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Budget anticipates Big 3 revenue increases

- City manager questions unusual expenses

By MARY BROWNFIELD

Published: May 27, 2011

WHILE ACKNOWLEDGING that Carmel is unique in many respects — including how it spends taxpayers’ money — interim city administrator John Goss gently challenged some of the city’s financial obligations last Thursday when he presented the proposed 2011-2012 budget, which estimates $13,090,408 in revenues and $13,074,249 in expenses.

“There are several service levels which are over and above that provided in other communities,” he observed at the May 19 meeting. “While these services have been established by past city council action, and undoubtedly involved considerable thought and community input, current economic constraints could argue for revisiting these issues.”

Specifically, he mentioned spending $60,000 to deliver mail to homebound residents who can’t make it to the post office and the $44,000 annual cost of hand-watering recently planted trees.

“Any step to preserve the urban forest without the inefficient use of staff resources such as hand watering should be encouraged,” he said in his report.

Finally, Goss observed, “It is unusual to find a city of this size with a full-time street-sweeping operation.” It costs $82,000 annually to clean the streets of the one-square-mile city, and the 2011-2012 capital outlay budget also proposes to replace the 12-year-old street sweeper with a new machine that will cost $29,000 per year in a five-year lease-purchase agreement.

He acknowledged those issues might be “sensitive to those in the community,” but he encouraged the council and the public to examine them alongside all other costs and revenues in hope of creating a “fiscally sustainable budget.”


Optimistic outlook

Despite the fact that developing the spending plan was “not an easy task, given the current uncertain economy,” Goss predicted upticks in all three major income sources — property, sales and hotel taxes. He made “a very conservative projection” of property taxes’ increasing from $4,147,055 this year to $4.2 million in 2011-2012. He predicted transient occupancy tax would rise from $4,084,000 this year to $4,210,000 in the next fiscal year and said sales taxes should improve from $1,750,000 in the current budget to $1,870,000 in next year’s.

He also estimated business license tax would increase by $10,000 to $500,000, fees and permits would go from $380,500 to $405,000, and franchise fees would rise from $495,579 to $504,608.

The budget foresees declines in other revenue streams, such as income from interest and parking lots going from $353,300 to $253,300, cash from other government agencies declining from $432,540 to $382,800, and grant money dropping from $600,760 to $158,350.

Goss mentioned several options for upping the city’s income, including phased paid parking, which could generate as much as $2 million annually, and increases in property tax or hotel tax, each of which would require a popular vote. He also said the council should review and consider increasing parking-citation fines, the charge for parking in the Norton Court lot, fees for using the beach and parks, charges for putting up banners, and other fees — including charging for the fire engine’s response to medical emergencies. He also recommended examining the fines levied for illegal activity.

“There likely is a need for a comprehensive review of the city’s fees. Staff has provided examples of fees which appear low and probably do not cover the city’s costs to perform services received by those paying the fees,” he wrote in his report. “Making certain that the general taxpayer does not subsidize special services provided by the city to groups and/or individuals would be an important objective in developing a new fee schedule.”


Public safety tops expenses

Regarding expenses, Carmel P.D. will top the list and is the only department to pass the $3 million mark, at $3,085,987 — an increase from the $2,876,415 budgeted in 2010-2011. Included in that figure are a 5 percent pay raise for police officers and a 4 percent increase for non-sworn CPD employees set to take effect when the fiscal year starts July 1.

“While it is unusual during the current economic conditions to see salary increases provided to employees in any city, the purported effort of this adjustment is to bring Carmel police officers in line with what’s paid officers in other Monterey County jurisdictions,” Goss wrote in his report.

The fire department comes in second with estimated costs of $2,079,181, compared with $2,013,685 this year. Because CFD’s future is up in the air, with the council’s pending decision on whether to merge it with the City of Monterey’s department, contract with Cal Fire to run it or find some other option, Goss said the spending plan “reflects current department operations projected at next year’s costs.” It does not include the 8.75 percent pay raise firefighters were supposed to receive Jan. 1, according to their contract, because it is “apparently contingent upon the city’s decision on whether or not to outsource fire service.”

Public works, the third most expensive city department, will consume an estimated $1,153,189, compared with $1,081,837 in 2010-2011.

Many other departments, however — including administrative services, community planning and building, facilities maintenance and the forestry department — are expected to cost less than they are this year.

Goss estimated bills for outside legal services would drop from $300,000 this year to $100,000 in 2011-2012, assuming the city is not the subject of so many lawsuits. The city paid extensive legal fees stemming from the sexual-harassment case that targeted former city administrator Rich Guillen and a small group’s efforts to stop the city from selling Flanders Mansion, among other matters.

Goss also pointed out he did not include money in the budget for hiring a new police officer, senior planner, human resources director and tree care specialist, nor did he fund requests from the planning commission for another planner or the forest and beach commission’s $100,000 for beach work, $30,000 for parks and $75,000 for “forest activities.” Furthermore, he did not include the $2,600 the community activities and cultural commission wanted for making improvements at Vista Lobos.

The Carmel Chamber of Commerce’s desired $15,000 for marketing materials was not included, because Goss said the city made a onetime payout of that amount in 2010-2011. He also recommended keeping the payment to the Monterey County Convention & Visitors Bureau at $106,000, rather than the $114,000 the MCCVB wants. The nonprofit that runs Sunset Center asked for $650,000, as opposed to the $577,000 originally projected for 2011-2012, and Goss proposed a compromise of $620,000.

“This proposed budget strives to continue the city’s frugal approach in providing service, using all available tools to achieve a balanced budget,” he said. “Every department account was reviewed and revised, if appropriate, so that a realistic statement of operating expenditures could be projected.”

He estimated capital outlay, which focuses on replacing worn-out equipment, at $313,860 in 2011-2012, while the capital improvement budget, which involves long-term infrastructure work, totals $831,868 — $344,308 of which would be covered by tax dollars from the Transportation Agency for Monterey County and the state.

In addition to contemplating whether the city should continue to fund home mail delivery, hand watering of trees and full-time street sweeping, the council should consider cost-cutting measures like combining police forces with Pacific Grove and joining other agencies for dispatching, and hiring outside contractors for human resources, street sweeping and IT.

Council members received the documents and fielded a few questions from the public, but they took no action. Questions about the budget can be emailed to jgoss@ci.carmel.ca.us, until close of business May 27, which will give him and other city hall staff enough time to compile and distribute answers to the council before its next budget meeting Tuesday, June 14, at 4:30 p.m.