After months of anticipation and dread among city workers, Costa Mesa Tuesday released a proposed $117.7-million budget for the next fiscal year that hikes capital spending by $6.6 million.

It also estimates a budget deficit of $3.3 million.

City officials described the proposed spending plan as fluid, saying they would spend the next several weeks briefing the public and council members on how they will close the budget gap.

At present, that gap is being filled by general reserves, even though that practice, used in past years, has been criticized by the new council majority.

This year’s budget is the city’s most anticipated in recent memory because of a massive outsourcing plan proposed by the City Council that could result in the layoffs of more than 200 employees.

“There was a $5 million gap,” said city CEO Tom Hatch Tuesday night after introducing the budget to a packed council chamber. “We’ll show you line by line how we went from $5 million gap to $3.3 million,” he added, referring to earlier deficit estimates that have apparently been trimmed.

Hatch announced that on Tuesday city staff will provide a full review of the preliminary budget starting at 4:30 p.m.

The preliminary budget estimates released by council members detail broad funding categories.

It shows $97.8 million in revenues allocated for the general fund in fiscal year 2011-12, a 3.47 percent increase from the current fiscal year. Another $19.8 million would be transferred from internal funds, resulting in total revenues for the city of $117.7 million.

Total appropriations — $117.7 million — represent an $8.2-million increase (7.5 percent) over the current fiscal year. The big jump in the capital budget — from $3.8 million to a $10.4 million — was not discussed.

The current council majority, however, has repeatedly discussed its intention to significantly increase such expenditures while reducing pension costs for public employees, mainly through the outsourcing plan.


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