Saturday, October 20 , 2018, 3:41 pm | Fair 85º


Goleta City Council Taps Into Reserves to Fill Budget Hole

Changes under consideration for next year include contracting with outside agencies and having employees pay part of their retirement benefit

Halfway through the fiscal year, the city of Goleta finds itself with six-figure revenue shortfalls.

Revenues from the transient-occupancy tax and sales tax have been much less than projected for 2009-10, and there has been only about 28 percent compliance with the newly enacted business licensing fees, finance director Tina Rivera said Tuesday.

Increasing revenues and cutting expenditures were discussed Tuesday, but ultimately the City Council voted unanimously to make up the difference with funds from the cash flow reserve — in an amount of about $631,000.

But all members of the council expressed trepidation at being so dependent on reserves to pick up the slack, especially since the revenue adjustments will be similar next year, with an estimated $617,000 needed to balance the budget.

Cash flow reserve funds would be depleted if tapped at that amount, but other reserves — including the $5.2 million contingency reserve — would remain untouched.

The cash flow reserve, made up of excess revenues and unallocated monies, is a necessity rather than a nicety, especially when the state comes knocking for a larger piece of the pie, Councilman Roger Aceves said.

Councilman Ed Easton agreed, saying it was risky to rely on reserves and the hope that there will be a lot of money coming in 2012 from returning taxes after a portion of the Revenue Neutrality Agreement ends.

“I hate to see us walking into the year after knowing we have to use reserves to get through it,” he said.

Mayor Eric Onnen also stressed the need to guard reserves, especially since it will be difficult, if not impossible, to replenish them in the near future.

He urged the staff to come back to the council with a more structurally balanced budget for 2010-11, one that doesn’t rely on reserves and considers all kinds of cost-cutting measures.

Suggestions for savings were offered by Councilman Michael Bennett, who focused on the hot topic of staff salaries and benefits for government employees

City of Goleta employees are eligible for retirement benefits at age 55 and don’t pay anything into their retirement, which was more affordable in better financial times.

“Well, these aren’t the good times,” Bennett said. “My constituents are very upset over the whole issue of retirement.”

He suggested raising the age limit to 60 to 65 for new employees, and having employees pay up to 50 percent of their retirement, effective retroactively for all current staff members.

He also asked City Manager Dan Singer to look into reorganizing departments and pursuing the concept of contracting with outside agencies whenever cost effective, to which other council members were receptive.

Aceves adamantly opposed the idea of cutting retirement costs and having staff pay up to 50 percent, saying “nobody does that.”

Council members said they were increasingly worried about wanting more from staff for less, and Singer said the council could have to decide between cutting staff and keeping strategic planning.

“We have to communicate with the community that we are going to do less,” he said.

Staff members were directed to minimize the dependency on reserves and evaluate various cost-cutting measures — including Bennett’s suggestions, contracts with law enforcement and more — in constructing next year’s budget.

Reserve funds are typically the last accounting measure of a fiscal year — the transfer could even happen a few months after the year ends — and staff must approach the council again if additional funds need to be allocated, Rivera said.

Noozhawk staff writer Giana Magnoli can be reached at .(JavaScript must be enabled to view this email address).

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