City Council Adopts Balanced Budget
Officials say this year's budget decision has been toughest ever
LAKE ELSINORE The City Council adopted a balanced budget for next fiscal year as the City faces a fourth straight year of declining revenues. The new fiscal year begins July 1.
The City will start the new fiscal year with a balanced budget, but getting there has involved the toughest decisions this City Council has had to make.
The $27.2 million operating budget details annual revenues and expenditures for all municipal services, including road improvements and public safety.
Public safety continues to be a City Council priority. Police and fire service contracts combined account for half of all spending next fiscal year.
The City's so-called "rainy day fund" will again be tapped to help offset a $3.8 million deficit. A $3.5 million dollar reserve fund will not be touched in any way, officials say.
In adopting a balanced budget Tuesday night, the Council had to bridge the $3.8 million gap between revenues and expenses. The causes: a projected revenue shortfall of $2.8 million, along with new and recurring expenditures anticipated at $1 million above this year's spending level.
The projected $2.8 million revenue shortfall is directly related to impacts from a lagging economy, including:
- A downward reassessment of property values that equates to a $300,000 or 4.74% decrease in property tax revenue;
- One-time moneys used in FY 2009-10 that are not available next fiscal year, amounting to $400,000 less;
- Supplemental revenue of $2.3 million in “rainy day” funds used to balance the current budget shortfall, which leaves a balance of $1.4 million to be spread over the next two or three years.
To offset an annual 5% general law enforcement increase, the City Council reduced the contract by $421,729, reducing the number of officers from 29 to 27 patrol officers. The net contract for law enforcement will cost $9.1 million next fiscal year.
The employees bargaining unit, LIUNA Local 777, has been asked to consider a combination of 24 furlough days and reduced benefits, including no Cost of Living Adjustment (COLA) or merit increases, for an overall labor savings of $742,540. Negotiations are continuing and will require a vote by union employees, which is expected soon.
City management staff have already agreed to these concessions, for a $195,693 share of the labor savings above. The proposed personnel adjustments are comparable to concessions that union employees and management staff previously agreed to for the current year.
The adopted budget contemplates eliminating 3 positions in FY 2010-11 for a savings of $288,053, though no official decision about the affected positions has been announced.
Opening a new animal shelter by year end will add $210,000 to the City’s expenses in FY 2010-11. The full annual obligation will be $600,000 beginning in FY 2011-12.
In a separate development, the Lake Elsinore Redevelopment Agency (RDA) met a May 10 deadline to return $6.98 million in Redevelopment Agency funds to the state of California, part of a $2 billion grab by the state to help balance its deficit budget.
The City's RDA will also be tapped for $1.7 million in one-time funding to balance the FY 2010-11 operating budget. The funds represent an accelerated loan repayment to the General Fund by the RDA.
In adopting the budget, City Council members unanimously expressed concern about the City's fiscal health over the next five years. Revenue growth will be outpaced by some onerous expenses, such as paying $600,000 more for a new animal shelter and contract than the current animal control services contract, unless something can be done to increase revenue.
The City of Lake Elsinore features Southern California’s largest natural freshwater lake. The City’s current population is estimated at 50,267. The City’s brand and slogan, “Dream Extreme,” exemplify the scenic beauty and active life style of this 122 year old boom town. Visitors and residents enjoy water sports such as skiing, power boating and fishing, world-class sky diving drop zone and thermals, a regional motocross track, professional baseball, an 18 hole golf course, outlet shops, plus dining and entertainment in Historic Downtown. The City’s Web site is www.lake-elsinore.org.