At preliminary budget presentation to the Westminster City Council last week, city staff projected a $5.39 million general fund deficit for the 2015-16 fiscal year, a shortfall that has been exacerbated by legal fees from two major federal lawsuits against the city's police department.
After a $1.5 million injection from its dwindling reserve funds, the deficit is roughly $3.8 million.
The city has relied heavily on reserve funds to make ends meet each year, since the state's decision to eliminate redevelopment agencies in 2012 opened a $10.4 million hole in Westminster's budget.
Earlier this year, city staff returned to the council for some last-minute budget adjustments that added $1.1 million to this year's spending, due in part to settlements and legal fees from two major federal lawsuits against its Police Department.
The city has settled a suit brought by the owner of a Vietnamese bikini bar involved in a 2013 FBI loan sharking sting, who alleged that a Westminster police officer harassed and threatened her on behalf of a businessman to whom she owed money.
The other suit brought in 2011 by three Latino police officers alleging discriminatory practices within the department.
Although city revenues have come in $1.13 million above initial projections, sales tax revenue took a hit due in part to the loss of a large recreational vehicle business and little growth in the city's retail sector, according to former Administrative Services Director Michael Solorza, who has since left the city.
Although a Costco and new RV business are expected to open in the future, economic data suggests a slow and shallow recovery, according to the presentation.
View the full presentation here.
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