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SH City Council, commissions discuss how to get by with less

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By Nick Diamantides
Staff Writer

The national economic recession and the State of California’s continuing budget crisis have resulted in declining revenues for the City of Signal Hill during the past two fiscal years. Things are not expected to significantly improve anytime soon, and city officials have reduced the new fiscal year budget, which began July 1, by almost half a million dollars compared to the previous fiscal year.
On Monday evening the Signal Hill City Council held a joint meeting with the city’s Planning Commission, Parks Commission and Civil Service Commission to discuss how declining revenues are impacting city operations. The meeting took place in the council chambers of Signal Hill City Hall.
“This is a very tough year. We’ve had to make tough decisions, and we will probably have to make more next year,” Mayor Ed Wilson told the commissioners. “Everyone here is an important part of the leadership of Signal Hill and it is important for all of you to know the direction the city is taking.”
After Wilson’s opening remarks, because City Manager Ken Farfsing is on vacation, Deputy City Manager Charlie Honeycutt began with the city staff presentation of the Fiscal Year 2010-11 city budget. “For the second year in a row, we will be working with a structural deficit,” he said. “This means our revenues are less than our expenditures, and it is mostly because of a significant reduction in sales-tax revenues.”
Honeycutt explained that the Long Beach area has a higher unemployment rate than the national and state averages, so people are buying fewer taxable items from stores and car dealerships in Signal Hill. He added that reduced property values have made it more difficult to get home-equity loans, which has further reduced the ability of residents in the area to make purchases.
He also spoke briefly about how the state budget crisis is hurting all municipal governments in California. “One of the biggest unknowns we have is what is the state going to do next,” he said, explaining that the state took $5.16 million from the Signal Hill Redevelopment Agency in FY 2009-10 and will take an additional $1.06 million from the agency in FY 2010-11. “At the end of the day, we are all holding our breath and expecting the state to come to the cities and counties for more money,” he added.
Finance Director Maida Alcantara spoke next. She gave a Powerpoint presentation that included the dollar amounts of the FY 2010-11 General Fund budget. “Estimated revenue for FY 2010-11 is $2.3 million less than proposed budgeted expenditures,” she said. “The revenue estimate is 2.72 percent less than the revenue estimates of FY 2009-10.”
According to Alcantara, General Fund expenditures for the new fiscal year are estimated at $17,224,570, while revenues are estimated at $14,951,952— a $2,272,618 gap. She explained, however, that renewable fund transfers from the city’s gas tax, traffic safety, Proposition C, and NDPES funds will reduce that shortfall to $1,764,518. After that a $1-million transfer from the city’s Economic Uncertainties Fund and smaller transfers from the city’s PERS, cable, insurance, and equipment reserve funds will entirely make up for the revenue shortfall.
Alcantara stressed that in order to deal with declining revenues, the City Council, city administration and all department heads have worked together to reduce expenditures. As a result, this year the city expects to spend $484,586 less than it did last year on General Fund expenditures.
She also explained that declining sales-tax revenues are mostly to blame for the city’s budget problems. According to Alcantara, in FY 2007-08, the city collected $9,198,236 in sales-tax revenues. That figure dropped to $8,348,000 in FY 2008-09 and is projected to drop to $6,870,747 for FY 2009-10. In FY 2010-11, however, sales-tax revenues are projected to slightly increase to $7,036,500— still more than $2 million less than sales-tax revenues collected in FY 2007-08.
After Alcantara’s presentation, all the city’s department heads spoke in turn, outlining the programs and projects of their respective departments and what they had done to reduce their expenditures, and to find other funding sources so as to put less stress on the General Fund.
As one example of doing so, Honeycutt noted that while the city will spend approximately $25 million in capital-improvement projects this fiscal year, only $110,000 of that amount will come from the General Fund. Most of those projects will be funded by state and federal grants, and the issuance of bonds.
In his closing remarks, Honeycutt explained that while hard times are not over yet, the economic turmoil does seem to be subsiding. “When we were deciding the FY 2009-10 budget, things were so chaotic in the national and state economies that we could not put together a five-year projection (of revenues and expenditures),” he said. “This year, we were able to put together a projection for the next five years.”
Honeycutt also praised all the department heads for reducing expenditures while maintaining a high level of service to the public. “Everyone is doing a very good job of managing their budgets,” he said.
City Councilman Mike Noll agreed. “Unlike many other cities, we have not had to do furloughs or layoffs,” he added.

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SH City Council, commissions discuss how to get by with less