," Pietig said.
The budget is available at http://www.lagunabeachcity.net, at the city clerk's office, administrative services in City Hall, or at the Laguna Beach Branch of the Orange County Library at Glenneyre Street and Laguna Avenue.