By Jacob Wilson/Garden Grove Journal
Westminster will likely head into the 2012-13 fiscal year with a $3.7 million budget gap thanks to low sales tax revenues, a sluggish housing market, and the closure of the Westminster Redevelopment Agency.
The Westminster City Council will review and vote on the budget June 27. The council saw a budget preview at its June 13 meeting, giving them and city staff two weeks to make any changes before the vote.
“This is not meant to ring any alarm bells, but it’s meant to show we have a lot more work to do,” Assistant City Manager Eddie Manfro said during the preview. “In six years we will have no reserves if we do nothing.
If no major changes are made to the budget, Westminster will dip into its reserve fund of over $21 million to make ends meet. Based on current budget projections, the city has enough money in its reserves to stay solvent for another five years.
Mayor Margie Rice is optimistic it won’t come to that.
“I have faith it’s going to start improving and we’re going to pull out of this,” she said, referring to the economic downturn.
Even before the state closed redevelopment agencies and transferred RDA funds to the state treasury, Westminster staff had projected an almost $4 million deficit. After the RDA closure, the deficit swelled to $10.4 million.
In response, city staff, led by city manager Mitch Waller, developed a Fiscal Stabilization Plan as an effort to decrease the deficit. Most of the plan has revolved around cutting personnel expenses.
The city is saving over $3.2 million by laying off 67 employees July 7. Overtime reductions and lower retirement benefit costs will save another $1.3 million.
Sales tax revenues in Westminster have risen slightly in the last few years. At almost $14 million, the figure is almost $2 million higher than in 2009-10. But current revenues are still much lower than in 2005-06, when sales tax revenue approached $18 million.
If sales tax revenues were still that high, there’d be no deficit, noted Manfro.
In contrast, property tax revenues have remained flat over the last five years, a sign that home sales are slow or values aren’t increasing in Westminster. The city brings in about $10 million a year in property taxes.
The general fund budget is more than $48.9 million, with most of the money going toward public safety. The Westminster Police Department costs $24.8 million to run.
Westminster pays another $10.5 million in fire services. The city contracts with the Orange County Fire Authority.
The council meets the second and fourth Wednesdays at 7 p.m. Meetings are held in the Council Chambers at 8200 Westminster Blvd.