City budget still a puzzle

Barbara Diamond

City Manager Ken Frank found some extra cash since he prepared the

draft budget for 2005-06.

The draft was presented at a workshop Saturday, a public

opportunity for the City Council and the community to review it and

pitch funding for projects of special interest or merit.

“It’s pretty negative,” Frank said of his list of ballooning

expenses and items that were not proposed for funding, including some

pet projects of the council and requests from city departments and

residents.

The city will spend more in the next fiscal year on health

benefits and pension plans for employees, worker’s compensation,

full-year salaries for the city’s new fire chief and marine

protection officer. The increases are exacerbated by the state

dipping a heavier hand into the flow of property taxes generated by

the city and on which it depends for 51.1% of the general fund

revenue, Frank said. .

The heavy payout to the retirement fund did not thrill Top of the

World resident Gene Felder.

“Taxpayers are retiring at 65, or 68 in my case, and we are paying

retirement costs for city people to retire at 50 and 55,” Felder

said.

As required by city law, Frank had prepared a balanced draft

budget by May 1. The draft included the mandatory reserve fund equal

to 10% of the general fund, but few items on the council’s wish list

-- always a fun prospect for the city manager.

However, the presentation Saturday included some late-breaking

good news.

A new franchise agreement with Cox Cable will include a

$60-per-subscriber grant that should total about $480,000 for the

city and an error in city payments should net another $60,000.

“We can add that revenue in August or September, if the council

agrees with the agreement,” said Director of Administrative Services

Richard Swanson.

More good news. The Police Department has some money in its

forfeiture fund -- money the department gets from the sale of

ill-gotten gains that are confiscated, to be used for department

needs.

The financial straight jacket will ease considerably when the

Treasure Island Park loan is paid off and all of the Montage bed tax

flows into the general fund, to be spent at the council’s discretion,

Frank said.

Councilwoman Toni Iseman noted that in the 2004-05 budget

discussions, the council raised Frank’s 8% estimate of property tax

increases to 8 1/2% to cover some of the council’s projects. The

actual increase was well above that.

“But you put it at 8% again this year,” Iseman said.

Frank said the city had the highest increase in property taxes of

any in Orange County this fiscal year.

“Am I a little conservative?” said Frank, who is notoriously

frugal in his revenue estimates. “If we have less, it’s a problem. If

we have more, it’s kind of fun.”

Frank also warned about a loophole in the ballot measure voters

approved in 2004 that limits the percentage of property taxes the

state can siphon off from local governments for its own use.

“If the state is in difficulty, it can borrow money for another

year,” Frank said.

The state must pay back the loan before it can borrow more money,

but it could pay back one amount -- say $600,000 -- one day and

borrow a greater amount the next.

Mayor Elizabeth Pearson-Schneider said the city could come by more

revenue by selling the North Laguna property where the Girl Scouts

meet, conservatively worth $1.5 million.

“That changes everything,” Iseman said.

There would be plenty of places for the money to go: starting with

the Village Entrance project, for which no funding was included in

the draft budget.

Or the money might be used to end the parking fund’s longtime role

as plugger of holes in the budget -- which Chamber of Commerce board

member Dennis Myers would like to see. He wants the funds spent only

on parking and transportation needs.

Pearson-Schnieder said she wants all parking funds earmarked for a

Village Entrance bond, presumably to be used only for the

construction of the parking structure proposed for the site.

“Toni and I are committed to the bond, but I won’t even look at

Cheryl,” Pearson-Schneider said. Councilwoman Cheryl Kinsman is

generally opposed to bonds that obligate the taxpayers.

Kinsman, however, favors funding Blackberries for council and

staff members, laptops for the council, sidewalk cleaning equipment,

consultants working to keep South Coast Medical Center in town, a

police dog, a directional sign for the Chamber of Commerce and

complete Internet access to public records, as urged by former City

Clerk Verna Rollinger.

“We spent $100,000 to create a website and when I retired

[December 2005], we were ready to put the database on the site. We

need the funding to make it [secure] and more efficient,” Rollinger

said.

Kinsman questioned the wisdom of trying to rebuild a home on a lot

that Gale Granger and other South Laguna residents want the city to

buy for a community garden and center.Draft budgets are available for

review on website www.lagunabeachcity.net or in the city clerk’s

office at City Hall, 505 Forest Ave. or for sale at the cashier’s

counter. For more information, call (494) 497-0705.