Tuesday, April 15, 2008

City unveils $3.3 million in budget cuts


In the first sweeping look at the City of Santa Barbara’s proposed $250 million operating budget for fiscal year 2009 Tuesday evening, finance staff outlined $3.3 million in suggested cuts to the general fund needed to keep the city on an even keel.
City Administrator Jim Armstrong blamed a sluggish economy and the ensuing lower-than-expected revenues for the need to make cuts. City leaders said estimates are on the cautious side due to uncertainty over the national economy, the state budget and other factors.

“The projections you’ve built in here are conservative and as good as anyone can do,” said Councilmember Roger Horton, who also chairs the city’s Finance Committee. “The level of uncertainty for those items is quite high. … We’ll be worrying about this on into the fall.”
Among the proposed cuts — which will actually total $4.1 million to provide a cushion to absorb uncertainties — are cutbacks of $767,000 to police, $295,600 to fire, $234,300 to parks and recreation, and $326,900 to community development.
While several members of the council raised concerns over slashes to the police department’s budget, Armstrong said those cuts will be discussed and explained in full detail during four budget work sessions planned for the next few months. He assured the council that no patrol positions are being dropped.
However, Councilmember Das Williams, in addition to calling the $767,000 figure alarming, noted a proposed increase in emergency response time from 6:15 to 7:40.
“I haven’t declared war yet,” he said, “I’m just putting it on notice.”
Williams also called attention to rising administration costs in the police and fire budgets despite cuts in other areas of those departments.
“Those are just my two big red flags that I hope we look very hard at,” he said.
Slacking tax revenues, including sales tax, transient occupancy tax and utility users tax, are largely responsibly for the need to make cutbacks in the general fund, city Finance Director Robert Peirson said.
In fiscal year 2008, those three taxes fell $1.1 million short of projections. Added to other deficient revenues, the general fund shortfall totaled $1.3 million. That figure served as the baseline for 2009 projections, Peirson said.
Finance staff predicts sales tax revenues to jump only 1 percent in 2009 when a 6.4 percent increase would be needed to balance that section of the general fund.
“I think everyone would agree it’s not very realistic to expect that growth,” Peirson said.
Transient occupancy tax revenues are projected to be $925,000 short as well, while property taxes should balance out. In total, Peirson said general fund revenues are expected to be down $2.7 million from previously projected figures.
“That really became the base of the problem,” he said.
In addition to departmental cuts, staff proposed additional adjustments, including rate freezes or reductions. Peirson also outlined withdrawals from the risk management and street sweeping reserves that are currently topping their required levels.
The $4.1 million in proposed cuts are split evenly between one-time and ongoing adjustments.
In the arena of general fund expenditures, Peirson noted that public safety makes up 50 percent of expenses at $53.2 million. Salaries and benefits comprise 75 percent of the general fund expenses, he said.
“Our revenue growth has not kept pace with our growth in salaries and benefits,” Peirson said.
City staff arrived at the proposed fiscal plan after nearly five months of contingency planning with each city department, Armstrong said.
“I’m very pleased in the way everyone dealt with it,” he said, emphasizing a focus on minimizing the impact to public services.
He also noted the enterprise funds, such as waterfront, wastewater and streets, are in good shape with projected balanced budgets.
A multiyear projection presented by Peirson showed $400,000 and $570,000 deficits in 2010 and 2011, which he said assumes revenue growth returns to its 4 percent baseline.
“It really will require above average revenue growth,” he said.
Among challenges facing the city, in addition to economic uncertainty and the state budget, is the expiration of Measure D and the need to update a significant portion of the utility users tax that could be in jeopardy, Peirson said.
He urged the public to visit the city’s website, www.santabarbaraca.gov, to view the proposed budget, which is also available at the city clerk’s office, the library and on CD-ROM upon request from the finance department.
City leaders will delve into the specifics of the budget in coming weeks, beginning on April 25 from 1:30 to 4:30 in Council Chambers. That meeting will cover budgets for the mayor and council, city administrator’s office, city attorney, library, and parks and recreation.
Three other budget work sessions are planned, covering other city departments, and the complete schedule is available on the city’s website. Budget adoption is scheduled for June 24.
Councilmember Helene Schneider praised Peirson and the finance department for their work while urging them to keep an eye on the potential impacts of school district and county mental health cuts.
Armstrong agreed in his executive summary contained in the proposed budget document, writing, “The magnitude of the [school district and county] cuts proposed could have severe impacts on the ability of our police department to maintain existing service levels and erode our efforts to curtail youth violence.”
Horton also complimented staff on the work that went into drafting the proposed budget and said most cities throughout the state are facing worse situations.
“It’s an evening when it’s looking a lot better than it could.”

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