The first City of Arcadia budget since the elimination of more than $2 mil. in Redevelopment Agency funding, and the first submitted by new City Manager Dominic Lazzaretto, shows a projected General Fund deficit of about $1.5 mil. for next year. It gets even worse in 2013-14 and still worse after that.
But the picture may not be that bleak. First of all, the City expects to make more than $600,000 from the one-time sale of former water well property and another $700,000 – $1.2 mil. from a joint IRS Task Force program involving the recovery of money through audits, according to Police Chief Robert Guthrie. Lazzaretto, who had only a few weeks to prepare the budget since taking over in late March, said during a study session Tuesday that those two projected windfalls cannot be budgeted since they are uncertain income.
In addition, the City typically proposes very conservative budgets and usually winds up with a hefty surplus, such as the current 2011-12 fiscal year ending June 30 which is projected to end up with a nearly $900,000 net gain versus the initial budget last year that forecast a deficit of about $850,000.
And finally, significant additional sales tax and business license tax revenue is anticipated from new shops scheduled to open at Westfield Santa Anita, starting this fall — probably September — with a new two-level Forever 21, and followed by a Gold’s Gym next February on the third level of the same building, the former Robinsons-May store. In fact, two of the brightest spots in the City of Arcadia’s income for fiscal year 2011-12 and projections for 2012-13 come from Arcadia businesses. Sales tax revenues and business license taxes are projected to climb another 6.3% and 9.1%, respectively, to a combined $10.8 million in 2012-13. The City’s annual sales tax from businesses has increased $2.3 mil. (34%) each year, climbing back this year to more than $9 mil. for the first time since the recession. Sales taxes are projected to climb to $9.6 mil. next year. And the Business License Tax, which has steadily increased each year, is budgeted to reach $1.2 mil. in 2012-13. (Despite the success of businesses, the City may consider cutting the fee it pays the Arcadia Chamber of Commerce by 50% as the Chamber is asking for only the second fee increase since the 1990s.)
Although Redevelopment funds from the state, which were eliminated earlier this year by Governor Brown, do not technically show up in the City’s General Fund, those state funds were used to pay nearly $1 million in staff salaries and other City expenses that must all now be covered by the General Fund.
Councilman Segal expressed concern that while the City may find temporary ways to cover projected deficits, those deficits are only going to get bigger each year until the City either finds significant new revenue streams or makes significant cuts in City services, such as cutting back the number of days the Library is open, cutting back tree trimming and street services, or even closing a fire station. He was not suggesting any of those things, but noting that it would take something on that scale to close the projected budget deficits over the next several years.
After a three-hour presentation by City department heads Tuesday, City officials decided to reconvene at 5:30 p.m., May 29, to decide how to approach the 2012-13 budget that starts July 1 — whether to make potentially major cuts to offset the $1.5 mil. projected loss on paper to come up with a balanced budget, or to leave expenses as budgeted by City staff and take a calculated gamble that the expected additional income will come through and more than cover what currently looks like a deficit. Or a combination of both.
Councilman Amundson expressed a desire to balance the budget. Mayor Harbicht later said that he is confident that City revenue will rebound when the economy recovers.
— By Scott Hettrick