Tuesday, June 7, 2011 | The Santa Ana City Council Monday night signed off on a $210-million budget for fiscal year 2011-12, making fewer cuts compared to recent years because of a smaller deficit.
City leaders managed to cover most of the $13.6-million budget gap by borrowing money from the liability and workers' compensation reserves, which, after an actuarial study, were found to have larger than necessary surpluses.
The council faced the city's largest deficit when it was confronted with a $46-million gap for fiscal year 2009-10.
But big cuts in recent years - including multiple rounds of employee layoffs - have helped to keep the deficit relatively low this year. The city has reduced its staff by 391 since fiscal year 2008-09 through layoffs, leaving vacancies unfunded, attrition of retiring employees, reorganizing city departments and contracting for some services.
This year, only three vacant full-time positions were eliminated, the result of reorganization within the Finance and Management Services and Public Works departments.
As the economy continues to show mixed signs of recovery, the massive drop in tax revenues to the city appears to have bottomed out. Tax revenue declined by $22 million through fiscal year 2009-10 but has since stabilized, according to city staff.
Sales tax is expected to increase in the next fiscal year by nearly 10 percent to just over $35.9 million, but utility users tax revenue, which comes from the levies placed on utilities like telephone lines, is expected to decline by 5.5 percent to $25 million. Other tax revenue sources, like property tax, are projected to remain flat.
The budget passed 6-0, with Councilman Sal Tinajero absent.
The council also approved 2 percent increases to both the water rate and sewer service charge despite resistance from a handful of residents.
"Please don't penalize the citizens even one penny - one dime," pleaded resident Billy Leigh, his voice breaking. "That's madness. That's madness. Please reconsider all of this."
A typical family will see its monthly water bill go up by $1.07, while the sewer bill will see a 14 cent increase, according to a city staff report.
The increases are small compared with past rate hikes. Two years ago, the council approved a 17 percent water rate increase, said Public Works Director Raul Godinez.
City staffers argued that the increases are necessary to maintain an aging infrastructure. Some water lines are approaching 100 years old, they said.
While council members agreed with the necessity of the increase, Councilwoman Claudia Alvarez lashed out at staff for failing to provide her with a report detailing maintenance priorities for the city's intricate water and sewer systems. Alvarez requested the study a year ago, but it turned out the funding for the study wasn't in the city budget.
"To have to go through a whole year without knowing that there wasn't a study is pretty pathetic," Alvarez said.
It wasn't the first time Alvarez publicly grilled city staffers. At a council meeting earlier this year, Alvarez singled out former Community Development Agency head Cindy Nelson and her department for spending millions of dollars without council oversight. Just days after the meeting, Nelson announced her retirement.
Godinez said there will be funding for the report next fiscal year and said it should take about a year to complete.
In other council action, members approved an agreement with the consulting firm Management Partners Inc. to offer interim city management services for up to $15,000 per month.
Police Chief Paul Walters took over as interim city manager at the beginning of this month. But with a void in top leadership at City Hall left by the departure of the city manager and deputy city manager earlier this year, council members decided to have a partner in the firm - former Assistant City Manager Jan Perkins - assist Walters.
Perkins will not have an official title and will provide services when required, Councilman Vincent Sarmiento emphasized.