Revenues offset by swell in costs

Despite significant increases in revenues and a healthy local economy, city officials will have to suck it up to meet Laguna’s financial obligations.

Increases in employee benefits and construction costs will sap the hefty boosts in property and bed tax revenue projected in the $56.8- million draft budget presented to the council and the public Tuesday. City law requires a balanced budget, accomplished this year by hewing closely to programs and projects approved last year.

“There are no new services, no new hours, no new anything ? even things the council directed us to put in the budget,” said City Manager Ken Frank, who is charged with preparing the draft.

Frank said the bad news is balanced by some good news.

“For the first time in three years, the state is not usurping $700,000 [property taxes] from us, so you’d think everything would be good,” Frank said. “But starting July 1, retirement benefits for firefighters will be increased by $450,000. In July, 2008, police officers’ retirement system will be upgraded, which will cost the city roughly $520,000 per year at that time.”

More good news: the city’s debt for Treasure Island Park will be paid off this fall and the Montage Resort & Spa bed tax will free up discretionary spending, an estimated $2.7 million in the next fiscal year, increasing to at least $3.3 million in subsequent years, Frank said.

“Unfortunately, I am recommending that all of the Montage money be deposited in the city’s capital improvement fund because every single capital improvement project is over budget,” Frank said. “It is not our fault. Everyone is faced with unbelievable increases in constructions costs that are unprecedented.

“The entire capital improvement budget next year is simply allocating [additional] funding for projects already approved.”

Proposed spending in the next fiscal year includes $3.73 million in supplemental funding for eight of 16 capital improvement projects that will total $6.2 million.

Projects include the construction of the lifeguard headquarters and public restrooms at Main Beach, the Senior/Community Center, two storm drains, South Laguna streetscaping, Diamond Street beach stairs, Main Beach boardwalk and the Coast Highway-Hinkle Place sidewalk.

“For many years, we have been playing catch-up on maintenance,” Mayor Elizabeth Pearson-Schneider said. “It’s basic. We have to do it.”

The city will again drain the parking fund of about $700,000 to fill gaps in the general fund ? the city’s discretionary spending, which is estimated next year to be almost $40 million.

“It is simply not possible to balance the general fund without that augmentation,” Frank said.

About 20 residents and business community representatives attended the meeting. Some submitted requests for funding.

Parents Club members Sita Helms and Rebecca Meekma and Top of the World resident Gene Felder asked the council to fund park improvements. Morrie Grainger urged the council to buy an empty lot for a community garden and parking in South Laguna.

“The city has more money than it has had in many years ? so what is being done for the residents who pay the taxes,” North Laguna resident Jeannette Merrilees asked. “One priority for residents is to look harder at peripheral parking.”

She also recommended buying room-darkening shades for the City Council Chamber windows.

“Remember, the people who live here pay the most in taxes and we should be the first priority,” South Laguna resident Tracy Klug said. “Adding more parking meters anywhere we can is a good idea.”

Dr. Korey Jorgeson asked the council to restore funding for the Laguna Beach Community Clinic that was reduced from $20,000 in 2003 to $8,000 in 2005.

“Because HIV has become a manageable illness, it makes people think funding isn’t necessary,” Jorgeson said.

Council members also had some requests, including laptops and cell phones for themselves, additional planning and technical staff and a pathway between the Act V parking lot and the Laguna College of Art & Design.

“I want everything,” Councilwoman Jane Egly said.

Egly and Councilwoman Cheryl Kinsman were appointed to the council sub-committee that will review community groups’ grant requests and make recommendations to the council in June, considered by council members to be a tough task because of the worthiness of the requests.

“That’s what happens when you are not running for re-election,” Kinsman told Egly.

The draft budget can be reviewed on the city’s website, www.lagunabeachcity.net, at City Hall or at the Laguna Beach library. It includes the City Manager’s summary of the city’s financial position, lists of what is and what is not budgeted for the new fiscal year, descriptions of city departments and functions, a 10-year projection of capital improvements, and lists of 2006-07 revenues and expenditures, with illustrative graphs.

Frank will review comments by the council members and public before presenting his final budget recommendations at the June 20 council meeting, at which time the budget is scheduled for adoption, in time to meet the June 30 deadline. The new fiscal year begins July 1.