Montebello Projects $17.3 Million Gap Over Next Five Years

By Elizabeth Hsing-Huei Chou, EGP Staff Writer

Montebello officials said Monday that the city could be facing a $17.3 million deficit over the next five years.

An accumulation of debt, starting with a $3 million shortfall in the upcoming 2012-2013 budget, is being blamed for the possible financial hole.

The loss of redevelopment is driving the $3 million deficit in the immediate, upcoming year, according to Finance Director Francesca Tucker-Schuyler.

Montebello will loses about $1.5 million in revenues used to run the redevelopment department eliminated in February, and the transit department, she said. The city will also now have to use funds from it operating budget to pay for $1.3 million in costs and salaries that used to be covered by redevelopment funds.

The five-year projection lays the groundwork for a plan advanced by city staff to place a sales tax e, utility tax, or parcel tax increase on the ballot sometime in the next two years.

“This is a billboard sized warning,” Interim City Administrator Keith Breskin stated during Monday night’s special meeting to discuss the budget.

The $17.3 million projection does not include obligated contributions to a “rainy day” reserve fund. In recent years, the city has exhausted its revenues and has had trouble coming up with cash to pay employees at the start of the fiscal year. If the city does make contributions to its reserve fund, the deficit could increase to $20.5 million over the next five years.

After listening to the staff report, Councilman Art Barajas and Mayor Pro Tem Christina Cortez declared they would not support a tax increase plan, but Mayor Frank Gomez said the city needs the additional tax revenue.

Cortez said it would be wrong to tax residents while the economy is still bad. Instead, she recommended that the city pursue a shop local campaign, work to turn a profit on its enterprise fund projects such as the golf course, and watch its spending.

She blamed the city’s budgeting and financial woes on poor decision-making. She noted that she voted against a decision to take over payments on a redevelopment agency debt, in return for the agency forgiving millions owed it by the city’s General Fund. Now the city is on the hook to pay it off. Cortez said.

But Gomez said if the city has done everything it can to cut spending, and if they do not increase revenues through a tax, the city would be forced to make more cuts resulting in a further decline in city services. Not only is the city now only opening four days a week, “on some days, it’s difficult to find anyone at city hall,” he said.

Councilman Jack Hadjinian instructed staff to bring back more alternatives to the tax plans they laid out. Councilman Bill Molinari said the city has allowed too many economic development possibilities, such as bringing in more big box stores or helping to develop a local hotel, slip through its hands in the past, and has to start thinking more like a business.

Barajas also supported raising revenue through increasing the sales tax base.

The city presented the project during its mid-year budget review.

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April 5, 2012  Copyright © 2012 Eastern Group Publications, Inc.

Comments

One Response to “Montebello Projects $17.3 Million Gap Over Next Five Years”

  1. Nissan Montebello on April 9th, 2012 6:17 pm

    It seems like taxes may be necessary despite the economy. How else are we going to get out of such a massive deficit? More financial accountability would be good too.

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