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Costs Rising Faster Than Revenue

In summing up Laguna Beach’s proposed $68.5 million annual budget, for the first time involving a two-year projected spending plan through June 2016, City Manager John Pietig tempered the good news about a recovering local economy with a prescription for caution moving forward.

Revenue sources that account for most of the $48.5 million general fund – taxes on sales, property and hotel occupancy — are on the rise, according to the proposed budget released last week. Yet costs of city services are also rising, and at a faster rate. Projected revenues exceed spending by $622,900 in 2013-14, but that gap is expected to narrow to $293,000 for the 2015-16 fiscal year, the document says.

A public workshop and hearing on the budget will be held at 3 p.m. on Tuesday, May 21, in council chambers. The document is available at the city’s web site.

The budget factors in some village entrance costs, as well as large and small capital improvements, such as a $50,000 trial round-about for the complete streets initiative. Even so, the proposed budget maintains current services and reserves while allowing for increasing retirement and healthcare costs and anticipates increased costs of general liability claims.

Pietig noted that the revised 10-year capital improvement plan includes an allocation of $5 million over two years for the planned village entrance project, with the price paid in postponing renovations to the city’s recreation building and fire stations. A separate financing plan is anticipated for the estimated $40 million village entrance project.

The budget includes $100,000 towards renovation of the high school tennis courts, $285,000 for improvements to the community pool, and $800,000 to replace beach access stairs at Oak Street and Mountain Road.

The proposed operating and capital improvement budget is $68.5 million for 2013-14 and $67.5 million for 2104-15, while the city’s primary operating fund is $48.5 million in 2103-14 and $49.6 million in 2014-15.

Pietig pointed out that the proposed budget does not account for a number of requests or needs, such as funding for an anticipated view preservation program, which might cost as much as $300,000 a year.

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