Budget Surplus Funds Familiar Projects

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By Allison Jarrell, Special to the Independent

The city of Laguna Beach is heading into the 2018-2019 fiscal year with $4.8 million more in its coffers than anticipated, according to city staff.

With those surplus funds in mind, the Laguna Beach City Council voted unanimously Tuesday, Feb. 27, to accept staff’s recommendations for revising the city’s budget, in addition to going beyond those recommendations and allocating another $249,000 to the South Laguna Community Garden, and $15,000 to assess the cost of refurbishing the interior of the historic sewer digester building near City Hall.

Revenue on the Rise

At midyear, a review of the city budget reports the general fund is $4.8 million above the 20-percent mandated reserve.

City Finance Officer Nancy Pauley said the unanticipated funds came from property taxes of $1.2 million over the initial estimate, $87,000 more in sales tax and $700,000 in hotel taxes, and community development fees of $312,000. The city also saved $1.7 million in expenditures, which was attributed to “responsible spending by departments.”

Further savings came from the city’s other funds—an additional $1.3 million in the capital improvement fund, $900,000 in the parking fund, $212,000 in the Measure LL fund, $98,000 in the street lighting fund, and $314,000 in the sewer fund.

In addition to one-time savings, Gavin Curran, director of administrative services, said the county assessor estimated that the city’s property tax revenue will see an ongoing increase of just over 6 percent (versus the 4.5 percent anticipated), or about $463,000 over the next year. The city’s hotel taxes are also expected to increase by $250,000 over the next year due to higher than anticipated revenue.

Upcoming Expenditures

With the savings from last year in mind, the Council approved staff’s recommended revisions to the city budget, including allotting $1 million for future IT equipment and software replacement.

Another $1 million will be reserved and transferred to the city’s insurance fund to offset unexpected legal claims and possible additional costs related to the Klein lawsuit filed in 2008.

Curran also recommended that the Council reserve $500,000 for other potential legal costs, increase the working capital reserve for capital improvement projects by $500,000, transfer $300,000 to the Open Space Fund, and allocate $500,000 to the grant programs for the Laguna Art Museum and the Laguna Playhouse.

While much of the news was positive Tuesday night, staff noted that the California Public Employees Retirement System, or CalPers, is lowering its discount rate—or expected rate of return on investment— to 7 percent from 7.5 percent, which is expected to increase future employee pension costs by $2.8 million.

When the two-year operating and capital projects budget was adopted last June, the Council appropriated $2 million to cover the CalPERS increases for fiscal year 2017-2018, and $1.4 million for the following year.

Staff provided lump sum payment options that had been requested by the Council, but ultimately recommended no payment at this time. Curran said CalPERS will have better estimates by June, so suggested the Council re-evaluate a lump sum payment at that time.

General Fund Wish List

City Manager John Pietig also presented a “general fund wish list” of nine requests for new programs and services that could potentially be covered by the remaining surplus in the general fund.

While the report laid out requests that Pietig said “all have merit,” he asked that the Council only approve ongoing funding for the first item—$160,000 beginning July 1 for a staff fire captain—and one-time funding of $200,000 for fire station facility improvements.

Pietig asked that the Council not take action on the other eight items, explaining that he recently became aware of “some additional ongoing funds” that the city “may need to appropriate in the next couple of months.”

In addition to Pietig’s recommendation, Council member Steve Dicterow vocalized support for allocating additional funding to go toward permanently acquiring the site of the South Laguna Community Garden, which was the ninth request on the “wish list.” The Council had previously reserved $251,000 for the garden.

The majority of the public comments on the budget review pertained to the city’s financial support of the community garden.

Tom and Gayle Joliet, of South Laguna, thanked the Council for its support and said that over nine years, the garden has grown to 50 plots for families to utilize.

Dicterow, along with Mayor Pro Tem Rob Zur Schmiede, pushed to include $249,000 in additional funding, bringing the city’s total contribution to $500,000 for the property. That additional funding will come from the city’s general fund and its park in lieu fund or the capital improvement fund. Residents will still have to raise matching funds to acquire the property, and the city will need to get in touch with the property owner.

The final item that was added to city staff’s budget recommendation came from Council member Toni Iseman, who asked that funding be allocated to assess the cost of refurbishing the interior of the historic sewer digester building. Pietig said $15,000 could be taken from the capital improvement fund for the assessment.

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