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City focuses on fiscal future

Continued unchecked spending will mean multi-million dollar deficit

Posted: February 1, 2009 9:50 p.m.
Updated: February 2, 2009 4:59 a.m.
 

Despite thrifty planning, if Santa Clarita continues with its present spending plan the city will face a more than $3 million deficit in 2010, City Manager Ken Pulskamp said last week.

By 2014, that figure could swell to $7 million, Pulskamp said during a budget subcommittee meeting Tuesday afternoon.

While stressing general fund projections will change, Pulskamp said the projected revenues for 2009 are $79.4 million. That is the same amount as the current projected expenditures.

In the 2007-08 fiscal year, the city had revenues of about $89 million, with operating expenditures of about $77 million.

A city hiring freeze, which has left 15 positions open is saving City Hall $1.3 million, Pulskamp said.

The city has an operating reserve of about $11.6 million, city treasurer Darren Hernandez said.

Reserve funds can be used for one-time expenses. For example, funds from the city's operating reserve were part of the $26 million spent in the wake of the 1994 Northridge earthquake that devastated the region, Hernandez said.

Department budgets are due to the city manager's office in March, and managers have been asked to submit three plans: A flat budget, a budget with a 3 percent reduction and one with a 5 percent reduction.

Sales tax information for the holiday season is expected in early spring, and Pulskamp said "the Christmas season was not good."

Sales tax revenue comprises about 40 percent of the city's general fund, Hernandez said.

It is not entirely surprising the economy has been unraveling over the past months, Pulskamp said, "but it is unraveling at unprecedented speed."

Every June the City Council approves a budget with a fiscal year schedule of July 1 to June 30.

In recent weeks city officials have lauded the city's practice of thrifty budgeting.

"It takes a tremendous amount of self-discipline to live below your means, but we do that so we're prepared for times like these," Hernandez said earlier this month.

In the midst of economic turmoil, the coming year holds pluses and minuses.

Three of last year's priorities will remain on hold, Pulskamp said.

Expansion work at Saugus' Central Park is on the back burner, as is gym expansion at the Santa Clarita Activities Center and any work on a Canyon Country community center.

On the flip side, work is funded and underway to complete the cross-valley connector by erecting a bridge across the Santa Clara River, Pulskamp said.

The city's efforts to keep Cemex Inc. from operating a massive sand and gravel mine in Soledad Canyon will be unaffected, he said, as a funding reserve has been built up over the years.

With funds allotted, the city can move ahead designing a new library in downtown Newhall and undertaking streetscaping along Main Street.

City officials are also in talks with the Valley Industrial Association, the Santa Clarita Chamber of Commerce and the business community at large to figure out how to deal with a tanking economy.

For example, Pulskamp said there have been discussions about what to do with the space formerly occupied by Mervyn's in the River Oaks Shopping Center on Magic Mountain Parkway. The space could either be filled by an anchor tenant, or subdivided for several businesses.

Whatever changes the 09/10 budget undergoes, public safety will remain a top funding concern, Mayor Frank Ferry said.

"When we talk about the budget, public safety is always a high priority," he said Friday.

The city contracts with the Los Angeles County Sheriff's Department for law enforcement services, paying about $19 million annually, Hernandez said.

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