COSTA MESA — The city finished the 2010-11 fiscal year $3.8 million in the black, thanks to better-than-expected sales tax receipts and cuts to city programs and staffing levels, city officials said.
Going into budget discussions over the summer, the city projected a $1.4-million deficit. However, taxable sales in the area rebounded, which was part of the 4.2% increase in revenue for Costa Mesa last year.
"We're not in the critical period, but we're still in the hospital," Mayor Pro Tem Jim Righeimer argued.
But opponents of the city's planned cutbacks interpreted the numbers differently.
"This demonstrates that this council can't be trusted and that this has been politically motivated the whole time," said Jennifer Muir, spokeswoman for the Orange County Employees Assn., which is suing Costa Mesa over proposed city worker layoffs. "It's important to look back at the past year and remember that when this whole layoff scheme started, the City Council said we're on the brink of insolvency and have no money."
There was a point last fiscal year when the city's on-hand cash was as low as $5 million; that number, however, fluctuates widely month to month and recently stood at $10 million. The city brought in an independent auditor who said Costa Mesa is not perilously close to going broke, but could spend more on paying down its long-term debt.
Costa Mesa negotiated higher pension contributions from its employees almost halfway through the year and saw a boost in revenue from an increased hotel tax, which was approved by voters in November.
Righeimer was one of the major forces behind the council majority's agenda: reduce the city's payroll and increase spending on capital improvements. The council majority claims cuts are necessary for long-term fiscal solvency, as pension costs are projected to increase.
The city's expenditures also dropped 8.6% due to a mixture of layoffs, keeping positions vacant and cutting city amenities like the police helicopter program.
"So now we've gotten to a point that revenue and expenses are in parity, and we're going to continue to reduce costs," Councilman Steve Mensinger said. "We've got to be able to fund [Costa Mesa's] five-year plan."
The city is still looking into outsourcing up to 40% of its workforce.
"Organizations in general never want to make the tough decisions because they don't want the dust associated with it," Mensinger said.
The city has spent more than $30 million of its reserves in recent years to balance its budgets.
"That speaks volumes to the fact we should've done it sooner," Mensinger said.
Some of Costa Mesa's extra dollars will go into the city's cash reserves, and some will go toward paying down the city's pension liability, an annual cost Costa Mesa has to pay to the state pension fund to cover its past and current workers.