Uptick in Tax Revenues Helps Irvine Balance Budget

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Thursday, June 16, 2011 | With an uptick in some projected tax revenues, the Irvine City Council Tuesday night erased a smaller deficit than in recent years and approved a $136-million budget for fiscal year 2011-12.

To balance the budget, city leaders used nearly $7 million in reserve funds and other one-time sources, including almost $4.5 million in “rainy day” reserves.

The city is in the third and final year of City Manager Sean Joyce’s plan to move the city through the bottom years of the recession by tapping reserve funds and making targeted cuts.

There had been concerns that Joyce’s plan would take too much from reserve funds, but Irvine is projecting an increase in sales tax revenues of $6.1 million and $937,000 more in hotel room taxes. If those predictions are accurate, the city will have $9 million in reserves at the end of the next fiscal year.

“A year ago, we thought we might need to use as much as $18 million in reserves and one-time funds,” said Joyce. “We will need fully half of those reserves.”

Finance Commission Chairman Don Dressler said the commission supports the budget but has long-range concerns about deferred maintenance and pension costs.

City leaders said that despite a mixed national economy, there are some good signs in Irvine.

Joyce cited, among other examples, robust Irvine Co. home sales in the northern part of the city and the opening of Hoag Hospital, which added 13,000 new jobs. Such indicators show that Irvine is on a good track toward recovery, he said.

“We here, through a very thoughtful plan, have managed to bridge the very troubled waters,” said Councilman Larry Agran. “I’m very proud of what we’ve accomplished.”

There was, however, one significant bone of contention: the Great Park budget. There remains such disagreement over spending at the Great Park that the council had to vote twice before the budget was approved, a twist that Mayor Sukhee Kang said was unprecedented.

Councilmen Jeffrey Lalloway and Steven Choi wanted to vote yes on most of the budget, but not the portion dealing with the Great Park. Irvine council members are on the Great Park Board of Directors, and in that role both Lalloway and Choi voted against the park’s $65-million budget last month.

So the City Council voted 5-0 for the overall budget, then 3-2 for the Great Park portion.

“I think that this is making both records consistent and straight, nothing more,” Choi said.

The biggest issue regarding the Great Park budget continues to be no-bid contracts awarded to consultants. A $100,000-per-month no-bid contract with Forde and Mollrich for public relations services has received the most criticism.

But in the next fiscal year budget, two new no-bid contracts drew rebuke: a double-dip by the park’s retired finance director and $25,000 per month for a consultant who specializes in public-private partnership deals.

“I was elected to be a steward of public funds, and I take that role very seriously,”¬†Lalloway said. “I would suggest that if there is one dollar that I disagree with, I will still vote no.”

Agran argued that the no-bid contracts at issue amounted to only about $300,000. When considered in the scope of the full $65-million park budget, it wasn’t “good government” to vote no, he said.

Councilwoman Beth Krom at first opposed dividing the budget for separate votes, but after Agran said he would support the division “as a courtesy” to Lalloway and Choi, Krom supported it too.

“I voted to support dividing the vote because at the end of the day its not a hill I need to take,” Krom said.

Please contact Adam Elmahrek directly at aelmahrek@voiceofoc.org and follow him on Twitter: twitter.com/adamelmahrek. And add your voice with a letter to the editor.


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