More on the Budget

The Beach Reporter asked each candidate a series of questions that they will run this week. The first three were different ways of asking about Heart of the City plans. Unfortunately, it was not until question #4 that they hit the real problem in our city--the budget. Even worse, they limited the answers to 100 words. Trying to explain the city's budget in 100 words is almost like trying to perform all of Shakespeare's plays in one night. I will have longer answers for all of these questions, but let me give you the budget question, and my more complete answer to it here:

THE CITY HAS FACED MONEY SHORTFALLS THE PAST SEVERAL YEARS AND HAS CUT PROGRAMS, ELIMINATED STAFF POSITIONS AND RAISED TAXES TO BALANCE THE BUDGET. CONTINUED BUDGET CUTS COULD BE NECESSARY, WHERE DO YOU THINK THE CITY SHOULD
LOOK TO CONSERVE MONEY OR RAISE ADDITIONAL FUNDS?

In the short-term, staff has estimated that we are looking at a shortfall of $11,000 to $1.5 Million, depending on the calculation of the deficit and the result of salary negotiations with the police and fire associations, far better than our estimates at this time last year. Some of that sortfall will come from increased reveneu from the new Target store that is opening near the Galleria (a block from my house) and from an increase in the Hotel Tax (or TOT). The higher TOT will generate $500,000 annually, while the new Target will bring in around $500,000 in sales taxes each year (since it is not slated to open until October 2005, we won't get all of that in the 2005-06 fiscal year, but it should be very safe to expect to see $200,000 come in). After that $700,000, if there are more cuts to be made, the solution for the remaining $800,000 or so will come from a combination of small cuts. At least 25 full-time positions in the city are currently vacant as a result of retirements or people leaving the city staff voluntarily. The City has had in place a hiring freeze (actually, a "chill"), that has kept these positions open without a significant reduction in city services. Between salary, benefits, and insurance, each employee costs the city around $100,000. Thus, if we kept only 8 of these positions vacant next year (1/3 of the amount that are currently vacant), we would should make up the remaining amount of the shortfall. The 2006-07 numbers are even more promising. We will have another increase in revenue, as we should get all of the Target sales tax in that year. Additionally, preliminary estimates of our Cal-PERS obligations is that it will be about the same in 2006-07 as it is in 2005-06, so we will not be suffering through another big hit. Naturally, a lot of this is dependent on the state and national economy, and what the state does with its budget (it has promised to pay back to cities money that it has "borrowed" from cities in the last few budgets, but many of us are worried that it is more likely to take away more money than give it). To be sure, the lean times will not be over, but there are reasons to be optimistic.

The long-term problems, however, require different solutions. In order to restore the city services that we have lost during the lean budget years, we must do two things. First, make it policy that we have a reserve account for our pension obligations. As it stands now, what we pay is entirely dependent on the stock market. Thus, in good years we paid very little, and in bad years, we pay millions extra. As a Budget & Finance Commissioner, I have proposed a plan that would even out these swings. Second, we need to rejuvenate business in the City. The Daily Breeze ran a series of articles about how the Pier is underperforming. The same is true of Artesia Boulevard. We have to continue to revitalize the Boulevard so that people in Redondo Beach want to shop there. That will keep the revenue within the city, creating more funds for city services. If we just look at the fact that one Target store will generate half a million dollars a year in revenue, we see the potential for Artesia Boulevard, as well as the waterfront areas, to draw in additional revenue to support the city’s critical services.