Mayor says Malibu in better financial shape than other cities

Mayor Andy Stern

Despite the mayor’s rosy outlook, falling sales taxes and holds on state gas tax and grant revenue may have the city pinching pennies soon.

Olivia Damavandi / Staff Writer

The City of Malibu, overall, is in much better financial shape than other California cities, Mayor Andy Stern summarized in his State of the City address last week at the Malibu Performing Arts Center. The upcoming fiscal year, however, could pose economic challenges that may have the city singing a different tune.

The speech was delivered during the “State of the City” luncheon hosted by the Malibu Chamber of Commerce last Thursday. Audience members included residents, local business owners and representatives from Sen. Fran Pavley’s and Los Angeles County Supervisor Zev Yaroslavsky’s offices.

“The City of Malibu still has a strong general fund reserve,” Stern said, explaining that the city’s major, local tax revenue sources are property, utility user and sales taxes.

The mayor said that though “minimal” foreclosures and property value reassessments have retained the high value of the city’s property taxes, declining revenue sources are permits and fees, which the city estimates will result in a $700,000 shortfall by the end of the fiscal year (July 1 to June 30).

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

If the economic turmoil continues, the sales tax downward spiral could continue into the summer, which is typically the city’s most prosperous season.

California’s budget crisis has delayed the construction of two Malibu projects: the Las Flores Creek Restoration Project and the storm water treatment facility for Ramirez Creek at Paradise Cove, which rely on state grant funding. Construction of each will begin once grant payments are released, Stern said.

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.

Stern said he expects general fund expenses will be trimmed to meet the revenue shortfall for the current and the upcoming fiscal years.

In its 2008-09 fiscal budget plan, the city states total budgeted revenues of $29.7 million and total budgeted expenditures of $32.1 million. The latest fiscal budget plan does not mention unused funds from previous years. The budget also maintains a minimum of $8 million in undesignated reserves that can be used for a variety of purposes.

City Manager Jim Thorsen on Friday explained that the city’s annual revenue is broken down into two different types of reserves: general funds, which can be utilized for a variety of city improvements, and designated funds, which can only be spent on certain types of projects.

In the fiscal year of 2008-09, Thorsen explained, the city receives an estimated $20 million in general fund revenue. The rest of the slightly more than $9 million comes from a variety of designated fund sources, such as gas taxes and Proposition A funds. When designated funds are unused, they are carried over into the fiscal budget of the following year.

Stern listed projects the city anticipates to embark upon during the present and forthcoming fiscal years, and also highlighted the city’s accomplished tasks and developments to date.

The council forecasts the city will spend more than $8.5 million on public improvements in the upcoming year. Projects on deck include the estimated $15 million construction of Legacy Park, scheduled to begin this summer; the completed construction of a $440,000 traffic signal at Pacific Coast Highway and Corral Canyon Road; the $3.5 million construction of Trancas Canyon Park; the initial phases of $85,000 playground improvements to Bluffs Park; the continued effort to complete the View Preservation Ordinance; the ongoing $2.6 million design work for the Civic Center wastewater treatment facility; the opening of the Lumber Yard mall; and completion of the $330,000 Civic Center groundwater study.

Future city goals also include working with the school district to improve traffic and parking issues in the Malibu Park area; completing the design and beginning the $3.6 million construction to renovate Malibu Public Library; working on securing a permanent home for city hall; and bringing forth a comprehensive green building program and developing a low-impact development ordinance.

Among the year’s completed developments are the Cross Creek Road Improvement Project; the construction of the Solstice Creek Bridge Replacement Project; the completion of a preliminary design for a new nature center at Charmlee Park; the awarding of a contract for the Carbon Beach Utility Undergrounding Project; and the approvals of the final environmental impact report and entitlement permits for the La Paz property, which, Thorsen stated last week, have been secured for implementation of a centralized wastewater treatment facility.

Local chef Jennifer Naylor catered the State of the City luncheon.