Workshop in response to $147,000 expected shortfall.
Despite conservative budgeting, the global financial crisis is forcing Solana Beach to cut expenditures and consider new sources of revenue in order to make up for projected shortfalls in 2009, 2010 and beyond.
While furloughs or layoffs aren't in the offing, city employees won't get their anticipated pay raises.
The city's primary revenues, which include property and sales tax, are expected to fall more than $500,000 this current fiscal year and almost $900,000 in fiscal year 2009-2010.
"That's significant for our little community," said City Manager David Ott at a fiscal sustainability workshop Feb. 2.
Even with significant cuts already made this year, the city is looking at a $147,000 shortfall because of unexpected increases in fire and legal expenses, Ott said.
He recommended postponing several infrastructure projects or dipping into the city's reserves, which hold $4.7 million. This equals 30 percent of the city's operating budget, which is much higher than some other cities in the region. However, he warned against using the reserves for day-to-day operations.
To meet the challenge posed by next fiscal year's even darker forecast, the city's department heads explained how they would trim more than $570,000 in materials, supplies and services, while still trying to provide the high level of service expected by the community.
Everything from minimizing paper usage to cutting back on street sweeping was suggested. Major savings were identified in the broadcast and Webcast of city council meetings, for a savings of $46,000.
"All of this is difficult, but this one is almost unacceptable," said Council member Lesa Heebner. "Our government needs to be transparent."
No pay raises
More money will be saved by not filling an open planning department position, and employees will not receive their annual 3 percent pay raise. But so far, Ott said he plans to hold to current levels for the already lean staff."[Furloughs and layoffs] are the absolutely last things you will hear me recommend, but if I have to, I will," Ott said.
Contributions to community groups are also slated for reductions. The Solana Beach Library is recommended to receive $10,000 instead of $15,000; the Chamber of Commerce $6,500 of the $13,000 it requests each year for Fiesta del Sol; and $10,000 less for the San Dieguito River Park Joint Powers Authority.
"The pain is being spread all the way around," Ott said.
New fees ahead?
The council will have the final say on the 2009-2010 budget cuts when it adopts a formal budget in June.
However, despite all the proposed cuts, the city could go into the red by $200,000 in 2010 if no further action is taken. And, Ott said he does not expect the economy to fully recover.
"This is different from previous recessions," Ott said. "People's behaviors today are changing, will change for the long-term future."
Therefore, Ott presented several fee and tax increases to provide new sources of revenue for the city.
The majority of the council was against increasing the sales tax or taxing utilities at this time.
"People are tired of being taxed unless it is for something tangible," Deputy Mayor Tom Campbell said.
However, the council wanted to investigate establishing a business tax on non-retail operations because Solana Beach is one of the last cities in the region to do so. A great deal of professional, office and storage space in town does not pay a portion of sales to the city as do retailers, restaurants and hotels, which helps cover city services like law enforcement and street repairs.
Also, the council favored doubling the fire benefit fee, which property owners pay to help cover the cost of fire protection services. For most homeowners, the fee would increase from $50 to $100. Since 1996, the fee has dropped from covering 29 percent of the department's expenditures to 14 percent.
Any increase in taxes or fees would require a citywide vote.
Changing the rules
Finally, the city will investigate allowing short-term vacation rentals to reduce the minimum stay from seven to three days. Brokers estimate this would increase rentals 20 to 25 percent, thereby increasing transit occupancy tax for the city 20 to 25 percent. However, some council members said they were concerned faster turnover could negatively impact permanent residents.
City staff will continue to gather more information and return to the council with proposals for cuts and enhancements throughout the coming year.
Watch what you missed
Watch the fiscal sustainability workshop at
- Click on public meetings.