Duarte Mid Year Report Reflects Impact of
Lackluster Economy and State Raids
DUARTE, CA, February 23, 2011 – Despite significant budget cutbacks, a hiring freeze and other cost-saving measures implemented over the past several years, Duarte is estimating a $915,500 budget deficit by 2010-2011 fiscal year-end.
That prediction, combined with a growing, gnawing concern that the governor will succeed in his plan to strip cities, including Duarte, of redevelopment funds in an effort to pump up the state’s finances added up to a sobering mid-year budget report to the City Council on Feb. 22. The State budget proposal to eliminate redevelopment if approved could add up to $1 million to Duarte’s structural deficit problem.
Total General Fund revenues are projected to be $11,162,300, a slight decrease of $34,200 or .3% as compared to the adopted budget. There was some positive news. Sales tax is expected to exceed initial projections for the first time in several years, $142,000 higher than projected, but it is still more than $1 million below the annual sales tax revenues of five years ago. Plan check fees are projected $50,000 higher than budgeted due to the Huntington Courts and other smaller projects in the community. On the down side, as with other cities in California, business licenses, transient occupancy and real property transfer taxes, revenues that are linked to business activity and real estate transactions, are expected to be a combined $48,000 lower than budgeted. Interest earnings, which the City has more and more utilized for cash flow purposes, have plummeted to all time lows of earning less than 1 percent, reducing this source of projected revenue by more than $100,000.
General Fund expenditures are projected to be $12,077,800, an increase of $323,500 as compared to the adopted budget, despite a majority of City departments expecting to spend less than originally budgeted and two more staff positions currently being held vacant.
One primary factor for the increased expenses is the current year legal expenses in the challenge to the Vulcan mining expansion, which is projected to reach $204,000. By the end of the fiscal year, the City will have spent $500,000 of the $700,000 Fight Against Vulcan Expansion fund set aside by the City Council in 2008.
Another factor is the Citywide Lighting and Landscape District, which continues to be a substantial drain on the City’s general fund. The original budget had projected a deficit of $250,000, which is now estimated to reach $305,000 by year-end. Following the vote in the Neighborhood Districts to not increase revenues, adjustments have been made to expenses in those districts to bring them into balance. But the Citywide District continues to be out of balance and adds to the City’s operating deficit. Other revenue measures must be considered in the future if services are to be continued at the current level, said Petersen.
Duarte currently has 43 full time employees. Full time staff has been reduced by 8 (16%) in less than two years. Positions that have remained vacant are Human Resources Manager, Code Enforcement Manager, City Planner, Facilities Supervisor, Recreation Coordinator, Redevelopment Agency Coordinator, IT Manager, and Field Services Maintenance Tech.
“This kind of reduction in staffing has and will continue to result in reduced and/or delayed services. This will make the prioritization of services and projects that much more important as we try to complete work with less staff,” said Petersen.
Included in the mid year budget Council approved a loan repayment of $7.5 million from the Redevelopment Agency to the City. Like most California Redevelopment Agencies, loans were made by their cities, particularly in the early years of adopting and kick starting the project areas. Under the terms of the agreements, the cities may demand payment of all or a portion of the principal balance at any time as funds become available. As of June 30, 2010 over $9 million was outstanding.
“Given the current economic climate and the governor’s proposed elimination of Redevelopment the City cannot afford to let this loan go unpaid into the uncertain future,” said Petersen.
In light of ongoing State raids on Redevelopment Funds combined with stagnated revenues, the City Council has instructed staff to start the 2011–12 budget process early. The City will be conducting its first budget workshop on Tuesday, March 8, 2011 @ 6:00 pm in the Community Center located at 1600 Huntington Drive. For additional information on the City budget, contact the Administrative Services Department at (626) 357-7931, ext. 211.
