Commerce ‘Studying’ Projected Budget Deficit
By Elizabeth Hsing-Huei Chou, EGP Staff Writer
The City of Commerce is taking early action to shore up a projected $1.9 million deficit in the 2009-2010 fiscal year budget.
Budget meetings usually begin in late May or June, but the city scheduled its first budget overview meeting in April, and is following up with regular workshops to discuss a slate of potential budget cuts in each department.
City officials think the deficit may extend to the 2010-2011 fiscal year, if not longer, which has prompted them to set aside a $1.5 million stabilization fund. This money would be spread evenly over three years and come out of the city’s reserve. This year’s injection of $500,000 still leaves a $1.4 million deficit.
Like many other local governments, Commerce has seen a sharp decline in its sales tax revenue. The city has taken in half a million dollars less in sales tax revenue compared to the same time last year.
Revenue from the Commerce Casino, which brings in more than one third of the city’s funds, has dropped $1.2 million compared to the same time last year.
The revenue decrease has not put the current year’s budget in the red, but Finance Director Vilko Domic said they don’t yet know how the city will fare in the last two months of this fiscal year, which ends June 30th.
Based on current economic conditions, the city is expecting sales tax revenue to go down by at least five percent next year, said Domic. They also expect to see decreased revenue next year from business licenses and building permits.
Meanwhile, the city is facing a cost of living increase for employee salaries and public safety contracts, along with costlier health benefits packages. The city has not planned any other operating increases and is working from the same $50.3 million operating budget from last year.
Initially the city asked the employee organizations if they would forego a 3.5 percent cost of living increase, which would save the city $1.1 million. It seemed to be the most prudent solution, Domic said, adding that they also told employees they would look for reductions in other areas.
“It’s just a request on our behalf,” he said.
“We knew this was going to be frowned upon by the employees, so a parallel track to benefit all of us would be to ask all the department heads to look at all their budgets and come up with two, three, five, seven and ten percent budget reductions,” Domic said.
Each city department will present the ramifications of increasing degrees of budget cuts. Reductions made around the two percent range include eliminating or reducing overtime, travel expenditures, gifts to residents and costs for running city events like the Miss Commerce pageant. The city has already voted to cut overtime by $123,225, travel and training by $107,233.
The city went more in-depth with the Parks and Recreations department at a recent budget discussion meeting. In past years, a fifth of the city’s general fund budget has gone to running the department. This makes it the second largest expense next to public safety, which takes up over a third of the city’s general fund.
At the Parks and Recreation budget meeting, the city council voted to introduce a fee for an adult exercise class and to renegotiate instructor fees. The city rarely charges for public services, and fees are not currently charged for any other exercise classes. As a rule, the city provides services to residents, including bus service, entrance into the city pool and gym, for free.
The city council also looked at eliminating the city’s under-used marksmanship range. In the last year only 57 people used the range. It costs $204,000 to operate the range, but the city only brings in a little over $70,000 in revenue, mostly from contracts with local public safety agencies that use it for training. The city is spending $2,350 on each person who currently uses the range, which Parks and Recreations Director Jim Jimenez says is “off the charts” compared to how much is spent per person for other services.
But because of the range’s history in the city – it has been around since the 1970s and has produced a number of talented sharpshooters – the city council voted to keep the range. Last June, the city directed staff to put together a promotional campaign for the range, but because of a recall election that interrupted the mid-year reviews that usually happen in the fall, it was never implemented, Jimenez said.
At the same meeting, the city also reviewed budget reduction options for the Public Information Office, including cuts to equipment rentals, advertising, and doing away with spotlights at the Miss Commerce pageant.
After the departmental budget meetings, the city will come back and consider the budget as a whole. Decisions made at these meetings will be brought back to the regular council meetings for an official vote.
City of Commerce Employees Association President Sandy Enriquez says so far the city seems to be working in good faith to look for areas where fat could be trimmed.
The next meeting is tonight at 6:30 pm in the City Council Chambers located at 5655 Jillson Way. This meeting will feature discussion and presentations from the Library and the Finance departments.
The city council will go over the Transportation and Community Development departments on May 21, and the Community Services and Human Resources departments on May 26.
Commerce has tentatively scheduled three more meetings after that and are shooting to adopt the budget at the June 23 City Council meeting.Print This Post
May 7, 2009 Copyright © 2012 Eastern Group Publications, Inc.