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Signal Hill city budget workshop shows city is still in the black

June 13th, 2008 · No Comments · Finance, News

city-of-signal-hill-seal.jpgBY NICK DIAMANTIDES
Staff Writer

While most cities in California are trying to figure out what programs to cut in order to deal with their budget deficit, Signal Hill is simply tapping into its reserve fund and maintaining a policy of “steady as she goes.” At the Signal Hill City Council’s budget workshop on Monday night, city officials spent about two hours briefly discussing the next fiscal year budget that was developed by city staff.
During the meeting, council members and staff compared planned expenditures to anticipated revenues and reserve funds and found that, while no major expansion in services is prudent in the 2008-2009 fiscal year, there is enough money to keep all operations running at their current level. According to the 290-page budget document staff presented to the council, the city expects to receive approximately $17.5 million in revenues while expecting to spend approximately $17.9 million for General Fund services. The shortfall is more than adequately covered by the city’s $4.9 million General Fund reserve.
“The development of this year’s budget was challenging,” acknowledged City Manager Ken Farfsing. “The process began with major uncertainties concerning the impact on the city from the state’s economic and budgetary deficit now projected in excess of $17 billion, the overall national economic outlook, the mortgage crisis and fears of recession and inflation.”
Farfsing explained that due to the uncertainties, staff made conservative estimates of revenues and expenditures. He added that years of prudent fiscal practices have enabled Signal Hill to achieve and maintain a long-term stable financial position in spite of the downturn in the national and regional economies.
Farfsing acknowledged that the city expects a decline in revenues during the next fiscal year. For that reason, he instructed department heads to keep their operating budgets at this year’s levels where possible. “Expenditures were capped at last year’s levels for all non-salary objects of expenditures and were only allowed to exceed the caps with justification (i.e. contractual agreements),” he noted. “Increases to budgets that either expanded programs or provided additional personnel had to be presented as decision packages.” He explained that “decision package” increases were only considered if reserve fund levels were met or maintained, the program generated revenues or the increases were necessary for the safety of city employees and/or residents.
City Finance Director Maida Alcantara told the city council that staff was conservatively projecting sales tax revenue to increase by about three percent in the next fiscal year. The increase is due to new retail stores that opened in Signal Hill recently, but it bucks the statewide trend of declining sales tax revenues, which are attributable to lack of consumer confidence in the economy. Alcantara noted that about 73 percent of the city’s revenues come from sales tax.
After Alcantara spent about 20 minutes outlining various aspects of the city budget, Director of Community Services Kathy Sorensen, Chief of Police Tom Sonoff, Director of Community Development Gary Jones, and Deputy Public Works Director Rick Olson explained the projected expenditures for their respective departments.
Assistant City Manager Charlie Honeycutt also addressed the council. He noted that the city has about $25.8 million in capital improvement projects (CIP) planned in the 2008-09 fiscal year. He noted that the figure is 244 percent greater than the 2007-08 CIP budget, mainly because the new budget includes about $15 million appropriated for the construction of the new police department headquarters. Some of the other planned capital improvements outlined by Honeycutt included the Cherry Avenue widening project, the acquisition of land for the North Slope Nature Park, the completion of a new water well and water treatment facility, the installation of an elevator in City Hall, the renovation of the Signal Hill Park restrooms, citywide pavement management, improvements to streets and sidewalks and a long list of other less costly improvements to city facilities.
Honeycutt and Farfsing explained that only about $716,000 of the CIP budget will come out of the General Fund. The city’s redevelopment agency is funding the development of the new police facility, and other CIP funding sources include state and federal grants, the city’s water fund, the city’s capital improvement reserve fund and other city reserve funds.
Alcantara noted that the city has 13 special reserve funds totaling about $24.4 million dollars, which can be used for various city needs in times of declining revenues.
During the presentations of the various department heads, council members directed staff to make a few minor changes. “We’re in stable shape and probably compared to other cities in a very enviable position,” Farfsing concluded.
Mayor Mike Noll noted that the city’s 2008-09 budget includes more than $8 million in grants secured from the federal and state governments. He praised all the department heads for their work in securing those grants and for managing to keep their budgets close to their present levels in spite of increased costs for everything.
Councilwoman Ellen Ward agreed. “We appreciate our people and the level of excellence we have,” she said.
“We are the little city that could and did,” added Councilman Larry Forester. “We are doing things that other cities can’t because we planned ahead.”
The city council will conduct a public hearing to consider adoption of the fiscal year 2008-09 budget as well as a 4.3 percent increase in the rate charged to water customers at the regularly scheduled June 24 council meeting.

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