News of a slowly recovering economy was found in a mid-year Hermosa Beach budget report, which estimates a 4 percent rise in revenues flowing to City Hall, on the heels of a 1 percent revenue increase the year before.
“As reported in January with the Comprehensive Annual Financial Report (CAFR) for 2010-11, the revenue picture at the end of the year was slightly improved with revenue up 1 percent overall. Now we are able to report an increase in revenue estimates of 4 percent, which suggests the trend may be sustainable,” wrote city Finance Director Viki Copeland.
“This is a positive indication that our local economy is indeed recovering, albeit slowly,” she wrote.
The estimate of property tax revenue for the year rose 2 percent, despite officials’ expectation of a slight decline.
“Hermosa Beach has been fortunate to have positive growth throughout the recession, whereas many cities had serious declines,” Copeland reported.
“Sales tax revenue is up 11 percent for the first half [of the fiscal year], which is very good news. The new estimate is conservatively 7 percent” over the year before, in which the city saw a 5 percent increase, she wrote.
The report shows a 13 percent increase in sales tax revenue from businesses located downtown, compared to the same period the year before.
The increase brings the downtown area on par with the Pacific Coast Highway business corridor, which has frequently stood alone as the sales tax leader. The downtown area has seen increased attention from energetic business owners and the Hermosa Beach Chamber of Commerce & Visitors Bureau, which have teamed up for once-a-month First Thursday promotional events.
The downtown and PCH areas each accounted for about 42 percent of the city’s total sales tax revenue, followed by the are of Pier Avenue, Valley Drive and Monterey Avenue with 12 percent and Aviation Boulevard with 4 percent.
Taxes charged to hotel visitors in Hermosa are up almost 10 percent compared to the first half of the last fiscal year, along with a 7 percent increase in occupancy. The increase follows an 8 percent rise in hotel tax revenue over the entire last fiscal year.
Revenue estimates for the city’s utility user tax are being revised down 3 percent, following a 2 percent dip last year, which was attributed to a change in taxation for “bundled services” by AT&T.
Estimated revenues from city licenses and permits are up about 5 percent, because of fee increases enacted in September, Copeland wrote.
In the current budget, city officials transferred $722,000 to an insurance fund to help pay for an upcoming civil trial in the Macpherson Oil Company’s breach-of-contract lawsuit, which could bankrupt City Hall.
“With the $750,000 already budgeted, this will bring the total to $1.4 million for the trial,” Copeland wrote.
In addition, the city is trying to save money by offering a second round of early retirement incentives, in which employees get credit for two extra years of service when their benefits are calculated.
“No estimate is factored into the budget at this point,” Copeland wrote.
The city continues to negotiate with its employee groups, some of which have agreed to status quo employment contracts. There have been no salary increases since July 2008.
Copeland said officials will continue to budget “conservatively,” and she warned that further budget cuts could be imposed by Sacramento if a multibillion-dollar statewide budget measure is rejected by voters. ER
