With nearly $2 million surplus in the general fund and $15.8 million in reserves by this fiscal year’s end, the City of Manhattan Beach is looking ahead at another year of economic growth, and with it, several new full-time positions, 13 new city vehicles and one-time capital equipment purchases amounting $1 million.
Finance Director and Acting City Manager Bruce Moe presented the proposed operating budget for fiscal year 2014-2015 at the City Council meeting Tuesday, projecting a nearly 4 percent growth, or $2.3 million, in general fund revenue, totaling $59.8 million. Expenditures are projected to increase by 2.8 percent, up to $60.6 million total, including capital equipment purchases such as a new human resources information system and an upgrade to the citywide phone system. These one-time spendings will be drawn from an unreserved general fund balance and pose no concern to the overall budget, he said.
“It’s no surprise that we’re in a period where we have some economic growth and stability, which is very nice after those tough few years we had,” Moe said. “Our major revenues are advancing and the housing market is very strong and the building activity is very robust.”
The numbers for next year are looking better across the board. Property taxes, the general fund’s biggest revenue stream, has a projected growth of 7.7 percent, or $1.7 million, from this fiscal year’s budget. With strong trends of tourism, revenue from the transient occupancy tax is projected at a 10.4 percent increase, with Marriott Hotel tax revenue at a 4 percent growth. And despite the departure of Marvel Studios last year, business license tax revenue is on a steady growth at 2.5 percent. And with a 33 percent increase in the number of building permits issued this year, projected building permit revenue is up 25.5 percent, plan check fees 29.8 percent.
On the other hand, trends of declining sales tax is area of concern due to slowing retail, particularly in consumer electronics, Moe said. This fiscal year’s end estimates place the city at a 1 percent growth from last year, which saw a nearly 7 percent jump from the prior year. Next fiscal year’s sales tax revenues are expected to perform 0.5 percent below this year’s budget, he said.
In projected expenditures, salaries and benefits will see a $1.6 million or 4.1 percent increase in the proposed budget. Highlights include creating full-time positions for a traffic engineer, currently covered by a contractor, and for a graphic artist, a part-time employee. Moe also recommended reclassifying the senior management analyst position to assistant to city manager, or deputy city manager, as well as the appointment of a temporary Battalion Chief in the fire department to cover a vacancy.
Medical premiums and pension costs are projected to spike over the next few years. To account for the rises in premium without any clear trends, a 10 percent increase has been included in the budget. Similarly, Moe recommends budgeting $4.8 million, or a 10.5 percent increase from last year, for funding pensions under the California Public Employees’ Retirement System. With CalPERS’ recent changes to assumptions regarding life expectancy, pension rates will spike 37 to 62 percent over the next seven years. By 2020, the city’s contributions are expected to increase by $1.7 million, Moe said.
In response to Councilman David Lesser’s inquiry about the rising pension costs, Moe said he’s confident the city has the ability to pay for them.
As part of the Information Systems Master Plan adopted last April, a phone system replacement ($450,000) and wide area network expansion ($300,000) are in the proposed budget. Council contingency or pay will be upped from $150,000 to $300,000; it’s historically half-a-percent of the general fund, he said.
Mayor Amy Howorth asked Moe whether the position of an economic development director has been considered in the budget. He replied that with the impending retirement of community development director Richard Thompson this November, the city will look for those qualifications in his successor.
Councilman Mark Burton said he will advocate for three new full-time officers, including a footbeat officer and a bicycle officer, as well as license plate recognition technology to stymie crime rates in town. He also highlighted “big challenges coming in the future,” including a ballooning senior population, which by 2020 is projected to account for 45 percent of Manhattan Beach, as well as water dependence.
The City Council will adopt the operating budget for fiscal year 2014-15 at a regular meeting on June 17 at 6 p.m. in the Council Chambers. The community is invited to participate in upcoming budget sessions at 6 p.m. in the Fire/Police Conference Room: Parks and Recreations and Public Works on Thursday, May 8; Human Resources, Police and Fire Departments on Monday, May 12; Management Services, Finance and Community Development Departments on Wednesday, May 21; and a wrap of all departments and review of the proposed FY2015-19 Capital Improvements Plan on Thursday, May 29.