Diamond Bar’s 1st City Budget Has a $329,000-Surplus

DIAMOND BAR —  When cityhood was being debated earlier this year, the campaign pitted rosy projections of increased revenue against gloomy prophecies of deficits and higher taxes.

The county Local Agency Formation Commission (LAFCO) projected a $2.6-million general-fund surplus, but incorporation opponents warned the city would wind up in the red.

The actual budget, passed last week by the City Council, is somewhere between the two extremes, with a general-fund surplus of more than $329,000.

“It’s not too bad, but it’s not that great either,” said City Manager Robert Van Nort. “One major disaster could wipe us out.”

Mayor Pro-Tem Paul Horcher was more positive in his assessment. “I’m pleased,” he said. “It’s about what I expected, maybe better.”

$2.9 Million for Deputies

The new city plans more than $5.8 million in general-fund expenditures during the 1989-90 fiscal year. The largest share, $2.9 million, will pay for Diamond Bar’s contract with the Los Angeles County Sheriff’s Department for police protection.

The general fund consists of tax dollars that the council can spend at its discretion. The city will also receive more than $2.2 million in grants, fees and specially earmarked tax revenue, which may only be spent for designated services.

The budget also projects more than $6.1 million in revenue, the same amount the city would have received in 1986-87, the year used as the basis for LAFCO’s financial report on cityhood.

Revenues should be considerably higher, however, because the city has grown in the past three years. But Van Nort said he is taking a cautious approach.

“You’ve got to have that cushion,” he said.

Although the city began accumulating debt immediately after its incorporation April 18, the state Board of Equalization only began setting aside sales tax and other revenue for the city on July 1. This city won’t get that money until Oct. 1 and will receive no property tax revenue until August, 1990.

To make ends meet during the next three months, Diamond Bar will float between $3 million and $5 million in revenue anticipation notes, Van Nort said. The notes will be paid off quickly when the state and county begin forwarding tax money to the city, he said.

“Every (new) city has gone through this at some point,” said Van Nort, who served as Big Bear Lake’s first city manager.

Prospects for Surplus

Van Nort said a budget surplus this year could portend robust times for Diamond Bar, particularly once property tax revenues are received. If the city can survive on three-fourths of its normal revenue this year, in future years, Van Nort said, “we’ll be in excellent shape.”

Horcher said a big surplus in the future could mean the hardest choice for city officials is still to come.

“The tougher decision is going to be . . . whether we should cut property taxes or increase services,” he said.