Seal Beach residents got a look at the City of Seal Beach’s finances during a public budget workshop on Tuesday evening and the numbers were not encouraging.
The city is facing an estimated $832,300 deficit for the 2018-2019 fiscal year according to draft budget projections presented at the nearly five-hour long workshop held at Council Chambers. Finance Director Victoria Beatley noted that $309,800 of the deficit will be covered by money from the city’s swimming pool reserve fund to pay the first-year salaries for two new police officers. In related news, the council is scheduled to look at the final budget on June 11.
The budget shortfall is for the city’s roughly $30 million General Fund which covers key city services including police, fire, marine safety, public works, community development and recreation. To stabilize the budget, department heads proposed cutting back on some services and potentially increasing fees. “Some of the challenges that we’re going to talk about tonight are significant and potentially have impacts on the quality of life for service levels here in the city,” Beatley said during her opening remarks at the workshop.
Expenditures exceeding revenues
The simplest way to understand the current budget challenges facing the City of Seal Beach is this: despite some bright spots, costs are exceeding revenues.
The biggest revenue source, property taxes, are projected to increase next year to $11,392,900, according to the draft budget. Money from parking citations and meters is also supposed to increase as the city implements new technology and continues to seek an increase in the parking fee at the beach parking lots. The city could also see increased money from the oil industry in barrel taxes as the price of oil hovers above $70 per barrel. That is tempered by estimates that the second and third top revenue generators for the city, sales taxes and utility taxes respectively, are projected to be flat in the coming fiscal year. There is also discussion about raising the sales tax through a ballot measure for the November election.
The bigger issue is the increasing costs. A large chunk of money is going to swelling pension payments. For example, the cost for CalPERS retirement just for the Police Department will jump an estimated $377,000 from the current fiscal year to next year. But there are other increases in expenditures including a projected $435,000 increase in premiums to the Joint Powers Insurance Authority which provides insurance for the city. The cost for contracting with the Orange County Fire Authority for fire and emergency medical services is also expected to increase annually by around 5 percent for the next two years. (For more information on OCFA see related story).
Draining reserves and cutting costs
The city will likely tap into its shrinking reserve funds to cover part of the budget deficit but there are also proposals to cut costs and raise fees.
During the workshop, a representative from each staff department presented their cost-cutting measures and proposals and what enacting them would mean for city services. Many spoke about reducing staff hours, eliminating positions as well as reducing training and membership in some professional organizations. Many said the reduction in staffing would reduce levels of customer service at City Hall and may increase processing times for public requests.
In addition to eliminating some contracts and reducing staff, the City Manager’s office suggested the city should opt out of membership of the League of California Cities and the Association of California Cities – Orange County, to save money estimated at $18,000 a year. The City Manager’s office also recommended a reduction or elimination of the $20,000 annual discretionary fund given to each council member to fund projects in their respective district. “While there are certainly benefits for this type of discretionary spending, our current financial condition causes us to ask if it’s the best use of these funds,” Assistant City Manager Patrick Gallegos said.
Public Works Director Steve Myrter outlined a few cost-cutting and revenue-generating proposals including reducing some transportation services for seniors such as the Dial-a-Ride program, reducing the frequency of tree trimming and reducing the number of days a week the beach is groomed by machine from seven to five. Myrter estimated the latter could save $50,000 and said the goal would be to reduce overtime hours spent grooming the beach while keeping coverage on the weekends.
Myrter emphasized other cleanup would still occur on the beach seven days a week including the emptying of trash cans. He said the measures were meant to increase efficiency and save money but “still have a beach that we’re proud of.”
Marine Safety Chief Joe Bailey brought up the possibility of raising adult lap swim fees at the pool at J.H. McGaugh Elementary School. He also spoke about raising the fee for the city’s Junior Lifeguard program for residents from $520 to $575 for a revenue boost of $16,500. That idea didn’t sit too well with District One Councilwoman Ellery Deaton who suggested there should be efforts to protect subsidies for recreation programs for children. Bailey said there are scholarships available for the Junior Lifeguard program and that the proposed $575 fee is less than the fees charged in nearby beach cities.
The cost-cutting proposals are still being debated, but some were used to create funding estimates for the draft budget for next year, according to Beatley.