City facing a $1.2 million deficit, slashes budget

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On Tuesday, a week before Malibu City Council’s quarterly meeting, the Administration and Finance Subcommittee held a special meeting in which it determined that the general fund reserve of the city’s 2008-2009 fiscal budget is $1.2 million less than originally projected. Also, the proposed 2009-2010 budget totals an equal amount in spending and revenue, at $19.4 million each, with the total budget at more than $36.5 million.

An additional $3.6 million will be transferred from the general fund to the $13 million 2009-2010 capital improvement fund.

Mayor Andy Stern, in his State of the City address a month ago, had warned that the budget would decline by $700,000 due to declining revenue sources such as permits and fees.

To balance its budget, the city has cut $1.2 million of its 2009-2010 fiscal year budget by decreasing expenses and increasing certain fees. Such changes include $300,000 saved by the termination of three city positions (senior civil engineer, division manager and part-time public works office assistant), and a $15,000 total decrease in authorized city salaries and a three percent property tax increase.

Revenue funding for the city from licenses, permits and service charges has decreased over the past fiscal year, and are projected to decline even further, contributing to the budget deficit.

Other general fund revenue sources that are budgeted to decline are interest earnings, documentary transfer taxes, motor vehicle in-lieu fees, false alarm service charges and passport processing fees.

The subcommittee will present the modified 2009-2010 fiscal budget to the city council at its April 29 quarterly meeting.

The budget for the 2009-2010 fiscal year includes a $247,660 increase of post-employment benefits for retired employees. The city currently owes $1.1 million toward post-employment benefits.

The city must pay the $1.1 million by July 9. If the city chooses not to fund the existing liability and continues to incur expenses, its credit rating will be affected. The city’s annual ongoing expense to the post-employment fund is $275,000, of which $75,000 goes toward the accrued liability of $1.1 million. The city can either choose to pay off the accrued liability, and save $75,000 per year, or continue to incur additional expenses.

The capital improvement budget of $13 million includes $570,000 for the annual street overlay (the paving of city roads), an estimated $1.4 million for the Las Flores Creek Restoration, $258,725 for the Trancas Canyon Park project, an estimated $1 million for the Paradise Cove Stormwater Treatment Facility and an estimated $7.4 million for Legacy Park improvements.

The new capital projects have been added to the 2009-2010 Fiscal Year, the Library Improvement Project ($108,900)and the Civic Center Wastewater Improvement Project, which is estimated to cost $2.1 million.

California’s budget crisis has delayed the construction of the Las Flores Creek Restoration Project and the Paradise Cove Stormwater Treatment Facility, which rely on state grant funding. Construction of each will begin once grant payments are released, Stern said in March.

State payment of gas taxes to the city has been delayed for at least six months and grant monies have been delayed indefinitely, but the city expects to be paid in full for these revenue sources. The city receives approximately $400,000 per year from the gas taxes. New funding sources come from the federal stimulus package, estimated to be $511,411 for the Fiscal Year 2009-2010, $500,000 of which has been budgeted toward the Annual Street Overlay Project, and Measure R revenue, which is expected to be $68,000.

The city is also experiencing a slight decline in sales taxes, but officials hope the opening of the Malibu Lumber Yard Mall will help offset the decline of retail sales and the closure of other retail stores.