At Tuesday night’s Signal Hill Council meeting, officials adopted the 2011-2012 budget with one bragging right– a humble projected surplus that totals just over $41,000. But even though city officials celebrated a balanced capital and operating budget for the upcoming fiscal year, they also acknowledged that they were waiting to see whether their redevelopment agency had much of a future.
California’s budget problems could have an immediate effect on the agency that’s been responsible for managing abandoned oil wells and cleaning up neighborhood blighted areas to create affordable housing and other major city projects. State lawmakers have taken additional steps to eliminate the Signal Hill Redevelopment Agency (RDA) and other redevelopment agencies all over California, or at least force a significant financial burden on these agencies.
“This budget I’ve been real nervous about because I don’t know what the state of California is going to do,” said Councilmember Michael Noll.
State lawmakers passed two bills that affect the redevelopment agencies. One bill would effectively dissolve redevelopment agencies, or, if redevelopment agencies can’t be shut down, another bill would require RDA agencies to pay a large amount to benefit schools.
According to City Manager Ken Farfsing, under this second piece of legislation, Signal Hill would be required to pay approximately $3.87 million in 2011–12, and about $1 million annually thereafter, and, Farfsing warned, it’s money the RDA does not have.
It is not known whether Governor Jerry Brown has taken a specific position on whether he will approve either of the two bills affecting redevelopment; however the governor has on numerous occasions called for an end to redevelopment agencies. The state has also not yet adopted a budget to close a budget deficit projected to be in the billions of dollars.
Several cities criticized their local state representatives for passing the two bills that could cripple redevelopment agencies. During the City Council meeting, Mayor Larry Forester did not shy away from specifically blasting California Senator Alan Lowenthal for his role in supporting the bills.
“Your blindness to the realities of local government, your record of burdening our communities, our residences, our businesses with costly and ineffectual regulations and laws, and ultimate abandonment of redevelopment do not look like representation,” said Forester, reading an open letter to Lowenthal from the Signal Hill mayor and other mayors from several cities in the region.
The City would have to revise its budget if redevelopment ended, but in addition to the threat to the city’s redevelopment agency, City officials acknowledged there were other economic uncertainties that would affect Signal Hill’s local budget. According to a City staff report, retail sales were down in April, there may be a reduction in Community Development Block grant funding, and there are “shortfalls” in the city’s employee pension plans, City officials arrived at a budget surplus that is projected to be more than $41,000 because they were able to rely on other funds to cover a significant difference in revenues vs. expenditures. Revenue projections for the upcoming fiscal year added up to more than $16.4 million while expenditures for the city are predicted to total almost $17.2 million, according to Finance Director Maida Alcantara, who presented a report at the City Council meeting. This year, they did not rely on monies from the Economic Uncertainties Reserve Fund to help balance the budget. To close the City’s own budget deficit and make up for that difference of more than $761,000, the City transferred money from several sources including the gas tax, traffic safety funds, and public employee benefit/retirement funds.
“There is not a lot of wiggle room in this particular budget,” Councilmember Ed Wilson acknowledged.
The next City Council meeting is Tuesday, July 5 at 7pm in the Council Chambers.